1) The Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Net
Position must include a performance indicator, such as operating income.
2) If a private not-for-profit fails to comply with donor restriction on contributions
received, the organization must accrue and disclose a contingent liability.
3) Under modified accrual accounting, property tax revenue should be recognized when
measurable and available; available means collected no more than 90 days after
year-end.
4) Sales taxes, income taxes, and motor fuel taxes are examples of
government-mandated non exchange transactions
5) Proprietary funds report using the economic resources measurement focus and the
accrual basis of accounting.
6) A Statement of Functional Expenses is required for voluntary health and welfare
organizations.
7) Charity care is reported as both revenue and expense (bad debt) in the Statement of
Operations.
8) Receivables from sales taxes are recorded in the period that the retailer submits the
taxes to the government.
9) The FASAB requires more financial statements than are typically required of state
and local governments.
10) With respect to colleges and universities, estimates of uncollectible accounts are
accounted for as bad debt expense.
11) In special revenue funds, revenues are recognized when available and measurable.
12) Accounting standards for the federal government and its agencies are established by
the Government Accountability Office.
13) The government-wide statements and the fund statements for proprietary funds and
fiduciary funds use the economic resources measurement focus and the accrual basis of
accounting.
14) Donated resources that benefit individuals or private organizations are reported in a
private-purpose trust fund.
15) Section 501(c)(3), exempt organizations are prohibited from supporting political
candidates or campaigning to influence legislation.
16) Which of the following is True regarding the government-wide financial
statements?
A)The government-wide financial statements are not required to present prior-year data
B)The government-wide financial statements include a Statement of Net Position and a
Statement of Activities, but not a Statement of Cash Flows
C)The government-wide financial statements include capital assets, including
infrastructure, and reflect depreciation, except for infrastructure using the modified
approach
D)All of the above are True
17) A pension plan that is required to pay out only the amount that has been
accumulated for each employee is a ________?
A) Defined Benefit Plan
B) Private-Purpose Plan
C) Defined Withdrawal Plan
D) Defined Contribution Plan
18) Assume a government is a special-purpose government engaged in only one
governmental activity. Which financial statements would be required?
A)Government-wide statements only
B) Statements combining the governmental funds and government-wide statements
C) Both government-wide and governmental fund basis statements
D)Either B or C above
19) The
A)The University of Virginia Hospital, a government-owned hospital
B)A psychiatrist operating as a limited liability corporation
C)A nursing home operated by the Lutheran Church
D)Voluntary health and welfare organizations
20) The difference between an expenditure and an encumbrance is?
A) An expenditure is the actual amount of an authorized liability and
encumbrances are estimates
B) An encumbrance is an expended expenditure
C)Enterprise funds record expenditures, but do not record encumbrances
D) Expenditures are estimates and encumbrances are not
21) Which of the following is not considered to be a major user group by the GASB?
A)Citizen groups
B)Investors and creditors
C)Government executive branch officials
D)Legislative and oversight officials
22) Which of the following statements is notcorrect with respect to the preparation of
government-wide statements?
A)A worksheet entry is required to record depreciation expense on capital assets of
governmental activities
B)Enterprise funds are reported in the business-type activities column of the
government-wide statements
C)Worksheet entries must be made to eliminate operating profits earned by enterprise
funds
D)A worksheet entry is required to eliminate the charge to expenditures for capital
outlay and record those expenditures as capital assets
23) How should customer deposits held for water metersthat cannot be spent for
operating purposes be classified?
A)As restricted cash in an Enterprise Fund
B)As both cash and a liability in an Agency fund
C)As Nonspendable fund balance in a Permanent Fund
D)Any of the above are acceptable alternatives
24) The Financial Accounting Standards Board (FASB) is the standard setting
organization for which of the following reporting organizations?
A) Private not-for-profits
B) Public not-for-profits
C) Investor owned businesses
D) A and C are both correct
25) During the fiscal year ended December 31, 2015, the City of Johnstown issued 6%
general obligation serial bonds in the amount of $2,000,000 at 102 ($2,040,000) and
used $1,980,000 of the proceeds to construct a fire station. The $40,000 premium was
transferred to a debt service fund. The $20,000 left in the capital projects fund at the
end of the project was later transferred to the debt service fund. The bonds were dated
April 1, 2015 and paid interest on October 1 and April 1 . The first of 10 equal annual
principal payments was due on April 1, 2016 .
How would the bond sale be recorded?
A)As a liability in the debt service fund
B)As a liability in the capital projects fund
C)As an other financing source in the debt service fund
D)As an other financing use in the capital projects fund
26) The estimated costs of closure of solid waste landfills are measured using:
A)Estimated future costs
B)Actual closure costs
C)Historical costs
D)Current costs
27) Investment income on Endowments held by private colleges and classified as
permanently restricted net assets should be recorded as an increase in:
A)Unrestricted net assets
B)Temporarily restricted net assets
C)Permanently restricted net assets
D)Any of the above, depending on the terms of the trust agreement
28) Under which of the following circumstances would an asset be considered
impaired?
A) A costly piece of diagnostic equipment at a city hospital is no longer used
because new technology exists that does a better job
B) A bridge is damaged by an earthquake
C) An expansion project at the city airport is halted because a major airline stops
service to the city
D) All of the above
29) The Township of Thomasvilles General Fund has the following net resources at
year end:
$77,000 of prepaid insurance
$375,000 rainy day fund approved by the township governing board with specific
conditions for its use
$2,500 of supplies inventory
$61,000 state grant for snow removal
$150,000 contractual obligations for the purchase of equipment
$200,000 to be used to fund government operations in the future
Outstanding encumbrance of $80,000 for the purchase of furniture & fixtures (assume
no contractual obligation)
What would be the total Non spendable fund balance?
A) $ 2,500
B)$ 77,000
C)$ 79,500
D)$159,500
30) Which of the following is not True regarding infrastructure assets?
A) Governments can record depreciation in the same manner as for other depreciable
fixed assets
B) Because they have such long useful lives, infrastructure assets are never depreciated
C) Governments can choose to expense expenditures that extend the life of
infrastructure assets in lieu of depreciation
D) Expenditures to add to or improve infrastructure assets must be capitalized
31) The City of Springfield has three pension plans: a locally administered police plan
for which it is trustee, a statewide cost sharing plan, and a statewide agency plan. The
City would include in its CAFR pension trust fund financial statements for:
A)All three plans
B)The locally administered plan plus the statewide agency plan
C)Both statewide plans
D)The locally administered plan only
32) Which of the following is not correct with respect to reporting of patient service
revenue for health care organizations?
A)Patient service revenue must be reported net of estimated adjustments for contractual
adjustments
B)Patient service revenue does not include amounts representing charity care
C)Changes to estimates of contractual adjustments related to prior periods must be
reported as a prior period adjustment if material
D)Unrestricted bequests and investment income for current unrestricted purposes may
be reported as either operating or nonoperating revenue, depending on the policy of the
entity
33) Which of the following funds requires a Budgetary Comparison Schedule?
A) Enterprise Funds
B) Internal Service Funds
C) General Fund
D) Investment Trust Funds
34) The institutions governing board decided to create an endowment from contributed
funds, this is called a(n) ________ and the funds are unrestricted.
A) Endowment
B) Term endowment
C) Quasi-endowment
D) None of the above
35) Which of the following are included in the Financial Snapshot section of the federal
governments Citizens Guide to the Financial Report of the US Government?
A)The Net Operating Cost of the federal government
B)The Net Position (assets minus liabilities) of the federal government
C)Both (a) and (b) above
D)Neither (a) nor (b) above
36) Which of the following statements is not correct with respect to GASB Statement
No. 53 which establishes reporting requirements for governments entering into
derivative instruments?
A)Derivatives include swaps, options, forward contracts and future contracts
B)If a derivative is effective in reducing a governments exposure to identifiable risks,
the changes in the value of the derivative are reflected as investment gains or losses in
the period that the value changes
C)If a hedge derivative is deemed ineffective it is classified as investment purpose
D)Statement No. 53 applies only to reporting at the government-wide level for
derivatives held by governmental funds, not the fund-basis statements
37) Public colleges and universities that choose to report as special-purpose entities
engaged only in business-type activities would have which of the following financial
statements?
A)Statement of Net Position, Statement of Activities
B)Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net
Position
C)Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net
Position, Statement of Cash Flows
D)None of the above
38) Distinguish between (a) True endowments, (b) term endowments, and (c)
quasi-endowments. Explain how the net assets of each is classified by a private college
or university.
39) General Fund resources were expended in the amount of $185,000 to purchase a
new fire truck. The General Fund would debit:
A)Expenditures Control
B)Capital assets -Motor Vehicles
C)Both (a) and (b) above
D)None of the above; no entry is made in the General Fund when a motor vehicle is
purchased because only current financial resources are recorded in the General Fund
40) Which of the following organizations is (are) part of the executive branch of the
federal government?
A)Government Accountability Office
B)Office of Management and Budget
C)Both (a) and (b) above
D)Neither (a) nor (b) above
41) What accounts appear in the equity section of the balance sheet for a college,
assuming the college is:
A.Public government owned
B.Private not-for-profit
C.For Profit – Investor owned business
42) A government signed a five-year capital lease on January 1, 2015 to obtain some
equipment. The lease provided that the government would make a down payment of
$20,000 and four $20,000 payments each year after that, beginning January 1, 2016 .
The government has a fiscal year ending December 31 . Upon inception of the lease, the
government, in its governmental fund accounting records would:
A)Debit expenditures for $20,000 and credit cash for $20,000
B)Debit expenditures for $100,000, credit cash for $20,000, and credit accounts payable
for $80,000
C)Debit expenditures for the present value of the payments (including the $20,000
down payment), credit cash for $20,000, and credit accounts payable for the difference
between the $20,000 and the present value of the future payments
D)Debit expenditures for the present value of the payments (including the $20,000
down payment), credit cash for $20,000, and credit other financing sources for the
difference between the $20,000 and the present value of the future payments
43) Which of the following is not an example of a donor imposed restriction?
A) Funds are not to be used until the following year
B) Funds must be used on certain programs
C) Funds are to be endowed
D) All of the above are examples of donor imposed restrictions
44) The City of Charlestown levied property taxes in the amount of $10,000,000. It is
estimated that 2% will not be collected. The taxes were levied July 1, 2014 for the fiscal
year ended June 30, 2015 . During the year ended June 30, 2015, $8,900,000 in
property taxes were collected from this levy. It is estimated that $620,000 will be
collected during the next 60 days, $300,000 will be collected more than 60 days after
June 30, 2015, and $180,000 will never be collected.
When preparing the government-wide financial statements, how much property tax
revenue should be recognized for the year ended June 30, 2015?
A)$ 8,900,000
B)$ 9,800,000
C)$ 9,820,000
D)$10,000,000
45) The modified accrual basis is a distinct system of accounting that:
A)Differs from accrual accounting only in its failure to recognize long term assets and
liabilities
B)Records expenses and revenues the same as accrual accounting
C)Records expenditures and fund balances
D)Is equivalent to cash basis accounting
46) Assume the mission statement for the Area Homeless Shelter is as follows:
To provide temporary shelter and meals to area homeless and to assist them in obtaining
self-sufficiency.
The Shelter has approached you about contributing a substantial amount of money to
support their operations. Before contributing your money, you would like to evaluate
the Shelter’s service efforts and accomplishments. Give an example of Input, Output,
Outcome, and Efficiency measures that you might find useful in assessing the Service
Efforts and Accomplishments of the Area Homeless Shelter.
47) What is the basis of accounting for a private college or university and what are the
principal sources of reporting standards?
48) Briefly discuss how governmental budgeting differs from budgeting for businesses.
49) Identify three types of restrictions placed on temporarily restricted net assets of a
private sector college or university and outline the accounting requirements for each
type.
50) Answer the following questions regarding financial reporting by private
not-for-profit organizations.
(1)What are the financial statements required for all private not-for-profit
organizations?
(2)What organizations are required to present a Statement of Functional Expenses?
(3)What are the three classes of Net Assets?
51) What are the criteria established by Statement of Position 98-02 for allocation of
costs that involve fund raising?
52) What factors would cause income that would otherwise qualify as unrelated
business income to not be taxed?