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1) Revenue for reimbursement grants may be recognized before expenditures take place
as long as the grant has been awarded.
2) The Fiduciary Funds are included in the Government-Wide Financial Statements.
3) There are no expenses in modified accrual funds.
4) Fiduciary Fund activities report in terms of Revenues and Expenses.
5) According to The
6) A private not-for-profit reports all expenses in unrestricted net asset class.
7) For accounting purposes, health care organizations include HMOs and individual
medical practitioners, as well as hospitals.
8) The budgetary authority process for a federal agency begins with the Treasury
Department issuing a warrant granting the agency the authority to withdraw funds.
9) GASB requirements for business-type activities of public colleges requires accrual of
interest and amortization of debt discount and premium.
10) Both public and private sector health care organizations measure transactions and
events similarly, but use different equity accounts.
11) The Federal Accounting Standards Advisory Board requires less extensive reports
than does the FASB or GASB.
12) Because capital project, debt service and permanent funds use modified accrual
accounting, these funds would typically record budgets.
13) The net position of a federal agency is comprised of Cumulative Results of
Operations and Unexpended Appropriations.
14) Public colleges typically report as special-purpose entities engaged only in
business-type activities.
15) Only the General Fund may have a positive Unassigned Fund Balance
16) The governmental funds follow __________ where the government-wide
statements follow ___________.
A) Modified accrual accounting, accrual accounting
B) Accrual accounting, modified accrual accounting
C) Accrual accounting, accrual accounting
D) None of the above
17) When a payment is due to a contractor from capital projects fund resources, the
debit would be to:
A)A capital asset account
B)Encumbrances Control
C)Expenditures-Capital Outlay
D) None of the above, no entry is made until payment
18) Which of the following is a governmental audit type that has a primary concern
with providing reasonable assurance about whether financial statements are presented
fairly?
A)Attestation Engagement
B)Performance Audit
C)Nonaudit services
D)Financial Audit
19) A government incurred expenditures for its infrastructure as follows: $20 million
for general repairs; $22 million to extend the life of existing infrastructure; $21 million
for improvements and additions. If depreciation is to be charged, the amount would be
$23 million. Which of the following would be True?
A)If the government chose to use the modified approach to record infrastructure, the
amount to be charged as expense would be $42 million
B)If the government chose not to use the modified approach to record infrastructure, the
amount to be charged to expense would be $43 million
C)Both A and B
D)None of the above
20) Which of the following is True regarding the proprietary fund financial statements?
A)The proprietary fund financial statements include the Statement of Net Position, the
Statement of Revenues, Expenses, and Changes in Fund Net Position, and the
Statement of Cash Flows
B)The proprietary funds include enterprise, internal service, and permanent funds
C)Both (A) and (B) are True
D)Neither (A) nor (B) is True
21) Which of the following student tuition or fee reductions should be listed as a
reduction in revenue?
A) Graduate Assistantships
B) Athletic or Academic Scholarships
C) Work-Study Programs
D) None of the Above
22) Governmental units use which fund type to account for services provided to the
general public on a user-charge basis?
A)General Fund
B)Internal service fund
C)Permanent fund
D)Enterprise fund
23) When preparing financial statements, the internal portion of investment pools would
be reported under which fund?
A)Investment trust fund
B)Private purpose trust fund
C)Permanent fund
D) The fund(s) providing the resources
24) The term opinion unit refers to which of the following:
A) A division of a CPA firm
B)A state or local government together with its component units
C)A level of reporting of a government that requires a separate materiality level
D)One of the four statements required in the second paragraph of an unqualified audit
opinion
25) Prepare entries in general journal form to record the following transactions in
General Fund general ledger accounts for fiscal year 2015 . Use modified accrual
accounting.
(a)The legal budget for the year provided for $5,000,000 of estimated revenues and
$4,960,000 appropriations.
(b)Assume there are $ 210,000 of purchase orders outstanding at the end of last year
and that these will be honored in the current year. Prepare the entries to re-establish the
encumbrance.
(c)Property taxes were levied in the amount of $3,300,000. It is estimated that 2 percent
of the taxes will never be collected.
(d)Purchase orders were issued for equipment and supplies in the amount of
$4,000,000.
(e)Supplies, relating to all of the prior year purchase orders ($210,000), were received
along with invoices amounting to $207,000.
(f)Collections of current property taxes amounted to $2,950,000. The uncollected taxes
recorded as delinquent.
(g)It was estimated that $210,000 in property taxes would be collected in the first 60
days of 2015 and that $160,000 would be collected in later periods.
26) In order for a fund to exist, there must be:
A)A fiscal entity; assets set aside for a specific purpose
B)A double-entry accounting entity
C)A & B are optional and not required
D)Both A & B are required
27) A tax-exempt organization is required to pay income taxes on
A)Profit that is earned
B)Investment gains or losses
C)Unrelated business income
D)Contributions received
28) A donor gave artwork to a nongovernmental, not-for-profit museum. The artwork
qualified as a collection, under FASB rules. The not-for-profit could:
A)Record the artwork at its fair market value at the time of receipt as an increase in
permanently restricted net assets
B)Not record the artwork, but provide information about the artwork in the notes
C)Do either of the above, depending upon the policy of the not-for-profit
D)Record the artwork as both a contribution and an expense
29) The difference between the financial statements of private not-for-profit hospitals
and privatenot-for-profit voluntary health and welfare organizations is:
A)Voluntary health and welfare organizations do not have to prepare a Statement of
Cash Flows
B)Hospitals do not have to prepare a Statement of Functional Expense
C)Both (a) and (b) above
D)Neither (a) nor (b) above
30) Which of the following is True regarding fiduciary fund financial statements?
A)Fiduciary fund financial statements include the Statement of Fiduciary Net Position,
the Statement of Changes in Fiduciary Net Position, and the Statement of Cash Flows
prepared on the direct method
B)Fiduciary fund financial statements are prepared on the current financial resources
measurement focus and modified accrual accounting
C)Both (A) and (B) are True
D)Neither (A) nor (B) is True
31) Indicate which of the following would not be an example of an internal service
fund:
A)City Self-Insurance Fund
B)City Print Shop
C)City Airport
D)City Data Processing Service Center
32) Which of the following is True with respect to public four-year higher education
institutions (public colleges)?
A)Revenue sources for public colleges include tuition and fees, state appropriations and
donations. All other income is reported as unrelated business income
B)Many institutions have most of their restricted resources managed by related entities,
known as foundations
C)No public colleges have the power to issue debt; it must be issued by the state as
general obligation debt
D)Public colleges may not choose to report as special-purpose entities engaged only in
business-type activities
33) The general ledger journal entry in the General Fund to record actual expenditures
and reversal of the associated encumbrance would include:
A) A debit to Encumbrance Control
B)A credit to Encumbrance Control
C)A debit to Accounts payable
D)A credit to Budgetary Fund Balance-Reserve for Encumbrances
34) Private universities follow the authoritative standards of _____ and use the _____
basis of accounting.
A) FASB, Accrual
B) FASB, Modified-accrual
C) GASB, Accrual
D) GASB, Modified-accrual
35) Contributed services are recognized as revenue for a private not-for-profit when the
service:
A)Is related to administration and fund raising activities
B)Requires specialized skills, is provided by someone possessing those skills, and
typically would be purchased if not provided by donation
C)A and B are both required for the service to be recorded as revenue
D)None of the above, contributed services are not recorded as revenue
36) Which of the following statements is not correct with respect to Agency Funds?
A)Agency funds use modified accrual accounting
B)Assets accounted for in an agency fund belong to the party or parties for which the
government acts as agent
C)Assets are offset by an equal amount of liabilities
D)Assets and liabilities are recognized at the time the government becomes responsible
for the assets
37) Which of the following is True regarding pension accounting and reporting forstate
and local governments?
A)When the General Fund makes a contribution to a pension trust fund, the account
Expenditures is debited
B)The Statement of Changes in Fiduciary Net Position reports additions and
deductions, computed on the accrual basis
C)Both of the above
D)Neither of the above
38) Funds other than the General Fund must be considered a major fund when
A)Total assets, liabilities, revenues, or expenditures/expenses of that fund constitute 10
percent of either the governmental or enterprise category
B)Total assets, liabilities, revenues, or expenditures/expenses of that fund are 5 percent
of the total of the governmental and enterprise category
C) Conditions of either A or B exist
D) Conditions of both A and B exist
39) A private sector not-for-profit hospital received a gift of $250,000 cash on the first
day of 2015 with a donor restriction that the resources be used to purchase certain
equipment. The equipment was purchased on the same day and is expected to last five
years with no salvage value. The Statement of Financial Position as of December 31,
2015 would reflect as net assets of:
A)$200,000 unrestricted and $0 temporarily restricted
B)$0 unrestricted and $200,000 temporarily restricted
C)Either (a) or (b), depending on the policy of the hospital
D)None of the above
40) Which of the following is True regarding the governmental fund statements?
A)The governmental fund statements include a Statement of Cash Flows prepared on
the direct method
B)The governmental fund statements are prepared using the economic financial
resources measurement focus and modified accrual accounting
C)Both (A) and (B) are True
D)Neither (A) nor (B) is True
41) Where is the net pension liability shown in a Comprehensive Annual Financial
Report for employees in governmental type activities?
A)The Statement of Fiduciary Net Position
B)The government-wide Statement of Net Position
C)Both A and B
D)Neither A nor B
42) Which of the following contributed services would probably not be recognized as
contribution revenue?
A)An attorney donates her services to defend the Girl Scouts in a lawsuit
B)A nurse donates her time to collect blood at an American Red Cross blood drive
C)An electrician donates his services to upgrade the electrical service at a mental health
clinic
D)State CPA society members hand out informational booklets at a shopping mall
43) The use of opinion units allows the auditor to
A)Provide different opinions on different components of the reporting entity
B)Only allow one opinion for entire entity not its components
C)Plan the audit better and increase the effectiveness of substantive procedures
D)Eliminate the need for Test of Controls
44) When a government acquires general fixed assets under a capital lease agreement,
the asset should be recorded in the General Funds fund basis financial statements:
A)As a capital asset and lease obligation at the inception of the lease agreement at the
lesser of the present value of the minimum lease payments or the fair market value of
the property
B)as an expenditure when payments are made
C)As a capital asset and lease obligation at the inception of the lease agreement for the
total lease payments
D)as an expense when payments are made
