The following cash transactions were among those reported by Genesee County’s
Wastewater Enterprise Fund for the year:
Proceeds from sale of revenue bonds for construction $5,000,000 Interest income
300,000 Capital contributed by developers 1,000,000
A. $5,000,000.
B. $5,300,000.
C. $5,300,000.
D. $6,300,000.
A good measure of whether a not-for-profit organization is operating its programs
efficiently is:
A. Fund-raising expenses as a percentage of public support.
B. The ratio of program expenses to number of clients served.
C. Total revenues divided by total expenses.
D. Percentage of program expenses to total expenses.
All of the following are appropriate benchmarks for a state or local government to use
as a basis for comparing performance except
A. A government’s own operating results and financial position from prior years.
B. International City/County Management Association’s Financial Trend Monitoring
System results for governments of similar types and size.
C. Federal agencies’ financial information for a comparable time period.
D. Socioeconomic and demographic trends of governments of similar types and size
available from U.S. Census Bureau.
Which of the following assets would appropriately be reported on the governmental
funds balance sheet?
A. Capital assets.
B. Inventories.
C. Unamortized debt issuance costs.
D. Goodwill. Unamortized debt issuance costs.
Which of the following terms is defined as determining whether current-year revenues
are sufficient to pay for current-year services and whether future taxpayers will be
required to assume the burdens of services previously provided?
A. Financial position.
B. Interperiod equity.
C. Financial condition.
D. Economic condition.
Cash receipts and cash disbursement budgets for a government:
A. Should be prepared for all funds for the entire fiscal year.
B. Should be prepared monthly or as needed to enhance cash management, investment
management, and short-term debt management.
C. Should be prepared for only those funds for which appropriations budgets are
required by law to be prepared on the accrual basis or the modified accrual basis.
D. Should be prepared for only those funds for which appropriations budgets are not
required by law.
The primary source of revenue for most hospitals is:
A. Nonexchange transactions, such as contributions.
B. Exchange transactions, such as fees for services.
C. Investment income.
D. Capitation fees from health maintenance organizations.
The following items were included in Castle City’s General Fund expenditures for the
year ended June
Personal computer for the city treasurer $6,000 Furniture for the mayor’s office $20,000
How much should be classified as capital assets in Castle City’s government-wide
statement of net position at June 30?
A. $ 0.
B. $ 6,000.
C. $20,000.
D. $26,000.
Which of the following funds is a governmental fund-type?
A. Private-purpose trust fund.
B. Internal service fund.
C. Permanent fund.
D. Enterprise fund.
Four new computers, for which the cost exceeded the city’s capitalization threshold,
were purchased for use in the city clerk’s office using General Fund resources. Which of
the following entries would be required to completely record this transaction?
A. General Journal Debit Credit General Fund: Expenditures 8,000 Vouchers Payable
8,000
B. General Journal Debit Credit Governmental Activities: Expenses 8,000 Vouchers
Payable 8,000
C. General Journal Debit Credit General Fund: Expenditures 8,000 Vouchers Payable
8,000 Governmental Activities: Expenses 8,000 Vouchers Payable 8,000
D. General Journal Debit Credit General Fund: Expenditures 8,000 Vouchers Payable
8,000 Governmental Activities: Equipment 8,000 Vouchers Payable 8,000
A general capital asset constructed several years ago by a capital projects fund was sold
by the General Fund. Entries are necessary in the:
A. General Fund only.
B. General Fund and the capital projects fund.
C. General Fund and governmental activities.
D. Governmental activities only.
Which of the following should be accounted for in an enterprise fund?
A. $65,000.
B. $415,000.
C. $1,250,000.
D. $1,315,000.
In which of the following would it not be appropriate to record depreciation of capital
assets?
A. Capital projects fund.
B. Internal service fund.
C. Business-type activities.
D. Governmental activities.
Economic rationality would argue against a university accepting a split-interest
agreement in which a fixed annuity is payable to the donor if:
A. The donor has attached conditions to the gift.
B. The university has no immediate need for the assets.
C. The sum of future annuity payments plus interest thereon exceeds the fair market
value of the assets.
D. The present value of the future annuity payments and other liabilities exceed the fair
market value of the assets.
Which of the following federal financial statements relies primarily on the use of
actuarial assumptions and long-range projections for the information reported on the
statement?
A. Balance sheet.
B. Statement of social insurance.
C. Statement of custodial activity.
D. Statement of fiduciary net assets.
Which of the following statements concerning the Patient Protection and Affordability
Act (also known as the Affordable Care Act) is true?
A. Since the Act primarily focuses on the insurance industry there is little impact on
health care accounting.
B. Since the Act is a federal law it only affects governmental health care facilities.
C. Since all portions of the Act have only recently been enacted the full impact on
health care accounting is unknown.
D. The Act will have no impact on a nongovernmental hospital’s Internal Revenue
Service filing of the Form 990, since the Act is not under the oversight of the Internal
Revenue Service.
The liability for general obligation bonds should be recorded in the:
A. General Fund.
B. Capital projects fund.
C. Governmental activities journal.
D. Debt service fund.
A recognizable signal of fiscal stress is:
A. Total revenues from own sources increasing as a percent of total revenues for all
sources.
B. Increasing population.
C. Declining property values.
D. An increasing ratio of total revenues to total expenditures.
Political culture, such as attitudes towards taxes, is an example in the ICMA’s Financial
Trend Monitoring Systems of:
A. Environmental factors.
B. Organizational factors.
C. Financial factors.
D. Management practices and legislative policies.
Which of the following activities would most appropriately be recorded by an agency
fund?
A. Donations collected for improvements to the public library.
B. Deposits held for customers of a municipal-owned electric utility.
C. Taxes collected by a county government on behalf of cities within the county.
D. Assets held for college scholarships to be awarded to the children of police officers.
A certain federal agency placed an order for office supplies at an estimated cost of
$14,400. Later in the same fiscal year these supplies were received at an actual cost of
$14,800. Assume commitment accounting is not used by this agency. At the time the
order is received, what is the net effect on the budgetary and proprietary track accounts?
A. Budgetary Accounts: $14,400; Proprietary Accounts: $14,400.
B. Budgetary Accounts: $14,400; Proprietary Accounts: $14,800.
C. Budgetary Accounts: $400; Proprietary Accounts: $14,800.
D. Budgetary Accounts: $0; Proprietary Accounts: $14,800.
Billing and collection of special assessments and payment of debt principal and interest
on special assessment debt for which the city is not obligated in any manner should be
recorded in a(an):
A. Debt service fund.
B. Special assessment fund.
C. Capital projects fund.
D. Agency fund.
Which of the following trends is most likely to be a signal of impending fiscal stress?
A. An increasing ratio of own source revenues to total revenues.
B. A decreasing ratio of total revenues to total expenditures.
C. A decreasing ratio of debt service expenditures to operating revenues.
D. A decreasing ratio of operating expenditures to total revenues.
When equipment that is to be used by the General Fund is received, how should it be
recorded?
A. Capital Asset.
B. Appropriation.
C. Encumbrances.
D. Expenditure.
Government-wide financial statements present the government’s financial position
using the:
A. Financial resources measurement focus and the accrual basis of accounting.
B. Economic resources measurement focus and the accrual basis of accounting.
C. Current financial resources measurement focus and the modified accrual basis of
accounting.
D. Current financial resources measurement focus and the cash basis of accounting.
Which of the following financial statement(s) reports both current and noncurrent assets
and liabilities?
Government-wide Statement of Net Position General Fund Balance Sheet
A. Choice A
B. Choice B
C. Choice C
D. Choice D
Which of the following governmental funds must be reported as a major fund?
A. The General Fund.
B. Any fund with total assets, liabilities, revenues, or expenditures that are 10% or more
of the General Fund and 5% or more of total General Fund and Business-type
Activities.
C. The government may opt to include or exclude any fund it choses as a major fund.
D. Only the General Fund and special revenue funds that meet the 10% and 5% size
criteria.
The purpose of an attestation engagement may include all of the following, except:
A. Expressing an opinion on whether the subject matter examined is in conformity with
recognized criteria.
B. Expressing a conclusion about whether any information came to the attention of the
auditor indicating that the subject matter reviewed is not based on recognized criteria.
C. Providing an agreed-upon procedure report on an assertion about a subject matter.
D. Providing a due diligence report on compliance with laws and regulations.
On May 1, the City of Dustin was notified of approval of a $300,000 federal operating
grant, payable on a reimbursement basis as the city expends resources for the intended
purpose of the grant. As of May 1, no expenditures had been made for grant purposes.
The journal entry to record approval of this grant will include:
A. A credit to Revenues in the amount of $300,000.
B. A credit to Deferred Inflow of Resources- Grant Proceeds in the amount of $300,000.
C. A debit to Grants Receivable in the amount of $300,000.
D. No journal entry will be made until expenditures for the authorized purpose occur.
Generally accepted government auditing standards (GAGAS):
A. Establish the same scope as GAAS, but use wording appropriate to governmental
entities instead of business organizations.
B. Are set forth in the Federal Government Compliance Supplement.
C. Establish more standards that are broader in scope than those found in GAAS.
D. Establish standard wording of auditor’s reports on governmental financial
statements.
At the end of the 2017 fiscal year the General Fund had $500 in encumbrances that
remained opened into fiscal year 2018. In 2018 the encumbered goods were received at
an invoiced cost of $520. How much would be recorded as the 2018 expenditure?
A. $0.
B. $20.
C. $500.
D. $520.
A common approach to budgeting line-items whereby the current year’s budget is
constructed by adding or subtracting amounts expected to be required by line items is:
A. Performance budgeting.
B. Zero-based budgeting.
C. Program budgeting.
D. Incremental budgeting.
If a governmental fund issues debt to finance a capital acquisition, how should the
proceeds of the debt be recorded?
A. Long-term liability.
B. Revenue.
C. Other financing source.
D. Not reported by the governmental fund; only reported at the government-wide level.
Under the modified accrual basis of accounting, revenues should be recognized when
A. Earned.
B. Collected in cash.
C. Authorized by the budget ordinance.
D. Measurable and available.