1) Government-wide statements are to be prepared using the current financial resources
measurement focus and modified accrual basis of accounting.
2) FASB requires that the reconciliation of income and cash flows from operations
starts with operating income.
3) When using the modified approach to account for infrastructures, expenditures to
extend the life of the infrastructure assets are expensed.
4) Fund accounting exists primarily to provide assurance that resources are used
according to legal or donor restrictions.
5) When a special revenue fund accounts for grants that are awarded on a
reimbursement basis, revenues are recognized only after qualified expenditures have
been recognized.
6) Encumbrances are recorded when a purchase order is filled or a contract is executed.
7) No public colleges have the power to issue debt; it must be issued by the state as
general obligation debt.
8) The General Fund is always a major fund for purposes of financial reporting.
9) A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be
used to maintain the city war memorials should be accounted for in a special revenue
fund.
10) While many private not-for-profit organizations use funds for internal purposes, the
financial statements do not report separate funds.
11) Proprietary funds are required to prepare a Statement of Cash Flows from operating
activities using the direct method.
12) An acceptable alternative to the Statement of Activities for a private college or
university is to present a Statement of Unrestricted Revenues, Expenses and Other
Changes in Unrestricted Net Assets and a Statement of Changes in Net Assets.
13) Every general purpose government may have more than one General Fund.
14) The
15) An encumbrance in a capital project fund is created when the contract for the work
is signed or issued.
16) The only objective of the Governmental Accounting Standards Board is to help
users determine compliance with finance-related laws, rules, and regulations.
17) The Government Accountability Office has authority for issuing Generally
Accepted Auditing Standards.
18) Which of the following groups would not be considered a component unit of a
special-purpose government, for the purposes of applying GASB Statement 39:
Determining Whether Certain Organizations Are Component Units?
A)A university foundation
B)A hospital auxiliary
C)A museum foundation
D)A high school band booster club
19) Inter fund transfers occur between individual funds in the same government system
without the requirement of repayment. If the General Fund transferred money to the
Debt Service Fund, how would the Debt Service Fund account for the transaction?
A) As non-operating revenue
B) As a liability on the balance sheet
C) As a source of funds on the activities statement
D)As a reduction in net liabilities
20) Which of the following accounts are used to display the difference between assets
and liabilities in a federal agency Balance Sheet?
A)Unrestricted Net Position, Restricted Net Position, and Net Investment in Capital
Assets
B)Unassigned, Assigned, Committed, Restricted and Nonspendable fund balance
C)Unrestricted, Temporarily Restricted, and Permanently Restricted Net Assets
D)Unexpended Appropriations and Cumulative Results of Operations
21) When preparing government-wide financial statements, the modified accrual basis
governmental funds are adjusted for all of the following events except?
A)Change in current assets and current liabilities from year to year
B)Long-term debt related events
C)Internal service fund activities
D)Interfund activities
22) Assume a federal agency places orders for contracted services supporting a federal
program. The journal entries at the agency level to record this event will include:
A)a debit to the account Allotments
B)a credit to the account Obligations Undelivered Orders
C)Both (a) and (b)
D)Neither (a) nor (b)
23) Which of the following is not a condition for recording donated services?
A)The individual providing the service provides an invoice detailing the hours
contributed but waives the requirement for payment
B)The service requires a specialized skill and the donor possesses those skills
C) The service would have been paid for if not donated
D)The service creates or enhances a non-financial asset
24) According to GASB Statement 34, restricted net assets are those that are the result
of constraints from:
A)Imposed by law though constitutional provisions
B)Imposed by enabling legislation
C)Imposed by creditors or grantors
D)All of the above
25) Which of the following is not an example of an Enterprise Fund?
A) Electric and Water Utilities
B)Public Libraries
C) Sports Stadiums
D)All of the above are commonly reported as enterprise funds
26) Which of the following is not required in a federal agencys financial report?
A)Statement of Budgetary Resources
B)Statement of Changes in Net Position
C)Statement of Cash Flows
D)Balance Sheet
27) The document often relied on for financial analysis by investors and creditors for
bonds in the secondary market is:
A)The official statement issued by the government issuing the bonds
B)The comprehensive annual financial report
C)An analysis prepared by the government’s auditor
D)None of the above
28) Private colleges are required to report net assets in the following categories:
A)Unrestricted and Restricted
B)Temporarily Restricted , Permanently Restricted and Unrestricted
C)Unrestricted, Temporarily Restricted and board designated
D)Restricted, Unrestricted and Temporarily Restricted
29) Which of the following adjustments would be made when moving from the
governmental funds balance sheet to the governmental activities column in the
government-wide Statement of Net Position?
A)Add balances of internal service fund assets and liabilities
B)Add beginning capital assets, net of depreciation
C)Both of the above
D)Neither of the above
30) St. Davids is a not-for-profit business-oriented hospital. What is the journal entry
for the following transaction: Cash was received for pledges made in the prior year in
the amount of $85,000. That amount has been recorded as temporarily restricted net
assets, based on time restrictions.
A)Cash85,000
Contributions receivable85,000
Reclassification from Temporarily Restricted Net Assets-
Expiration of Time Restrictions85,000
Reclassification to Unrestricted Net Assets Expiration
of Time restrictions85,000
B)Cash85,000
Contributions receivable85,000
Reclassification to Unrestricted Net Assets – Expiration
of Time Restrictions85,000
Reclassification from Temporarily Restricted Net Assets
Expiration of Time restrictions85,000
C)Contributions Receivable-Unrestricted85,000
Contributions Receivable Restricted85,000
Cash85,000
Contributions receivable-Unrestricted85,000
D)Cash85,000
Contribution Revenue Unrestricted85,000
31) Under GASB Statement 34, enterprise funds must be used in which of the following
circumstances?
A)When debt is backed solely by fees and charges
B)When services are provided to other governmental units for a fee
C)When the activities are expected to make a profit to be used to fund other
government programs
D)None of the above; enterprise funds are optional
32) Which of the following steps in the budgetary authority process occurs when
Congress passes a spending bill which is signed by the President?
A)Apportionment
B)Appropriation
C)Allotment
D)Obligation
33) A federal agency prepared the following schedule showing the status of federal
appropriations at the end of the first quarter:
What is the total amount allotted to subunits or programs within the agency during the
first quarter of the year?
A)15,000
B)45,000
C)190,000
D)200,000
34) Which of the following is/are True regarding Capital Projects Funds?
A) A major source of funding for capital projects funds is the issuance of long-term debt
B) Capital project funds only exist for the duration of the project for which it is created
C) Capital Project funds use the Modified Accrual Basis of Accounting
D) All of the above are True
35) To compute the Financial Position-General Fund ratio, one would need to look in
the CAFR for the:
A)Governmental funds Balance Sheet
B)Governmental funds Statement of Revenues, Expenditures, and Changes in Fund
Balances
C)Both A and B above
D)Neither A nor B above
36) At the inception of a capital lease agreement for a piece of equipment used in
governmental operations,
A) A liability is incurred and reported in the governmental fundsbalance sheet
B) A liability is incurred and reported in the government-wide financial statements
C) An expenditure is recorded in the governmental fund
D) Both B and C
37) Under modified accrual accounting, revenues are recognized when measurable and:
A)Available
B)Collected
C)Earned
D)Expenditures have been made
38) Debt service funds use the same measurement focus and basis of accounting as:
A)Internal service funds
B)Special revenue funds
C)Both (a) and (b)
D)None of the above
39) When payrolls and other liabilities are incurred and must be paid before substantial
amounts of cash will be collected, what type of short-term note is desirable and secured
by a government’s power to tax?
A)Tax Relief Note Payable
B)Tax Budget Note Payable
C)Tax Anticipation Note Payable
D)Tax Encumbrances Note Payable
40) Which of the following sections of the CAFR is audited?
A) Introductory section
B) Financial section
C) Statistical section
D) Management Discussion and Analysis section
41) The journal entry to record the property tax levy for a municipality would include:
A)A debit to Bad Debts Expense
B)A credit to Estimated Uncollectible Current Taxes
C)A credit to Taxes Receivable Current
D)A and B would both be included in the journal entry
42) Which of the following is True regarding accounting and financial reporting for
not-for-profit health care organizations?
A)Charity care is reported as operating revenue at the normal and customary rate and
bad debt expense is reported for an equal amount
B)Contractual adjustments with insurance companies are reported as a reduction in
patient service revenue
C)Both (a) and (b) above
D)Neither (a) nor (b) above
43) A)Financial Accounting Standards Board
B)Governmental Accounting Standards Board
C)American Institute of Certified Public Accountants
D)National Association of College and University Business Officers
44) Record the following transactions on the books of St. Maries Hospital, a private
not-for-profit hospital.
(a)The Hospital billed patients $612,000 for services rendered. Of this amount, 4.5% is
expected to be uncollectible. Contractual adjustments with insurance companies are
expected to total $87,000.
(b)The Hospital received $500,000 in pledges of support in a campaign undertaken to
purchase new MRI equipment. All of the pledges are payable within one year and 8%
are expected to be uncollectible.
(c)Charity care in the amount of $36,000 (at standard charges) was performed on an
indigent patient.
(d)The Hospital collected $487,200 for the services performed in (1) above. Actual
contractual adjustments for these services amounted to $89,700. $ 15,900 of receivables
were identified as uncollectible and written off.
45) To compute the net debt per capita, a user of financial statements would need to
lookat (in the CAFR):
A) The government-wide Statement of Net Position and the population from the
statistical section
B)The debt and the amount available to pay that debt in the governmental funds
Balance Sheet, and the population from the statistical section
C)The debt in the governmental funds Balance Sheet, the amount available in the
government-wide Statement of Net Position, and the population from the statistical
section
D)The debt in the government-wide Statement of Net Position, the amount available to
pay that debt in the governmental funds Balance Sheet, and the population from the
statistical section
46) If a donor were to contribute money with instructions that the funds be invested for
a period of time and then released to be used for any purpose, this would be called a(n):
A)Permanent endowment
B)Quasi-endowment
C)Term endowment
D)Unrestricted endowment