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1) Universities treat athletic scholarships as a reduction in revenue.
2) The Comprehensive Annual Financial Report (CAFR) contains four major sections:
introductory, financial, supplementary, and statistical.
3) Private-purpose Trust Funds benefit individuals, private organizations, or other
governments.
4) Debt margin is the difference between the amount of debt limit outstanding and the
amount of indebtedness allowed by law.
5) The modified accrual basis is a distinct system of accounting that contains financial
statement elements that appear nowhere else.
6) When purchase orders are filled and the invoice amount differs from the estimated
amount, the amount recorded as an expenditure corresponds to the invoice amount.
7) FASB Statement 124, Accounting for Certain Investments of Not-for-Profit
Organizations, requires investments by a not-for-profit in debt securitiesandequity
securities to be carried at fair value.
8) Governments may choose either to depreciate infrastructure assets or use the
modified approach.
9) When establishing funds, governments should attempt to have a large number of
special revenue and other funds to provide the user with maximum detail to understand
the transactions.
10) A Non-exchange transaction is one in which a government receives value without
directly giving equal value in exchange.
11) Which account would be debited when the City of Corfuissued purchase orders for
materials and supplies?
A) Budgetary Fund Balance -- Reserve for Encumbrance
B) Expenditures
C) Encumbrances Control
D) Materials and supplies expense
12) Which of the following is True?
A)Tuition and fees charged are included in income and the fees waived for graduate
assistants are expensed
B)Scholarship allowances for which no services are required are expensed
C)Fees waived for graduate assistantships for which services are required are deducted
directly from tuition revenue
D)Revenues for summer sessions are recorded in deferred revenues and recorded as
revenue when the semester ends
13) Which of the following items are added to government-wide financial statements
through worksheet journal entries?
A) General Capital Assets
B) General Long Term Debt
C) Internal Service Funds servicing governmental departments
D) All of the above
14) Restricted Net Position for a proprietary fund is:
A)Net resources whose use is restricted by users of the services
B)Reported net of depreciation
C)Reported net of accumulated depreciation and any outstanding debt used to acquire
the asset
D)Net resources whose use is restricted by creditors, grantors or laws or regulations of
other governments
15) Which of the following is an example of a temporarily restricted revenue?
A) Tuition and fees
B) Contribution for plant acquisition
C) Auxiliary enterprises
D) Quasi- Endowment
16) A city government collects local option sales taxes legally restricted to pay for the
hiring of teachers for hearing impaired school children. Which fund should account for
the receipt of the sales taxes?
A)Special revenue fund
B)Capital projects fund
C)Private-purpose trust fund
D)General fund
17) FASB statement 116 requires contributions to be recorded as revenue when
A) The contribution is promised
B) The contributed asset is actually received
C) The contribution is likely to be received
D) The contribution is probable and measurable
18) Private not-for-profit health care organizations follow standards set by:
A) GASB
B) FASB
C) SEC
D) All of the above
19) Which of the following is an area of concern by the IRS with respect to tax-exempt
organizations?
A)Cost allocations
B)Excess executive compensation
C)Organizations operating out of their tax-exempt purpose
D)All the above
20) The following are sources of funds for the debt service fund except:
A) Tax levies specifically designed for debt service
B) General taxes levied by the General Fund and transferred to the debt service fund
C) Special assessments levied against property
D) All of the above are sources of funds for the debt service fund
21) According to GASB Statement No. 54 which of the following is an example of a
non spendable fund balance?
A)Resources (such as supplies) that are used in operations rather than converted to cash
B)The corpus of a permanent fund that may not be spent
C)Prepaid insurance
D)All of the above
22) In 2015, a major drug company agreed to give a not-for-profit private college
$2,100,000 to perform testing of a new drug. An advance payment of $700,000 was
received in 2015 . The college was to receive $7,000 per individual test. In 2015, the
college completed 100 tests. How much revenue should the college report for 2015?
A)$ - 0 -
B)$ 400,000
C)$ 700,000
D)$1,700,000
23) The FASB has the authority to set accounting standards for all of the following
organizations except:
A)Political parties
B)City owned hospital
C)For profit hospitals
D)Trade associations
24) All of the following are True about proprietary funds EXCEPT:
A) They include Internal Service Funds and Enterprise Funds
B)A Statement of Cash Flows is required in accordance with FASB standards
C)The economic resources measurement focus is used
D) Accrual accounting is used as the basis of accounting
25) Which of the following is True regarding fiduciary funds?
A)Fiduciary funds are reported in the fiduciary fund financial statements but not in the
government-wide financial statements
B)Agency funds would be reported in both the Statement of Fiduciary Net Position and
the Statement of Changes in Fiduciary Net Position
C)Both of the above
D)Neither of the above
26) In addition to a Statement of Net Position and Statement of Revenues, Expenses
and Changes in Fund Net Position, which of the following statements is (are) required
for proprietary funds?
A)Statement of Cash Flows
B) Budgetary Comparison Schedule
C) Both A and B above
D)Neither A nor B above
27) The City of Pine Cove levied property taxes for the fiscal year ended June 30, 2015,
in the amount of $10,000,000. It is estimated that 2% will not be collected. During the
year ended June 30, 2015, $8,500,000 in property taxes was collected. It is estimated
that $550,000 will be collected during the next 60 days, $765,000 will be collected after
60 days, and $185,000 will not be collected. What is the maximum amount Lonesome
Pines can recognize as property tax revenue for the fiscal year ended June 30, 2015, in
its Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund
Balances, assuming there were no unpaid property taxes at the end of the previous year?
A)$8,500,000
B)$9,050,000
C) $9,815,000
D)$10,000,000
28) The City of DeKalb contributes to three pension plans: (1) a statewide pension plan
for nonuniformed personnel, (2) a locally administered plan for police officers, and (3)
a locally administered plan for firefighters. The City is trustee for the plans for police
officers and firefighters. Which of the following is True?
A)The City would maintain trust funds for the police and fire plans but not the
statewide plan
B)When making contributions from General Fund resources to the police and fire plans,
the General Fund would debit Other Financing Sources-Transfers Out and the Pension
Trust Fund would credit Transfers In
C)Both of the above
D)Neither of the above
29) Which of the following is True regarding the government-wide financial
statements?
A)The government-wide financial statements include the Statement of Net Position and
the Statement of Activities
B)The government-wide financial statements are prepared using the current financial
resources measurement focus and the modified accrual basis of accounting
C)Both of the above
D)Neither of the above
30) Which of the following is True regarding the government-wide Statement of
Activities?
A)Program revenues include charges for services, operating grants and contracts,
capital grants and contracts, and taxes levied for specific purposes
B)The accrual basis of accounting is used to calculate revenues and expenses
C)Both of the above
D)Neither of the above
31) Which of the following is True regarding the Statement of Cash Flows for a public
college?
A)A reconciliation is required, reconciling operating income in the Statement of
Revenues, Expenses, and Changes in Net Position to the cash flows provided (used) by
operating activities
B)Cash purchases of capital assets are reported as outflows in the capital related
financing activities section
C)Both A and B are True
D)Neither A nor B is True
32) 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 .
What would be the amount of expenditures recorded by the debt service fund for the
fiscal year ended December 31, 2016?
A)$440,000
B)$324,000
C)$320,000
D)$120,000
33) A government entered into a capital lease agreement to acquire equipment for the
general government on January 1, 2015 . Five payments of $9,000 each are to be made,
beginning on December 31, 2015 . Discounting is at 6%, computed annually. The
present value of the five payments is $37,911.
Which of the following would be True as of January 1, 2015?
A)An entry would be made debiting Expenditures and crediting Other Financing
Sources-Capital Leases in a governmental fund, both in the amount of $45,000
B)An entry would be made debiting Equipment and crediting Capital Leases Payable in
a governmental fund, both in the amount of $37,911
C)An entry would be made debiting Capital Expenditure and crediting Capital Leases
Payable in a governmental fund, both in the amount of $37,911
D)An entry would be made debiting Expenditures and crediting Other Financing
Sources-Capital Leases in a governmental fund, both in the amount of $37,911
34) When the materials and supplies are received and the invoice is more than the
related purchase order, this entry should be made:
A) Debit Expenditures Control for the amount of the invoice
B) Debit Expenditures Control for the amount of the purchase order
C) Credit Accounts Payable for the amount of the purchase order
D) Credit Encumbrances Control for the amount of the invoice
35) Which of the following fundsis used to accountfor the external portion of
investment pools?
A)Special Revenue Fund
B)Investment Trust Fund
C)Enterprise Fund
D)Private-purpose Trust Fund
36) Which of the following is correct with respect to the recording of charity care for
health care organizations?
A)Revenues are not recorded for the value of charity care services provided, but related
expenses are included with other expenses on the Statement of Operations
B)Charity care is recorded as revenue and an adjustment is recorded for the difference
between the value of the revenue and expenses incurred in providing health care
services
C)The value of foregone charity care revenue is deducted as a charitable contribution
expense in the Statement of Operations
D)Managements policy for providing charity care and the level of charity care provided
is an optional disclosure
37) Capital project funds
A) Receive all of their money from tax revenues
B)Exist only for the duration of the project for which they are created
C) Record debt issuances as revenues
D) all of the above
38) General fixed assets that are acquired with governmental fund resources are
reported as assets in the:
A)General Fund
B)Capital Projects Fund
C)General Fund or Capital Projects Fund, depending upon which fund provided the
resources
D)None of the above
39) Which of the following is considered Required Supplementary Information (RSI)?
A)Management's Discussion and Analysis
B)Budgetary Comparison Schedule
C)Schedule of Risk Management Activities
D)All of the above are considered RSI
40) When supplies ordered by a governmental unit are received at an actual price which
is less than the estimated price on the purchase order, the Encumbrance Control account
is:
A)Credited for the actual price on the purchase invoice
B)Credited for the original estimated price for the supplies
C)Debitedfor the original estimated price for the supplies
D)Debitedfor the actual price on the purchase invoice
41) Notre Dame University, a private institution, has level A GAAP established by the:
A)American Institute of Certified Public Accountants
B)Governmental Accounting Standards Board
C)National Association of College and University Business Officers
D)Financial Accounting Standards Board
42) What is the difference between reciprocal inter fund activity and nonreciprocal inter
fund activity?
43) Define the term Expenditure and distinguish between that term and each of the
following terms:
1>Expense
2>Disbursement
3>Encumbrance
44) Describe the accounting treatment of Agency Funds, including the purpose, basis of
accounting, and required financial statements
45) Contrast the accounting and reporting of Private-purpose Trust Funds and
Permanent Funds.
46) What is the basis of accounting for hospitals and other health care organizations,
and what organizations are responsible for setting Category A GAAP?
47) What are the four types of fiduciary funds and the function of each?
48) List three examples (types) of general-purpose state or local governments and three
special-purpose local governments.
49) Contrast a defined benefit and defined contribution retirement plan.
50) What is the difference between a component unit and a special purpose local
government?
51) Describe the differences in cash flow statements required by GASB standards when
compared with cash flow statements required by FASB standards.
