1) The Financial Accounting Standards Board and the Governmental Accounting
Standards Board are parallel bodies under the oversight of the Financial Accounting
Foundation.
2) General-purpose governments are those that offer more than one type of basic
governmental service, while special-purpose entities generally provide a limited, or
single, set of programs or services.
3) Depreciation on capital assets is included as an expense in the Statement of
Revenues, Expenses, and Changes in Fund Net Position in the proprietary fund
financial statements
4) The Statement of Net Cost of a federal agency is prepared on theaccrual basis of
accounting.
5) College and universities treat uncollectible student accounts as bad debt expense.
6) Enterprise Funds and Internal Service Funds are part of the larger category of
Proprietary Funds.
7) Private, Not-for-profit Colleges and Universities and Investor-owned Schools follow
FASB standards and adhere to the accrual basis of accounting.
8) Contributions to a private not-for-profit may notbe restricted as to time, purpose or
for plant acquisition.
9) GASB standards permit exercise of judgment when determining whether a
government is general-purpose or special-purpose.
10) If a derivative is effective in reducing a governments exposure to identifiable risks,
the changes in the value of the derivative are reflected as deferred outflows or deferred
inflows in the period that the value changes.
11) If a government issues new debt, and places the proceeds in an escrow account
pending the maturity date of existing debt, the existing debt is said to be defeased.
12) Cash flows must be presented separately in the Statement of Cash Flows for the
three classes (unrestricted, temporarily restricted, and permanently restricted).
13) GASB Cash Flow Statements requires the following classification of cash flows:
Operating, Investing, and Financing.
14) Bonds which carry the full faith and credit of a government are called general
obligation bonds.
15) Service Efforts and Accomplishments Reporting is voluntary for not-for-profit
organizations.
16) Private-sector health care organizations use the three-category FASB format for the
Statement of Cash flows, while public sector organizations use the four-category GASB
format
17) Tax-exempt organizations are required to pay tax at the corporate or trust rate on the
income generated from any trade or business activities unrelated to the entitys tax
exempt purpose.
18) While the Sarbanes-Oxley Act applies to corporations filing with the Securities and
Exchange Commission, several provisions of the Act already existed in governmental
auditing standards and now are also mandated for not-for-profit organizations.
19) The portion of a permanent fund which is spendable should be reported as
Unassigned Fund Balance.
20) With respect to Government-wide financial statements, which of the following is
not required by GASB?
A)Statement of Cash Flow
B)Statement of Net Position
C)Statement of Activities
D)All of the above are required by GASB Statement 34
21) Which of the following bond types has a payment schedule in which the amount of
annual principal repayment is scheduled to increase each year by approximately the
same amount that interest payments decrease?
A)Regular
B)Deferred
C)Annuity
D)Irregular
22) A private not-for-profit entity estimated its Allowance for Contractual Adjustment.
During the next year, the hospital found that the actual total of contractual adjustments
applied to receivables on hand at the end of the previous year was $ 5,000 higher than
the estimate. How should the difference be reported?
A)The hospital should reduce current period net patient service revenues for the $5,000
B)The hospital should make a prior period adjustment to retained earnings for $5,000
C)The hospital should record a current period expense for the $5,000
D)The hospital should record a cumulative effect of a change in accounting principle
for the $5,000
23) Proprietary funds use the:
A)current financial resources measurement focus and modified accrual basis of
accounting
B)economic resources measurement focus and accrual basis of accounting
C)economic resources measurement focus and modified accrual basis of accounting
D)current financial resources measurement focus and accrual basis of accounting
24) Proceeds of tax supported bonds are recognized in a capital projects fund as a(an):
A)Revenue
B)Liability
C)Other Financing Source
D)Other Financing Use
25) Which of the following funds is not a Fiduciary Fund?
A)Investment Trust Fund
B)Private Purpose Trust Fund
C)Permanent Fund
D)Pension Fund
26) A government owned college follows whose standards?
A. FASB because GASB doesnt have standards for universities
B. GASB
C.
D. None of the above
27) A government reported the following transfers in its governmental funds Statement
of Revenues, Expenditures, and Changes in Fund Balances: (1) a transfer from the
General Fund to a special revenue fund in the amount of $500,000; (2) a transfer from
the General Fund to an enterprise fund in the amount of $400,000; (3) a transfer from
the General Fund to a permanent fund in the amount of $100,000. The amount that
would be shown as a transfer out in the governmental activities column in the Statement
of Activities would be:
A)$0; no transfer would be shown
B)$ 400,000
C)$700,000
D)$1,000,000
28) The three classes of net assets required to be presented by a private college or
university are:
A)Permanently Restricted, Temporarily Restricted, and Unrestricted
B)Reserved, Unreserved, and Undesignated
C)Net investment in capital assets, Restricted, and Unrestricted
D)Educational and General, and Auxiliary Enterprises
29) A public charity is:
A)An organization founded and operated exclusively for public safety
B)An organization that receives more than one-third of its support from a combination
of contributions, membership fees, and gross receipts from exempt activities
C)An organization operated exclusively for the benefit of a church
D)All of the above are considered to be public charities
30) Which of the following organizations would not be subject to the (level b)
accounting and reporting requirements of the
A)Discovery Museum (nongovernmental)
B)American Heart Association
C)Meals on Wheels
D)Local Farm Cooperative
31) Long-term liabilities of an enterprise fund should be reported in the:
Proprietary Fund Statements Government-Wide Statements
A) No No
B) No Yes
C) Yes No
D) Yes Yes
32) Special-purpose governments that are engaged in both governmental and
business-type activities or in more than one governmental activity are required to
include all of the following in its financial statements except?
A)Required supplementary Information
B)Fund basis financial statements
C)Government-wide financial statements
D)None of the above, these are all required
33) If bonds issued to fund a capital project are sold at a premium, the additional money
received is:
A)Recorded as Other Financing Sources Premium on Bonds in the capital projects fund
B)Transferred from the capital projects fund to the debt service fund
C)Transferred from the capital projects fund to the General Fund
D)Both A and B are correct
34) Capital assets of an enterprise fund should be reported in the:
A)Government-Wide Statement of Net Position only
B)Proprietary Fund Statement of Net Position only
C)General Fixed Asset Account Group only
D)Government-Wide Statement of Net Position and Proprietary Funds Statement of Net
Position
35) Which of the following is notan example of the function of an Agency Fund?
A)Payment of pension benefits to retired government employees
B)Collection of local government sales taxes by the state government
C)Collection of property taxes for the school district by an elected county government
official
D)Periodic distribution by the state government of county sales taxes
36) Service Efforts and Accomplishments Reporting is best completed by using
A)A standard single measure to evaluate or present information
B)A variety of measures which vary from year to year in order to evaluate and present
information
C)Only the information that is favorable to the organization
D)A variety of measures which are consistent from year to year
37) When supplies ordered for use in an activity accounted for in the General Fund of a
government are received at an actual price which is less than the estimated price on the
purchase order, the Encumbrance Control account is:
A)debited for the estimated price on the purchase order
B)credited for the estimated price on the purchase order
C)debited for the actual price for the supplies received
D)credited for the actual price of the supplies received
38) If Budgetary Fund Balance was debited in the process of recording a budget for the
General Fund of a governmental unit, it can be assumed that:
A)Estimated Revenues exceed Appropriations
B)Estimated Expenses exceed Actual Revenues
C)Actual Expenses exceed Estimated Expenses
D)Appropriations exceed Estimated Revenues
39) The total fund balances presented in Governmental Funds Statements are different
from the total Net Positionon the government-wide Statement of Net Position. Which of
the following is nota reason for this difference?
A) The two statements have different bases of accounting
B)Capital assets used in government operations are not financial resources and
therefore are not reported in the funds
C)Some liabilities are not due and payable in the current period and are not reported in
fund liabilities
D)Accrued Wages Payableat year end are reported on the statement of Net Positionbut
are not reported in the fund statements
40) According to the National Association of College and Business Officers,
scholarship discounts and allowances paid by institutional funds, assuming that no
services are provided by the recipients:
A)Are included in tuition revenue and recorded as an expense
B)Are reported as a reduction of revenue by directly reducing the revenue account or
increasing a contra- revenue account
C)Are not included in tuition revenue but are included as an other source
D)Are reported as an adjustment to tuition revenue in the government-wide statements
41) Which of the following is not a fiduciary fund?
A) Private-Purpose Trust Fund
B) Investment Trust Fund
C) Pension Trust Fund
D) Permanent Fund
42) Which of the following is True regarding the government-wide Statement of
Activities?
A)General revenues include items such as charges for services and program fees
B)Fiduciary activities are included
C)Both of the above
D)Neither of the above
43) A statement of Cash Flows is required for which type of Fund?
A) Governmental
B) Fiduciary
C) Proprietary
D) All of the above
44) On April 1, 2015, the City of Southern Ponds issued $3,500,000 in 4% general
obligation, tax supported bonds at 101 for the purpose of constructing a new police
station. The premium was transferred to a debt service fund. A total of $3,490,000 was
used to construct the police station, which was completed before December 31, 2015,
the end of the fiscal year. The remaining funds were 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 20 equal annual principal payments of $175,000 is due April 1, 2016 .
What amount would be reported as debt service expenditures for 2016?
A)$245,000
B)$315,000
C)$318,150
D)$351,750
45) Fund net position will not be found in
A)Investment trust funds
B)Pension trust funds
C)Agency funds
D) Private-purpose trust funds
46) Which of the following is True regarding the use of Special Revenue Funds?
A)Special Revenue Funds may be used whenever a government wishes to segregate
income for specific purposes
B)Special Revenue Funds are appropriate if the sole source of resources are assigned
funds
C)Special Revenue Funds may only be used when a substantial portion of the resources
are provided by restricted or committed revenue sources
D)Once a Special Revenue Fund is established, it will continue to be a Special Revenue
Fund until all resources are exhausted