1) Present and potential donors are the primary users of private not-for-profit
financial statements.
2) GASB standards for property tax revenue recognition under the modified accrual
basis of accounting provide that revenue is permitted to be recorded if the expected
amount to be collected can be determined and collection is reasonably assured, even if
the taxes are expected to be collected more than 60 days after the fiscal year end.
3) Like charities and private colleges, private not-for-profit health care organizations
follow FASB standards.
4) Special-purpose governmental entities that are engaged in a single
governmental-type activity only are required to prepare only the statements required for
governmental fund basis financial statements.
5) Under FASB standards, True endowments are classified as Permanently Restricted
Net Assets.
6) Fiduciary Funds are not included in the government-wide financial statements.
7) The Statement of Cash Flows for a private not-for-profit organization has four
different classifications of cash flows.
8) 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 purposes.
9) GASB requires that collections be capitalized and depreciated.
10) Government-wide statements are prepared using the modified accrual basis;
therefore, governmental fund-basis statements need to be adjusted from their original
accrual basis.
11) Assets held in trust that are restricted to benefit the citizenry in general or in support
of the reporting governments programs would be reported as private purpose trust
funds.
12) Governmental fund financial statements are prepared using the accrual basis of
accounting.
13) Health care organizations that are privately owned and operated to provide a return
to investors follow GASB standards.
14) According to The
15) The
16) GASB standards require a reconciliation from fund financial statements to
government-wide financial statements.
17) The government-wide financial statements do not include a Statement of Cash
Flows.
18) Not-for-profit business-oriented organizations use accrual accounting.
19) GASB and FASB Concept Statements establish accounting standards that must be
complied with to receive an unqualified audit opinion.
20) On October 1, 2014, the City of Mizner issued $4,000,000 in 4%, general obligation
bonds at 101 for the purpose of constructing an addition to City Hall. The premium was
transferred to a debt service fund. A total of $3,975,000 was used to construct the
addition, which was completed prior to June 30, 2015 . The remaining funds were
transferred to the debt service fund. The bonds were dated October 1, 2014, and paid
interest on April 1 and October 1 . The first of 20 annual principal payments of
$200,000 is due October 1, 2015 . The fiscal year for Mizner is July 1- June 30 .
In addition to a $4,000,000 liability in the government-wide Statement of Net Position,
how would the bond sale be reported?
A)As a $4,040,000 other financing source in the capital projects fund, a $40,000 other
financing use in the capital projects fund, and a $40,000 other financing source in the
debt service fund
B)As a $4,000,000 other financing source in the capital projects fund, a $40,000 other
financing source in the debt service fund, and as a $4,000,000 liability in the debt
service fund
C)As a $4,000,000 revenue in the capital projects fund, a $40,000 revenue in the debt
service fund, and a $4,000,000 expenditure in the debt service fund
D)As a $3,975,000 revenue in the capital projects fund and a $25,000 revenue in the
debt service fund
21) Which of the following is not required in a federal agencys financial report?
A)Managements Discussion and Analysis
B)Notes to the Financial Statements
C)Required Supplemental Information
D)Budgetary Comparison Schedule
22) According to GASB Statement No. 54 an unassigned fund balance is
A)The residual category for the General Fund
B)The only category of Fund balance that may not be reported as a negative number
C)The designation given for rainy day funds
D)None of the above
23) According to NACUBO guidelines, what is the correct treatment for recognizing
summer school revenues and expenses when a colleges fiscal year ends on June 30?
A)Recognize the entire amount of revenues and expenses in the year in which the
summer term is predominantly conducted
B)Recognize the entire amount of revenues and expenses in the year in which the
summer term began
C)Apportion the revenues and expenses to the two fiscal years, following accrual
accounting practices similar to those employed by commercial enterprises
D)Recognize expenses in the year in which they were billed and the expenses in the
year in which they were incurred
24) Regarding inter fund transactions, which of the following is not correct?
A)Transaction between funds are not assumed to be arms length in nature
B)Inter fund transactions must be repaid
C)Failure to properly report inter fund transactions will result in two funds being
misstated
D)Inter fund reimbursement is a payment by one fund to second fund to repay it for a
purchase which belongs in the first fund
25) Which of the following is an example of an Internal Service Fund?
A)State Risk Management Fund
B)County Water and Sewer Utilities
C)State Lotteries
D)Municipal Golf Courses
26) What is not an advantage of obtaining section 501(c)(3) status?
A)The charitable organization is permitted to engage in a trade or business unrelated to
its mission without having to pay income taxes
B)Donors to the charitable organization are permitted to deduct contributions to the
organization in computing their income taxes
C)The charitable organization does not have to pay state sales tax
D)Neither (A) nor (C) is an advantage
27) Which of the following accounts of a governmental units General Fund is credited
to close it at the end of the fiscal year?
A)Appropriations Control
B)Other Financing Sources-Transfers In
C)Budgetary Fund Balance — Reserve for Encumbrances
D)None of the above
28) The equity section of the Statement of Net Assets of a private not-for-profit hospital
may contain which of the following descriptions?
A)Fiduciary, Proprietary, and General
B)Nonspendable, Committed, Restricted and Assigned
C)Permanently Restricted, Temporarily Restricted, and Unrestricted
D)Net Investment in Capital Assets, Restricted, and Unrestricted Net Position
29) Which of the following funds is considered a Fiduciary Fund?
A) Debt Service Fund
B)Enterprise Fund
C) Internal Service Fund
D)Pension Trust Fund
30) Describe the purpose of the following:
a)Federal government budgetary accounts
b)Federal government proprietary accounts
31) Which of the following is not considered Required Supplementary Information
(RSI)?
A)Notes to the financial statements
B)Budgetary Comparison Schedule
C)Management’s Discussion and Analysis
D)None of the above; all are considered RSI
32) A governmental funds Statement of Revenues, Expenditures, and Changes in Fund
Balances reported expenditures of $40 million, including capital outlay expenditures of
$12 million. Capital assets for that government cost $80 million, including land in the
amount of $10 million. Depreciable assets are amortized over 10 years, on average. The
reconciliation from governmental fund changes in fund balances to governmental
activities change in Net Position would reflect a(an):
A)$4 million increase
B)$5 million increase
C)$5 million decrease
D)$12 million decrease
33) The entry to record the expiration of program restrictions includes which of the
following?
A) Debit Reclassification from Temporarily Restricted Net Assets
B) Credit Performance Expense
C) Debit Reclassification to Unrestricted Net Assets
D) Credit Reclassification from Temporarily Restricted Net Assets
34) The City of Odessa maintains its books so as to prepare fund accounting statements
and prepares worksheet adjustments in order to prepare government-wide statements.
As such, the City’s internal service fund, a print shop fund, is included in the proprietary
funds statements. Required: Prepare necessary adjustments in order to incorporate the
internal service fund in the government-wide statements as a part of governmental
activities:
A.Balance sheet accounts include: Cash, $150,000; Inventories, $425,000; Capital
Assets, $1,200,000; Accumulated Depreciation, $600,000; Accounts Payable, $150,000;
and Bonds Payable, $500,000.
B.The only transaction in the internal service fund that is external to the government is
interest expense in the amount of $15,000.
C.Exclusive of the interest expense, the internal service fund reported operating income
of $40,000. An examination of the records indicates that services were provided as
follows: one half to general government, one fourth to public safety, one fourth to
culture and recreation.
35) The City of Westboro passed an appropriations ordinance for the year ended June
30, 2015 . Included in the appropriations ordinance was an appropriation for public
safety in the amount of $7,600,000. During the month ended July 31, 2014 the
following transactions took place:
a.Purchase orders were issued in the amount of $410,000.
b.Goods were received, related to purchase orders in the amount of $220,000, along
with invoices amounting to $215,000.
c.Salaries were paid in the amount of $450,000
d.Because of an economic slowdown, a budget amendment was passed cutting all
departments’ (annual) appropriations by 4%.
Required:
Compute the amount of appropriations available at July 31, 2014 .
36) The operations of agency funds will be included in which of the following
statements?
A)The fiduciary funds Statement of FiduciaryNet Position
B)The Statement of Changes in Fiduciary Net Position
C)The Government-wide Financial Statements
D)All of the above
37) A measure of performance that expresses how much an organization expends in
raisinga dollar of donations is:
A)Fund-raising efficiency
B)Program expense ratio
C)Working capital ratio
D)None of the above
38) If a clinic raises a significant amount or nearly all their resources from voluntary
contributions or grants, they are subject to the guidance in the
A) Not-for-Profit Guide
B) Health Care Guide
C) Voluntary Health and Welfare Guide
D) Contributions and Grants Guide
39) Which of the following is/are True with respect to health care organizations?
A) Expenses must be reported using their natural classifications
B) Assets that have limited use are temporarily restricted on the balance sheet
C) Private sector not-for-profits health care entities must disclose expenses by
functional classifications, if not provided in the Statement of Operations
D) All of the above are True
40) Which of the following is a proprietary fund?
A)Investment trust
B)Permanent
C)Special revenue
D)Internal service
41) Fees waived by the an educational institution in return for services to be provided
by students are reported:
A)As a reduction in tuition revenue by directly reducing the revenue account or
increasing a contra-revenue account
B)As an adjustment to tuition revenue in the government-wide statements
C)As an expense
D)By deducting the waived fee from tuition revenue before it is recorded
42) FASB Statement 124, Accounting for Certain Investments of Not-for-Profit
Organizations:
A)Requires that investments in equity securities be carried at book value
B)Requires that investments accounted for under the equity method be adjusted to fair
value at the end of the accounting period
C)Requires that investments in debt securities be carried at fair value
D)Requires that investments in consolidated subsidiaries be reported as permanently
restricted
43) The journal entry to record the budget of a Special Revenue Fund would include:
A)A debit to appropriations Control
B)A debit to Estimated Revenues Control
C)A credit to Estimated Revenues Control
D)None of the above, Special Revenue Funds do not record budgets
44) A government reported another financing source in the amount of $900,000 related
to the sale of land in its governmental funds Statement of Revenues, Expenditures, and
Changes in Fund Balances. The land had a cost of $400,000. The amount that would be
reported in the government-wide Statement of Activities would be:
A)A gain of $1,300,000
B)A gain of $ 900,000
C)A gain of $ 500,000
D)A gain of $ 400,000
45) What are Enterprise funds used for?
A) To account for pension and employee benefit funds for which the governmental unit
is the trustee
B)To account for most of the basic services provided by the governmental units
C)To account for resources provided primarily through the use of sales and service
charges to parties external to the government
D)To report resources that are legally restricted so only earnings, not principal, may be
expended, and for purposes to benefit the government and its citizenry
46) In a budgetary entry (combining entry), if Estimated Revenues Control exceeds
Appropriations Control, the excess would be:
A)credited to Fund Balance-Unreserved
B)debited to Fund Balance-Unreserved
C)debited to Budgetary Fund Balance
D)credited to Budgetary Fund Balance
47) Government auditing standards are commonly known as:
A)The Green Book
B)The Yellow book
C)The Blue Book
D)The Red book
48) Governmental-type funds label the excess of assets over liabilities on the balance
sheet as:
A)Net Position
B)Net Fund Balance and Liabilities
C)Assets Net of Liabilities
D)Fund Balance
49) Which of the following is not True regarding the Statement of Revenues, Expenses,
and Changes in Net Position for a public college, operating as a special-purpose entity
engaged only in business-type activities?
A)The accrual basis of accounting is used
B)Auxiliary enterprise activities represent revenues and expenses related to units of the
college that provide services to students on a user fee basis
C)Infrastructure must be reported using the modified approach
D)All of the above are True
50) When accounting for the General Fund, the Encumbrances Control account is
credited when:
A)A purchase order is approved
B)The budget is approved
C)An invoice is paid
D)A purchase order is filled or canceled
51) Answer the following related to accounting and financial reporting for public
colleges and universities:
a.What choices exist for financial reporting by public colleges and universities,
according to GASB Statement 35?
b.Indicate the contents required for a financial report for those public colleges and
universities that choose to report as special-purpose entities engaged only in
business-type activities.
52) For the depreciation of infrastructure
A) Governments are required to record depreciation in the same manner as other
depreciable fixed assets
B) Governments are required to record depreciation using a modified approach
C) Governments do not record depreciation for infrastructure
D)Governments can choose to expense expenditures that extend the life of
infrastructure assets in lieu of depreciation
53) Which of the following is True regarding the reporting of major funds in the
governmental funds financial statements?
A)The General Fund is always considered a major fund
B)A fund is considered major if its revenues, expenditures, assets, or liabilities exceed
10% of the total governmental fund categories and if the same element (revenues,
expenditures, assets, or liabilities) exceeds 5% of the governmental and enterprise funds
combined
C)Both (A) and (B) are True
D)Neither (A) nor (B) is True
54) Property Taxes, special assessments, and fines and forfeits are types of non
exchange transactions. These are examples of:
A)Government-mandated non exchange transactions
B)Imposed non exchange transactions
C)Deferred Inflows
D)Voluntary non exchange transactions
55) List the four eligibility requirements for a government to record revenue from a non
exchange transaction. Provide a brief explanation for each.
56) What is the different accounting treatment with respect to supplies inventory using
the Consumption versus the Purchases method?
57) In addition to government-wide statements, governments are required to prepare
fund financial statements within which three categories of funds?
58) A city government has decided to build and operate a convention center. Identify
what factors should be considered in deciding whether to account for the convention
center as an Enterprise Fund or as part of general governmental activities?
59) Why might it be desirable for an enterprise fund to operate at a profit?