1) The government-wide financial statements present the government as a whole,
including component units and including fiduciary activities.
2) Special-purpose governments generally provide a limited set of services or programs.
3) A non exchange transaction is one where a government receives resources without
giving equal value in return.
4) Funds that are restricted for a certain number of years and then released are
considered to be quasi-endowments and are classified as temporarily restricted fundsby
private colleges and universities.
5) Tax-exempt organizations are required to disclose the compensation of its officers,
directors, trustees, highest paid employees and independent contractors in the Form 990
.
6) Private not-for-profit organizations record depreciation expense.
7) The excess of assets over liabilities of proprietary funds is termed Net Position.
8) Long term debt serviced from proprietary funds is reportedonly in
thegovernment-wide Statement of Net Position.
9) $200,000 to be used to fund government operations in the future from the General
Fund is an example of an unassigned fund balance.
10) Depreciation on capital assets is included as an expense in the Statement of
Activities in the governmental fund statements.
11) According to the rules for accounting for colleges and universities under the
jurisdiction of the FASB, contributed services should be recognized when the services
create or enhance nonfinancial assets or require specialized skills, are provided by an
individual possessing those skills, and would typically be purchased if not provided by
donation.
12) GASB requires that the budgetary basis of accounting for the General Fund used in
the Budget-Actual Comparison Schedule be on the same modified accrual basis as the
governmental fund Statement of Revenues, Expenditures and Changes in Fund Balance.
13) If a tax-exempt organization is found by the IRS to have paid unreasonable benefits,
the individual must pay a tax penalty of 25% of the excess benefit and the individuals
who approved the benefits must pay a 10% penalty.
14) When using the modified approach to record infrastructure, expenditures to widen a
2-lane road to 4-lanes would be charged to an expense, in lieu of depreciation.
15) A non-expendable trust which benefits a government or its citizenry and which
stipulates that earnings only (not principal) may be used for its prescribed purpose
would be reported in a Special Revenue Fund.
16) According to the rules for accounting for colleges and universities under the
jurisdiction of the FASB, investments in stock with determinable fair values and all debt
securities are reported at market value.
17) The General Fund of the City of Lexington approved a tax levy for the calendar
year 2015 in the amount of $2,000,000. Of that amount, $30,000 is expected to be
uncollectible. During 2015, $1,750,000 was collected. During 2016, $100,000 was
collected during the first 30 days, $50,000 was collected during days 31-60, and
$70,000 was collected during the days 61-90 . During the post-audit, you discovered
that the City showed $2,000,000 in revenues. How much revenue should the City
recognize in 2015 from this tax levy?
A)$ 1,850,000
B)$ 1,900,000
C)$ 1,920,000
D)$ 2,000,000
18) Which of the following is True regarding the Balance Sheet of a federal agency?
A)The balance sheet is prepared using the economic resource measurement focus and
accrual accounting
B)Assetsare measured on the modified accrual basis
C)The difference between assets and liabilities is termed Net Assets
D)Assets are separated between current and noncurrent
19) Revenue bonds sold by a water utility fund, upon sale, would be recorded:
A)In an enterprise fund as Other Financing Source
B)In the general long-term debt accounts as a liability
C)In an enterprise fund as a liability
D)In an enterprise fund as an addition to Net Position
20) GASB requires which of the following to be reported separately after other
financing sources and uses in the Statement of Revenues, Expenditures, and Changes in
Fund Balance?
A)Special items
B)Extraordinary items
C)Inter fund transfers
D) A and B
21) Which of the Fiduciary Funds listed below is used to account for the assets held by
a government acting as an agent for one or more other governmental units?
A)Private-purpose Trust Fund
B)Permanent Fund
C)Pension Fund
D)Agency Fund
22) Which of the following is True regarding revenue recognition for health care
organizations?
A)Patient service revenues are reported net of contractual adjustments
B)Revenues do not include charity care
C)Revenues may include fees for parking, cafeteria sales, and gift shops
D)All of the above are True
23) Lisa informed her church that she had named the church in her will and later
provided a written copy of the will to the church. At what point should the church
record the contribution?
A)At the time when the church was informed of her will
B)At the time the church receives a written copy of the will
C)At the date the probate court declares the will valid following her death
D)At Lisas death
24) The equity section of the balance sheet for investor-owned colleges and universities
includes which of the following designations?
A) Unrestricted Net Assets, Temporarily Restricted Net Assets, and Permanently
Restricted Net Assets
B) Paid in Capital and Retained Earnings
C) Net Investment in Capital Assets, net of related Debt; Restricted Net position; and
Unrestricted Net position
D) None of the above
25) Which of the following is True regarding component units?
A)Component units may be reported discretely in the government-wide statements or
may be blended as a fund in the fund financial statements (and thus also included in the
government-wide financial statements)
B)Component units could include towns, school districts, counties, and municipalities
C)Both of the above
D)Neither of the above
26) On July 1, 2014, the City of Corfu received a gift of debt securities of XYZ
Company with a nominal (par) value of $1,600,000. Income is to be used to make
awards for civic achievements. As of the date of the gift, the securities had a market
value of $1,668,000. Included in this amount is accrued interest of $18,000. The bonds
carried an annual interest rate of 6%, payable semiannually on April 1 and October 1 .
During the fiscal year ended June 30, 2015, the following transactions took place:
Required:
A.Record the above transactions on the books of the City of Corfu Private-Purpose
Trust Fund.
B.Prepare a Statement of Changes in Fiduciary Net Position for the City of Corfu
Private-Purpose Trust Fund for the year ended June 30, 2015 .
27) The ___________ is the governments official annual report prepared and published
as a matter of public record.
A) comprehensive annual financial report
B) governmental annual financial report
C) independent auditors report
D) complete audited financial report
28) Which of the following is True regarding the proprietary fund financial statements?
A)Statements include the Statement of Net Position, Statement of Revenues, Expenses,
and Changes in Fund Net Position, and Statement of Cash Flows
B)Normally, a reconciliation is required between the proprietary fund financial
statements and the business-type activities column in the government-wide financial
statements
C)The Statement of Net Position reflects equity as contributed equity and retained
earnings
D)The Statement of Cash Flows may be prepared using either the direct or indirect
methods
29) Which of the following is not likely to be recorded in a special revenue fund?
A)Phone fees restricted to supporting the emergency 911 access system
B)Hotel taxes restricted to promoting tourism
C)Sales taxes restricted to courthouse additions
D)State motor fuel tax restricted to road maintenance
30) The city of Canandaiguareceives proceeds from the sale of land, the transaction is
considered to be a special item. The proceeds are:
A)Reported separately after other financing sources and uses
B)Reported as a revenue
C) Reported as an item that changes the Fund Balance
D)Not recorded but the gain on the sale is
31) The City of Morganville had the following pre-closing account balances in its
General Fund as of April 30, 2015 . Debits and credits are not separated; each account
had its normal balance. Among the expenditures recorded this year is an amount
expended on supplies ordered at the end of the previous year. Assume that
encumbrances do not lapse and that the City failed to make the journal entry(s)
necessary to re-establish the encumbrance in the current year.
Required:
(a)Prepare all entries necessary to close the General Fund of the City of Morganville.
(b)Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for
the General Fund for the City of Morganville for the Year Ended April 30, 2015 . End
with the ending fund balance. This is the GAAP operating statement.
32) Which of the following organizations wouldnotbe subject to the accounting and
reporting requirements of FASB Statements 116 (Accounting for Contributions) and
117 (Financial Reporting for Not-for-Profit Organizations)?
A)The City of Hannibal Missouri
B)St. Jude Childrens Hospital
C)Live Arts Theater
D)Girl Scouts
33) Which of the following is part of the treatment of multi-year pledges as required by
FASB Statement No. 116?
A)The donation is recorded as a receivable at the present value of the future collections
but revenue is not recorded until the pledge is received
B)At the end of each accounting period, the difference between the balance in the
receivable account and the new present value is deducted from the amount of the
amount received from the donor which is recorded as income
C)At the end of each accounting period, the difference between the balance in the
receivable account and the new present value is recorded as contribution revenue and
the receivable is increased
D)Pledge receivable is recorded for the total amount to be received and revenue is
recorded each year as monies are received by the organization
34) The NACUBO Financial Accounting and Reporting Manual treats estimates of
uncollectible student accounts as:
A)A reduction in tuition and fee revenue
B)Bad debt expense
C)Either bad debt expense or a reduction in tuition and fee revenue as long as the policy
is consistently applied
D)None of the above; colleges and universities must use the direct write off method
35) A transaction in which a government receives resources without directly giving
equal value in exchange is known as a(n):
A) Equity Transaction
B) Fair Exchange.
C) Non-exchange Transaction
D) Not Fair Market Exchange transaction
36) The journal entry to record the prior years deferred Inflows: property taxes (those
expected to be collected more than 60 daysbeyond year-end) as revenue in the current
year would include:
A)A debit to Revenues Control
B)A debit to Deferred Inflows: Revenues
C)A credit to Revenues Control
D)B and C would both be included in the journal entry
37) The City of Smithfield levied property taxes in and for 2015 in the amount of $300
million. It is estimated that 1% will be uncollectible. During 2015, $280 million was
collected, and $12 million was collected during the next 60 days. Smithfield recognizes
the maximum possible property taxes in its governmental funds. The adjustment, when
moving from the governmental funds changes in fund balances to the governmental
activities change in Net Position would be:
A)$2 million increase
B)$2 million decrease
C)$5 million increase
D)$5 million decrease
38) Which of the following General Fund accounts would be closed at year end?
A) Due from State Government
B)Special Items Proceeds from Sale of Land
C)Taxes Receivable Delinquent
D) Deferred Inflows Property Taxes
39) Identify the primary financial reporting body for each of the following forms of
college or university
A.Private not-for-profit
B.For Profit – Investor owned
C.Public government owned
40) Which of the following is notcorrect with respect to the reporting of expenses for a
private not-for-profit?
A)Expenses can be reported in the unrestricted net asset class or restricted net asset
class, as appropriate
B)Expenses are reported by function in the Statement of Activities or in the notes
C)The FASB describes functions as either program or supporting
D)Major program classifications should be shown in the Statement of Activities or in
the notes
41) Which of the following is True regarding pension (and other employee benefit)
trust funds?
A)The actuarially computed Net Pension Liability is reported in the Statement of
Fiduciary Net Position
B)While full accrual accounting is used, the terms additions and deductions are used in
the Statement of Changes in Fiduciary Net Position in lieu of revenues and expenses
C)Both of the above
D)Neither of the above
42) A public college had tuition and fees of $21,000,000. Scholarships, for which no
services were required, amounted to $2,500,000. Graduate assistantships, for which
services were required, amounted to $1,600,000. The amount to be reported by the
public college as net tuition and fees would be:
A)$21,000,000
B)$19,400,000
C)$18,500,000
D)$16,900,000
43) Which of the following is(are) accurate regarding a federal agencys Statement of
Changes in Net Position?
A)The statement starts with the beginning of year balances in the net position accounts
and reconciles these to the ending balances appearing on the agencys Balance Sheet
B)The statement does not report Appropriations Received since this is a budgetary
account and does not affect net position
C)Both (a) and (b) above
D)Neither (a) nor (b) above
44) Which of the following statements regarding serial bonds is False?
A)The principal on serial bonds is paid over the term of the bonds
B)The assets of a debt service fund may include Cash with Fiscal Agent
C)If the first payment is delayed for more than a year with equal payments thereafter,
the bonds are deferred serial bonds
D)The principal repayment on an annuity serial bonds decreases each year as the
outstanding balancedecreases
45) Which of the following funds require a Statement of Cash Flows?
A) Governmental funds
B)Proprietary funds
C)Fiduciary Funds
D)Governmental and Fiduciary Funds
46) Governmental funds include:
A)Special revenue funds
B)Internal service funds
C)Debt service funds
D)A and C
47) Which of the following would not be considered a special-purpose government for
financial reporting purposes?
A)A public school system
B)An art museum
C)A public hospital
D)A county board of supervisors
48) Revenues in governmental fund accounting
A) include taxes, fees, resources provided by other governments, and interfund transfers
B)are recognized when earned
C)are recognized in the fiscal year they are available for expenditure
D) none of the above describes revenues in governmental accounting
49) Reciprocal inter fund activity:
A)Does not include inter fund loans
B)Is the internal counterpart to exchange transactions
C)Includes inter fund transfers
D)None of the above
50) Which of the following factors, if present, would indicate that a transaction is not a
contribution?
A)The resource provider received value in exchange
B)The resource provider entered into the transaction voluntarily
C)The transfer of assets was unconditional
D)The organization has discretion in the use of the assets received
51) Care Foundation is a voluntary health and welfare organization funded by
contributions from the general public. Care sold equipment for $30,000 which cost
$40,000 and had a book value of $25,000 at the time of sale. In recording the sale, Care
should:
A)Record temporarily restricted revenue of $ 30,000
B)Record a gain of $ 5,000
C)Record a loss of $10,000
D)None of the above
52) Identify the standard setting body for private not-for-profit organizations and the
basis of accounting that should be used.
A) GASB & Accrual
B) GASB & Modified Accrual
C) FASB & Accrual
D) FASB & Modified Accrual
53) A donor pledged $500,000 to a not-for-profit hospital in 2014 to conduct medical
research, conditional on the hospital raising $500,000 from other donors. The other
donors met the condition in 2015. The donor transferred the funds to the hospital in
2015 . In which year would the revenue be recognized?
A)2014
B)2015
C)Half in 2014 and half in 2015
D)None of the above; the hospital would only recognize revenue when the amounts had
been expended according to the donor’s wishes
54) A)Governmental Accounting Standards Board
B)Financial Accounting Standards Board
C)Hospital Financial Management Association
D)American Institute of Certified Public Accountants
55) The General Fund of the City of X passed a budget, providing for $2,000,000 in
anticipated revenues and $1,990,000 in anticipated expenditures. The journal entry(s)to
record the budget would result in a:
A)credit to Appropriations Control in the amount of $1,990,000
B)debit to Estimated Revenues Control in the amount of $2,000,000
C)credit to Budgetary Fund Balance in the amount of $10,000
D)all of the above
56) At year-end, the balance of Expenditures, Revenues and Other Financing Sources
and Uses accounts are closed to:
A) Budgetary Fund Balance
B) Expenses
C)Fund Balance
D)Expenditure Control
57) What are major programs with respect to the Single Audit Act of 1984 and
amendment of 1996? Distinguish between Type A and Type B programs.
58) What is the purpose of the Unrelated Business Income Tax?
59) What is the treatment of multi-year pledges as required by FASB Statement No.
116?
60) Special-purpose governments that are engaged in both governmental and
business-type activities or in more than one governmental activity are required to
include which items in its financial reporting?
61) Identify (in order of occurrence) the steps in the federal budgetary authority
process.
62) Assume a federal agency has the following events:
1>Receives a warrant from the Treasury notifying the agency of appropriations of
$12,000,000.
2>OMB apportions 1/4th of the appropriation for the first quarter of the year.
3>The Director of the agency allots $ 2,850,000 to program units.
4>Program units place orders $ 2,790,000.
5>Supplies ($ 490,000) and services ($ 2,291,000) are received and paid during the first
quarter. Supplies of $ 417,000 were used in the quarter.
Required: Prepare any necessary journal entries to reflect the events described above.
Identify whether the entry is budgetary or proprietary.
63) Distinguish between an exchange transaction and a contribution. How is the
accounting different for these two events?
64) Describe the different types of governmental audit and attestation engagements.
65) The City of Fairport adopted the following budget for fiscal year 2015:
In addition, the City reported the following actual amounts for the same fiscal year.
Required: Prepare a budgetary comparison schedule for the City for the year ended
December 31,2015 assuming the fund balance of the General Fund(budgetary basis)
was $627,000 at January 1, 2015 . No “original budget” column is required. Include a
“variance” column.
