The FASB requires that a statement of functional expenses be prepared by which of the
following entities?
A. Colleges and universities.
B. Health care entities.
C. Voluntary health and welfare entities.
D. Religious entities.
Which of the following volunteer services is most likely to be reported by a
nongovernmental not-for-profit hospital as contribution revenue and an expense?
A. Community members who plant flowers on the grounds once a year in the spring.
B. Volunteers in the gift shop who work a few hours a day serving customers.
C. Nurses from a religious organization who volunteer to assist in the care of critically
ill children.
D. An accountant who is a member of the board of directors.
When the budget of a government is adopted and Estimated Revenues exceed
Appropriations, the excess is:
A. Credited to Budgetary Fund Balance.
B. Debited to Budgetary Fund Balance.
C. Debited to Encumbrances Outstanding.
D. Credited to Encumbrances Outstanding.
During the year a donor pledged $1,000,000 in funds to a not-for-profit private charter
school. The school will receive the pledge if it is able to raise $500,000 in funds over
the next year. According to the FASB, how would this pledge be recorded?
A. Contribution-Unrestricted.
B. Contribution-Temporarily Restricted.
C. Contribution-Permanently Restricted.
D. It would not be recorded.
In reconciling the net change in fund balances to the change in net position of
governmental activities which of the following would be added to the change in net
position of governmental activities?
A. Issuance of long-term debt.
B. Construction of capital assets.
C. Accrual of interest expense.
D. Depreciation expense.
The process by which a legal valuation is placed on taxable property is called:
A. An appropriation.
B. A property tax levy.
C. Property assessment.
D. Ad valorem determination.
In which of the following funds is it appropriate to record depreciation of capital assets?
A. Internal service fund.
B. Permanent fund.
C. General fund.
D. Capital projects fund.
Which of the following would be reported on the operating statement of a governmental
fund?
A. The liability for the annual obligation to the employee retirement plan.
B. Depreciation expense.
C. Resources received for services to be provided in future periods.
D. Revenue related to prior periods.
In accordance with the FASB Codification, which of the following would be an
appropriate performance indicator for a not-for-profit health care organization?
A. Revenues.
B. Excess of revenues and gains over expenses and losses.
C. Expenses and losses.
D. Contributions to long-lived assets.
The comprehensive annual financial report (CAFR) of a government should contain a
statement of revenues, expenses, and changes in fund net position for:
A. Both proprietary and governmental funds.
B. Proprietary but not governmental funds.
C. Governmental but not proprietary funds.
D. Proprietary and fiduciary funds.
Under the consumption method for recording supplies that are maintained on a
perpetual inventory system, the adjusting entry made at year end would affect which of
the following accounts?
A. Fund Balance-Nonspendable-Inventory of Supplies.
B. Fund Balance-Restricted-Inventory of Supplies.
C. Expenditures.
D. Inventory of Supplies.
Charity service and bad debts in a government hospital that follows business-type
accounting are:
A. Both reported as deductions from gross patient revenue in arriving at net patient
revenue.
B. Both reported as expenses.
C. Reported differently, with charity service disclosed in the notes to the financial
statements and bad debts reported as a deduction from revenue.
D. Reported differently, with charity service reported as a deduction from gross patient
revenue and bad debts reported as an expense.
The City of Island Grove uses encumbrance accounting and its fiscal year ends on June
30. On May 6, a purchase order was approved and issued for supplies in the amount of
$6,000. Island Grove received these supplies on June 2, and the $6,000 invoice was
approved for payment. What General Fund journal entry should Island Grove make on
May 6, to record the approved purchase order?
A. Choice A
B. Choice B
C. Choice C
D. Choice D
Which of the following statements is true regarding the required disclosure of
budgetary information?
A. All budgetary disclosures should be presented in the notes to the financial
statements.
B. There is one specific format for presenting the budgetary comparison statement.
C. Budgetary comparisons may be presented as a statement or as required
supplementary information (RSI).
D. The budgetary reconciliation must focus on the operating statement, but not the
statement of position.
A comprehensive annual financial report (CAFR) prepared in conformity with GASB
recommendations should include which of the following sections?
A. Letter of transmittal, management’s discussion and analysis (MD&A), and financial.
B. Introductory, financial, and statistical.
C. Introductory, MD&A, and financial.
D. Letter of transmittal, financial, and supplementary.
An annual contributor to a nongovernmental not-for-profit hospital made an
unrestricted pledge in October 2016 that will be paid in March 2017. Assuming the
hospital’s fiscal year-end is December 31, 2016, the pledge should be credited to:
A. ContributionsTemporarily Restricted in 2016.
B. ContributionsUnrestricted in 2016.
C. ContributionsTemporarily Restricted in 2017.
D. ContributionsUnrestricted in equal amounts in 2016 and 2017.
Which of the following best describes the recommended format for the
government-wide statement of activities?
A. Program revenues minus expenses minus other revenues and expenses equals change
in net position.
B. Program revenues plus general revenues minus expenses equals change in net
position.
C. Program revenues minus expenses plus general revenues equals change in net
position.
D. Expenses minus program revenues plus general revenues equals change in net
position.
The Academy, a private college, provided tuition waivers of $500,000. Of the amount
$200,000 was for students teaching courses as graduate assistants and $300,000 was
simply an award for scholastic accomplishments. Another $100,000 was given is tuition
refunds. What amount would The Academy record as Tuition and Fees Discounts and
Allowances?
A. $600,000.
B. $500,000.
C. $400,000.
D. $300,000.
How does the FASB require not-for-profit organizations to report expenses?
A. Natural classification, such as salaries, rent, and supplies.
B. Functional classification, such as program and support.
C. Management has the option of reporting using natural classification or functional
classification.
D. Both natural classification and functional classification must be reported, one must
be recognized on the face of the financial statements and one is reported in the notes to
the financial statements.
A statement of cash flows should be prepared for which of the following fiduciary fund
types?
A. Fiduciary funds do not provide a statement of cash flows.
B. Agency.
C. Pension trust.
D. Private-purpose trust
Which of the following is not one of the seven elements defined by the GASB concept
statements?
A. Deferred inflow of resources.
B. Expenses.
C. Assets.
D. Net position.
The Estimated Revenues control account of a government is credited when:
Budgetary accounts are closed Revenues are recorded
Budgetary accounts are closed Revenues are recorded
A) Yes No
B) No No
C) No Yes
D) Yes Yes
A. Choice A.
B. Choice B.
C. Choice C.
D. Choice D.
Which of the following would increase the governmental activities balance in Net
PositionNet Investment in Capital Assets?
A. Acquisition of a building to be used by the police department.
B. Issuance of long-term debt to be used to acquire equipment for the police
department.
C. A gift of land to the city restricted by the donor to be used by the city airport, which
is accounted for as an enterprise fund.
D. Recording annual depreciation on capital assets.
In the auditor’s report the financial statements on which the opinion is being expressed
are specified in the:
A. Introductory paragraph.
B. Opinion paragraph.
C. Scope paragraph.
D. Explanatory paragraph.
Which of the following is true regarding capital projects funds?
A. Encumbrances accounting is employed.
B. Encumbrances accounting is not normally employed, but Appropriations are
recorded.
C. No budgetary accounts are ever used.
D. All budgetary accounts are employed and budget to actual statements are prepared.
Which of the following statements is correct regarding depreciation?
A. Depreciation expense should be recorded in the appropriate governmental funds, and
recorded in the governmental activities accounts.
B. Depreciation expense must be recorded in the governmental fund, but no
depreciation expense is recorded in the governmental activities accounts.
C. No depreciation can be recorded in any governmental fund, but depreciation expense
must be recorded in the governmental activities accounts.
D. No depreciation can be recorded in any governmental fund, nor is it permissible to
record depreciation expense in the governmental activities accounts.
The City of Island Grove uses encumbrance accounting and its fiscal year ends on June
30. On May 6, a purchase order was approved and issued for supplies in the amount of
$6,000. Island Grove received these supplies on June 2, and the $6,000 invoice was
approved for payment. What General Fund journal entry or entries should Island Grove
make on June 2, upon receipt of the supplies and approval of the invoice?
A. Choice A.
B. Choice B.
C. Choice C.
D. Choice D.
Which of the following statements concerning the reporting of expenses on the
statement of activities is true?
A. Expenses are reported after program revenues.
B. Expenses are reported after general revenues.
C. Expenses are reported after program and general revenues.
D. Expenses are reported before program and general revenues.
Which of the following accounts is a budgetary account of a governmental fund?
A. Encumbrances Outstanding.
B. Appropriations.
C. Expenditures.
D. Other Financing Sources.
According to the FASB, temporarily restricted net assets are released from restrictions:
A. At the end of each fiscal year.
B. As assets are spent for the purposes intended by the donor.
C. When funds are returned to the donor.
D. When they are converted to permanently restricted net assets.
Fund balance may be classified as all of the following except:
A. Restricted.
B. Committed.
C. Uncommitted.
D. Assigned.
The following general capital assets were owned by the Town of Otterville:
Town buildings $3,250,000 Intangible assets 1,000,000 Streets, sidewalks, and water
lines 2,000,000
What amount should be recorded as capital assets in the town’s governmental activities
accounts?
A. $0.
B. $3,250,000.
C. $5,250,000
D. $6,250,000