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1) Typically, budgetary authority that is not obligated by a federal agency before the
end of the fiscal year rolls over and is available for the following fiscal year.
2) For hospitals, contractual adjustments to 3rd party payers, such as insurance
companies, are recorded with a debit to Contractual Adjustments (a contra-revenue
account) and a credit to an allowance for contractual adjustments.
3) The fund balance represents the excess of fund assets over fund liabilities.
4) The reconciliation on the statement of cash flows for a proprietary fund under GASB
requirements is between operating income and cash flows from operating activities.
5) When liabilities authorized by an appropriation have been incurred, the appropriation
is said to be expended.
6) Net resources of a governmental fund represented by prepaid insurance is an
example of a non spendable fund balance
7) When a government receives a gift that must be invested permanently and the
investment proceeds are used to benefit the government or its citizens, it would be
appropriate to account for that gift in a private purpose trust fund.
8) An appropriation is authorization for administrators to incur specified amounts of
liabilities on behalf of the government for specified purposes.
9) Measurement focus refers to those items, such as current and long-term assets, that
are being reported on the financial statements.
10) Bonds which carry the full faith and credit of a government are called revenue
bonds.
11) Long-term debt that is to be paid with tax revenues is not reported both in the
government-wide statements and in the governmental fund statements
12) Assuming an auditee is considered low-risk, the auditor is required to express an
opinion on compliance on major programs, which must add up to 50 percent of federal
funds expended by the auditee.
13) The Statement of Net Position and Statement of Activities and Statement of Cash
Flows are the only three statements for the government-wide financial statements.
14) Governmental Funds Fund Balance is displayed in which of the following
categories?
A)Non spendable, Spendable, Assigned, Unassigned
B)Non spendable, Restricted, Unrestricted
C)Restricted, Unrestricted, Assigned, Unassigned
D)Non spendable, Restricted, Committed, Assigned, Unassigned
15) To record the budget for the General Fund
A)Revenue Control is Debited
B)Expenditure Control is Debited
C) Appropriations Control is Debited
D)Estimated Revenue Control is Debited
16) Which of the following areTrue of the proprietary accounts of the federal
government?
A)The accounts provide a record by which federal expenditures may be traced to the
budgetary authority granted by Congress
B)The accounts are used to present the financial position and results of operations of
the federal government and its agencies using the accrual basis of accounting
C)Both (a) and (b) above
D)Neither (a) nor (b) above
17) To compute the debt service to total expenditures, one would need to look in the
CAFR for the:
A)Government-wide Statement of Net Position
B)Proprietary funds Statement of Revenues, Expenses, and Changes in Fund Net
Position
C)Governmental fund-basis statements
D)Enterprise fund Statement of Cash Flows
18) When summer school classes at a university cover parts of two fiscal years, the
revenues and expenses are
A) All recognized in the second of the two years
B) Apportioned to the two fiscal years
C) Recognized in the year in which the term was predominantly conducted
D) All recognized in the first of the two years
19) In 2015, a major drug company agreed to give a not-for-profit private college
$300,000 to perform testing of a new drug. An advance payment of $200,000 was
received in 2015 . The college was to receive $1,500 per individual test. In 2015, the
college completed 100 tests. How much revenue should the college report for 2015?
A)$ 300,000
B)$ 200,000
C)$ 150,000
D)$ 100,000
20) The term proprietary funds applies to:
A)all funds that use accrual accounting
B)enterprise and internal service funds only
C)enterprise, internal service, and private-purpose trust funds
D)none of the above answers are correct
21) The terms used for classification of items on the Statement of Changes in Fiduciary
Net Position are:
A) Revenues and Expenses
B) Additions and Deductions
C) Revenues and Expenditures
D) Contributions and Expenses
22) When a computer which is to be used by an activity accounted for by the General
Fund of a governmental unit is received, it should be recorded in the General Fund as
a(an):
A)Encumbrance
B)Appropriation
C)Expenditure
D)Capital asset
23) According to GASB Statement No. 54 which of the following statements is not
True regarding assigned funds?
A)Assigned fund balances represent governmental resources that the government
intends to use for a specific purpose such as a debt service fund
B)Constraints on assigned resources are more easily changed than committed funds
C)For governmental funds other than the General Fund, this is the category for all
positive residual fund balances
D)This is the only fund balance that can be negative
24) During the month of December, Godiva Hospital billed patients $55,000, billed 3rd
parties $65,000, and provided $10,000 of charity care. How much should Godiva report
as Accounts Receivable?
A)$130,000
B)$120,000
C)$ 65,000
D)$55,000
25) Which of the following is not True regarding the treatment of multiyear pledges,
according to FASB Statement 116?
A)They are recorded at the present value of future collections
B)They should be reported net of an allowance for estimated uncollectibles
C)They should be recorded as temporarily restricted
D)At the end of each accounting period, the difference between the new and previously
recorded present value is recorded as interest revenue
26) Which of the following fund types is not included in the government-wide financial
statements?
A)General Fund
B)Pension Trust Fund
C)Enterprise Fund
D)Internal Service Fund
27) When would a special revenue fund be deemed to have satisfied the eligibility
requirement of a reimbursement-type federal grant, under GASB Statement 33?
A)Only after work is completely finished for the project
B)When a plan for use of the funds has been developed and approved
C)Only as qualified expenditures are incurred
D)When the grant is first approved by the granting agency
28) Governmental fund-basis statements are prepared using the________, and must be
converted to the ________ to be incorporated in the government-wide statements.
A) Accrual basis, modified accrual basis
B) Accrual basis, tax basis
C) Cash basis, accrual basis
D) Modified accrual basis, accrual basis
29) A donor made a cash contribution of $90,000 to a private not-for-profit organization
for the purpose of acquiring a building. The not-for-profit organization properly
recorded the gift of cash as temporarily restricted revenue. When the building is
acquired, the organization should:
A)Record the building as permanently restricted
B)Record the building as temporarily restricted
C)Record the building as either unrestricted or temporarily restricted, as long as a
consistent policy is followed
D)Show an expense equivalent to the amount paid for the building in unrestricted net
assets and reclassify the same amount from temporarily restricted to unrestricted net
assets
30) A reconciliation from Enterprise funds statements to government-wide statements is
not necessary because
A) They both use the same measurement focus and basis of accounting (economic
resources, accrual)
B)They both use the same measurement focus and basis of accounting (current financial
resources, modified accrual)
C)They use a different measurement focus and basis of accounting
D)Enterprise funds are not included in the government-wide statements
31) Northern University received state appropriations as follows:
Unrestricted general purposes$1,300,000
Capital outlay, set aside for specific projects1,700,000
What is the journal entry to record this event?
A)Cash and Cash Equivalents1,300,000
Restricted Cash and Cash Equivalents1,700,000
Nonoperating Revenues State Appropriations1,300,000
Capital Appropriations1,700,000
B)Cash and Cash Equivalents3,000,000
Nonoperating Revenues State Appropriations1,300,000
Capital Appropriations1,700,000
C)Cash and Cash Equivalents3,000,000
Nonoperating Revenues State Appropriations1,300,000
Nonoperating Revenues-Capital Appropriations1,700,000
D)Cash and Cash Equivalents 1,700,000
Restricted Cash and Cash Equivalents 1,300,000
Nonoperating Revenues State Appropriations1,700,000
Capital Appropriations1,300,000
32) Which of the following would not be recognized as contribution revenue by a
private not-for-profit organization?
A)A pledge to support an educational program for the next 3 years
B)A gift restricted to purchase equipment
C)A health clinic is paid to perform clinical trials of a new medicine
D)Dues paid in excess of the fair value of benefits received
33) What account should be credited in a pension trust fund to record employee
contributions?
A)Other Financing Sources
B)Net Position
C)Pension Benefit Obligation
D)Additions
34) What is the effect on the General Fund's fund balance when capital assets are
purchased during a year from General Fund revenues?
A)Fund balance is increased
B)Fund balance is decreased
C)There is no effect, since one asset (cash) is replaced by another (capital asset)
D)None of the above, capital assets must be purchased through a capital projects fund
35) Which of the following is not True of Tax-exempt Entities having 501(c) (3) status?
A)Donors to the organization may deduct their contributions as charitable donations
B)Churches and public charities with tax-exempt status must file an information return
(Form 990, 990EZ or 990-N) with the IRS annually
C)Tax-exempt entities are prohibited from certain activities such as supporting political
candidates
D)None of the above, these are all True of tax-exempt entities
36) The Police Department of a given city received an appropriation in the amount of
$8,000,000 for the fiscal year ended June 30, 2015 . During the month ended July 31,
2014, the following transactions occurred: (a) purchase orders were issued in the
amount of $500,000; (b) purchase orders, related to (a) above, were filled in the amount
of $490,000; the related invoice amount was $495,000; invoices were paid in the
amount of $450,000; (c) salaries were accrued and paid in the amount of $475,000. The
balance available for the police department as of July 31, 2014 is:
A)$7,065,000
B)$7,025,000
C)$7,020,000
D)$6,575,000
37) A donor made a gift of cash to a private not-for-profit organization in 2015 with an
expressed purpose restriction. All the funds were expended in 2015 . The organization
must:
A)Record the gift as a temporarily restricted revenue, reclassify the funds to
unrestricted, and then report the expense as unrestricted
B)Record the gift and expense as unrestricted
C)Record the gift and expense as temporarily restricted
D)Use either of the methods described in (a) or (b)
38) A government recorded transfers out of the General Fund to the debt service fund in
the amount of $ 600,000 and to the enterprise fund in the amount of $ 300,000. The
amount that would be shown as a transfer in the governmental activities column of the
Statement of Activities would be:
A)$900,000
B)$600,000
C)$300,000
D)$ 0
39) On April 1, 2015, a local government issued bonds in the amount of $2,000,000.
The bonds were issued at par and carried an interest rate of 5%, payable October 1 and
April 1 . When moving from the change in fund balances in the governmental funds
Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in
Net Position in the governmental funds column of the Statement of Activities, both for
the fiscal year ended June 30, 2015, the effect for the interest accrual only would be:
A)A decrease of $25,000
B)An increase of $25,000
C)A decrease of $50,000
D)An increase of $50,000
