1) The three major sections of a CAFR are the Introductory, Financial, and Statistical
sections.
2) The FASAB was established to recommend accounting and financial reporting
standards for the federal government.
3) Governmental Auditing Standards identifies four categories of professional
engagements: financial audits, performance audits, attestation engagements, and
non-audit services.
4) According to GASB, Service Efforts and Accomplishments Reporting is to provide
more complete information about a governmental entitys performance.
5) Inter fund transactions are of particular interest to financial statement preparers and
users since failure to properly report these transactions will result in two funds being
misstated.
6) Sales taxes, income taxes, and motor fuel taxes are examples of derived tax revenues.
7) Depreciation on capital assets is not included as an expense in the Statement of
Revenues, Expenses, and Changes in Fund Net Position in the proprietary fund
financial statements
8) A Research grant program is a type of split-interest agreement.
9) If a government has a locally administered pension plan for which it is trustee, the
government would report the locally administered plan as a pension trust fund in the
basic financial statements.
10) Tuition revenue for summer classes spanning two fiscal periods must be recorded in
the period when the drop date passes and refunds are no longer an option.
11) Permanent funds account for resources that are donor restricted to the extent
earnings (but not principal) may be used to support government programs.
12) With respect to colleges and universities, if a tuition or fee reduction is an employee
benefit it should be treated as a compensation expense, rather than a discount.
13) Entities that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
do not have to pay income taxes, even if some of their activities compete with
commercial enterprises.
14) Tuition revenue for summer classes spanning two fiscal periods must be allocated
on a pro-rata basis.
15) Entities that are tax-exempt under IRS Section 501(c)(3) with gross receipts less
than $500,000 may file Form 990-N (electronic postcard).
16) College and universities treat uncollectible student accounts as reductions in
revenue, rather than bad debt expense.
17) Private not-for-profit organizations are required to present a Statement of
Functional Expenses instead of a Statement of Cash Flows, as required of businesses.
18) Apportionmentsare issued by the OMB and establish the amount of an
appropriation that will be available each quarter.
19) All of the following are examples of service outputs, except:
A)Enrollment increases
B)The number of gifted or alternative programs
C)Dropout rates
D)Degrees conferred
20) A December 2015 year-end government should record which of the following as
expenditures:
A)Salaries Payable due January 20, 2015
B) Bond Payable that matures January 30, 2015
C) Bond Payable that matures February 14, 2015
D) Both A & B
21) Assume encumbrances do not expire at year-end. $16,000 was encumbered during
the prior year for a computer and the actual cost of the computer in the current year is
$14,000. How does this affect unassigned fund balance?
A)Previous Year: increase $16,000; Current Year: decrease $14,000
B)Previous Year: decrease $16,000; Current Year: increase $2,000
C)Previous Year: no effect; Current Year: decrease $14,000
D)Previous Year: decrease $16,000; Current Year: decrease 14,000
22) The Fire Department of a certain city received an appropriation in the amount of
$13,000,000 for the fiscal year ended December 31, 2015 . During the month ended
January 31, 2015, the following transactions occurred: (a) purchase orders were issued
in the amount of $480,000; (b) purchase orders, related to (a) above, were filled in the
amount of $380,000; the related invoice amount was $368,000; invoices were paid in
the amount of $350,000; (c) salaries were accrued and paid in the amount of $575,000;
(d) the appropriation was increased in amount of $100,000. The amount available for
the Fire Department as of January 31, 2015 would be:
A)$11,787,000
B)$12,077,000
C)$12,057,000
D)$12,137,000
23) The City of Charlottereported property tax revenuesin 2015 in the amount of $10
million. The deferred inflow – property taxes reported in the General Funds balance
sheet was $ 300,000 on December 31, 2014 and was $ 375,000 on December 31, 2015 .
During 2015, $9,000,000 was collected. What amount should the city report for
Property Tax Revenue in its year ended December 31, 2015 government-wide
Statement of Activities?
A)$ 9,075,000
B)$ 9,975,000
C)$ 10,075,000
D)$ 10,375,000
24) The City of Park Ridge reported appropriations in the amount of $17,000,000 for its
General Fund for the fiscal year ended December 31, 2015 . During that year,
expenditures amounted to $16,200,000 (related to current year purchase orders). In
addition, $600,000 in encumbrances had been issued this year, but not filled.
The amount that Park Ridgewould report for expenditures (and encumbrances, if
applicable) in its 2015General Fund Statement of Revenues, Expenditures, and Changes
in Fund Balances (GAAP Basis) would be:
A)$600,000
B)$16,200,000
C)$16,800,000
D)Not enough information is provided to calculate the solution
25) Which of the following is True regarding revenue recognition for health care
organizations?
A)Patient service revenue includes an imputed charge for charity care
B)Patient service revenue is reported net of contractual adjustments
C)Both (a) and (b) above
D)Neither (a) nor (b) above
26) What is the appropriate accounting for the signing of a contract to build a new water
treatment facility by an Enterprise Fund?
A) Debit Encumbrances
B)Credit Budgetary Fund Balance – Reserve for encumbrances
C)Both A & B
D)No entry is required
27) Which of the following is accurate regarding a federal agencys Statement of Net
Costs?
A)It is similar in presentation to the GASB government-wide Statement of Activities in
that earned revenues are subtracted from costs to determine the net cost of government
services
B)Costs are reported within the broad categories of current, capital, and debt service
C)Both (a) and (b) above
D)Neither (a) nor (b) above
28) Which of the following is True regarding the government-wide Statement of Net
Position?
A)A classified approach is required, reflecting current assets separately from noncurrent
assets and current liabilities from noncurrent liabilities
B)Major funds are reported for governmental and enterprise funds
C)Both of the above
D)Neither of the above
29) The Statement of Functional Expenses:
A) Is no longer a required financial statement of any organization
B)Is required of all private not-for-profit organizations
C)Is required of voluntary health and welfare organizations
D)Is required of all private colleges but not public colleges
30) A construction contract was issued for an addition to the county jail in the amount
of $2,300,000. When the project was approximately half finished, the contractor
submitted an invoice for payment of $1,150,000. Which partial entry below is not
required to record this transaction?
A)Credit Contracts Payable $1,150,000
B) Debit Expenditures Capital Outlay $1,150,000
C) Credit Encumbrances Control $2,300,000
D) Credit Encumbrances Control $1,150,000
31) Which of the following health care organizations must follow standards established
by the Governmental Accounting Standards Board?
A)Private not-for-profit hospitals
B)Government owed hospitals
C)Both (a) and (b) above
D)Neither (a) nor (b)above
32) Which of the following would be included in the Equity section of the Statement of
Net Position?
A) Retained Earnings
B) Unassigned Fund Balance
C) Net investment in capital assets
D) Nonspendable fund balance
33) Which of the following funds is used to account for the payment of principal and
interest of general long term debt of a government?
A)Capital Projects Fund
B)Internal Service Fund
C) Agency Fund
D)None of the above
34) Which of the following statements is False?
A)The corpus (principal) from a permanent fund should be classified as Nonspendable
B)Unexpended intergovernmental grants and taxes dedicated to capital improvements
in a capital projects fund are likely to be classified as Assigned Fund Balance
C)The residual classification for funds other than the General Fund is Assigned
D)If a bond sinking fund is required by creditors or law, the unexpended resources
would be classified as Restricted
35) Which of the following is not True regarding financial reporting of special-purpose
entities?
A)Special-purpose entities might be included as component units in a primary
government’s financial statements
B)Special-purpose entities that engage in a single governmental activity may prepare
statements that combine government-wide and governmental fund statements
C)Special-purpose entities that are engaged only in fiduciary activities must prepare a
Statement of Activities and a Statement of Fiduciary Net Position
D)None of the above all are True
36) The City of Brownsville had a balance in the Budgetary Fund Balance — Reserve
for Encumbrances account at the end of 2014 in the amount of $90,000. During 2015,
all purchase orders related to the $90,000 were filled, and the invoice amount was
$91,200. Which of the following would be True regarding the Statement of Revenues,
Expenditures, and Changes in Fund Balances for 2015? (assume encumbrances do not
lapse)
A)The amount shown for Expenditures would include only the $1,200
B)The amount shown for Expenditures would include only the $90,000
C)The amount shown for Expenditures would include the $91,200
D)The amount shown for Expenditures would not include items related to orders placed
in 2014
37) What would be the effect on the General FundsFund Balance at the end of the
current fiscal year of recording the purchase of a $5,000 new computer with a five year
estimated useful life and zero salvage?
A)Have no effect on the General Fund’s Fund Balance
B)Reduce the General Fund’s Fund Balance $1,000
C)Reduce the General Fund’s Fund Balance $5,000
D)Reduce the General Fund’s Fund Balance $6,000
38) The Comprehensive Annual Financial Report of a local governmental unit includes
several statements and sections. When a financial analyst is computing ratios and
extracting other information, he or she needs to know where in the CAFR to look. Use
the following classification to indicate where an analyst would look in the CAFR to
compute the ratios and gather information by placing the appropriate letter(s) in the
space next to each item. When possible, choose the location in the basic financial
statements or notes that would be subject to examination:
a. Letter of transmittal-introductory section
b. Managements Discussion and Analysis
c. Auditors opinion
d. Government-wide Statement of Net Position
e. Government-wide Statement of Activities
f. Governmental funds Balance Sheet
g. Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund
Balances
h. Proprietary funds Statement of Net Position
i. Proprietary funds Statement of Revenues, Expenses, and Changes in Fund Net
Position
j. Proprietary funds Statement of Cash Flows
k. Fiduciary funds Statement of Fiduciary Net Position
l. Fiduciary funds Statement of Changes in Fiduciary Net Position
m. Notes to the Basic Financial Statements
n. Required Supplementary Information other than MD&A
o. Combining and individual fund statements (Other Supplementary Information)
p. Statistical Section
39) With respect to Capital Projects Funds, which of the following is correct?
A) These funds commonly account for resources provided by long-term debt issues or
dedicated taxes
B)Capital assets appear in both the government-wide and the fund basis financial
statements
C)A and B are both correct
D)Neither A or B is correct
40) GASB Statement 34 requires enterprise funds to be used under which of the
following circumstances?
A)When the legal requirement exists that the cost of providing services for an activity,
including capital costs, be recovered through fees or charges
B)When debt is backed solely by fees and charges
C)When a government has a policy to establish fees and charges to cover the cost of
providing services for an activity
D)All of the above
41) A government reported anOther Financing Source in the amount of $600,000
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 $150,000. The
adjustment in the reconciliation when moving from the changes in fund balances in the
Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in
Net Position in the Statement of Activities would be:
A)Increase of $150,000
B)Decrease of $150,000
C)Increase of $450,000
D)Decrease of $450,000
42) Which of the following is True concerning infrastructure assets?
A) Capitalization of infrastructure is optional
B) Capitalization of infrastructure is required
C) Governments must depreciate infrastructure assets
D) Governments rarely possess infrastructure
43) What is the first step a government takes in acquiring goods or services through the
General Fund?
A)Appropriation
B)Expenditure
C)Requisition order
D)Encumbrance
44) Prepare the General Ledger journal entries for the General Fund for the Village of
Bath for the year ended December 31, 2015
a. The budget was formally adopted. Estimated revenues are $3,250,000 and
appropriations are estimated to be $3,204,500.
b.Revenues were received in the amount of $3,256,500.
c.Purchase orders were issued in the amount of $1,690,000.
d.Purchase orders were filled in the amount of $1,436,500. The invoice amount was
$1,443,000.
e.Expenditures, not encumbered, amounted to $1,352,000. (not yet paid)
f.Amounts from d and e are paid
45) Inflows from self-supporting university operations, known as auxiliary enterprises,
are classified as
A) Unrestricted
B) Temporarily Restricted
C) Permanently Restricted
D) Either A or B