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1) With respect to private colleges and universities, why are quasi-endowments not
classified as permanently restricted net assets while True endowments are?
2) State and local governments may use twelve different fund types.
3) The difference between assets and liabilities of a federal agency is comprised of
Fund Balance and may be classified as Non spendable, Committed, Restricted,
Assigned and Unassigned.
4) Private colleges and universities record depreciation expense and allocate it to
functions.
5) Prior-year data may be presented but are not required on government-wide
statements
6) Assume a government reported Other Financing Sources - Proceeds of Bonds in the
amount of $1,000,000 in the governmental fund Statement of Revenues, Expenditures,
and Changes in Fund Balances. When preparing the reconciliation from the changes in
fund balances in that statement to the changes in net position in the governmental funds
column in the Statement of Activities, an increase of $1,000,000 would be entered.
7) Fixed assets of completed projects are recorded in the accounts of capital projects
funds.
8) A special assessment tax is a tax levy that is assessed against only those taxpayers
who are deemed to benefit from the service or project paid for by the proceeds of the
special assessment levy.
9) Financial statements for proprietary funds are prepared using the economic resources
measurement focus.
10) Public colleges may depreciate infrastructure or may use the modified approach.
11) A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be
used to maintain the city war memorials should be accounted for in a special projects
fund.
12) State appropriations for higher education institutions are to be reported as
nonoperating revenues in the Statement of Revenues, Expenses, and Changes in Net
Position.
13) Permanent funds can be either a governmental fund or a fiduciary fund where only
income on donated assets may be spent.
14) When a private college is the recipient of a perpetual trust held by a third party, the
initial contribution revenue is recorded in the permanently restricted net asset class, and
income received from the trust is recorded as either unrestricted or temporarily
restricted investment income, depending on the trust agreement.
15) GASB requires that endowments report investments at fair value unless the
investments are in real estate
16) Accounting practices of private sector not-for-profit organizations are influenced by
two
17) State and local governments are not required to prepare a CAFR.
18) When using debt service accounting, interest on long term debt is not to be accrued
unless the payment is due in no more than one month and the government has resources
available for payment.
19) When an activity is created to provide goods or services to provide assistance to
other departments or other governmental units, it should be accounted for in the:
A) Special Revenue Fund
B) Internal Services Fund
C) Enterprise Fund
D) General Fixed Asset Group
20) Purchase orders for items ordered by the General Fund totaled $ 205,000. Upon
receipt, invoices for these items totaled $200,000. Which of the following will take
place on the date the goods are received.
A) An encumbrance is debited for $205,000
B)Budgetary Fund Balance -- Reserve for Encumbrances is credited for $200,000
C) An expenditure is credited for $205,000
D) A liability is credited for $200,000
21) Not-for-profit health care entities are distinguished from voluntary health and
welfare organizations in the following manner:
A)Health care organizations provide health care services while voluntary health and
welfare organizations do not
B)Health care organizations use accrual accounting whereas voluntary health and
welfare organizations do not
C)Health care organizations are considered to be primarily business-oriented whereas
voluntary health and welfare organizations raise a significant portion of their money
from voluntary contributions
D)Health care organizations do not provide services to individuals who are unable to
pay
22) An alumpledges $9,000 to GreystoneCollege in 2015 on the condition that matching
funds are raised. The matching funds are raisedin 2016, how much revenue will
Greystone College recognize in 2015?
A)$ 0
B)$3,000
C)$6,000
D)$9,000
23) On April 1, 2015, the City of Southern Ponds issued $3,500,000 in 4% general
obligation, tax supported bonds at 101 for the purpose of constructing a new police
station. The premium was transferred to a debt service fund. A total of $3,490,000 was
used to construct the police station, which was completed before December 31, 2015,
the end of the fiscal year. The remaining funds were transferred to the debt service fund.
The bonds were dated April 1, 2015, and paid interest on October 1 and April 1 . The
first of 20 equal annual principal payments of $175,000 is due April 1, 2016 .
How would the $3,490,000 be accounted for?
A)As a capital asset in the government-wide Statement of Net Position
B)As an expenditure in the capital projects fund
C)As an expenditure in the capital projects fund and as an expense in the
government-wide Statement of Activities
D)Both (a) and (b)
24) Northern University has a fiscal year end of June 30 .
In June 2015, tuition and fees of $1,200,000 was assessed for the summer term that runs
from June 1, 2015 through August 31, 2015 . $1,200,000 was collected on June 1,
2015 .
When is this revenue reportable on the financial statements for Northern?
20152016
A) $ 1,200,000 0
B) $ 0 1,200,000
C) $ 600,000600,000
D) $ 400,000800,000
25) With respect to the preparation of fund basis financial statements, governmental
funds other than the General fund are considered to be major when which of the
following conditions exist?
A)With respect to fund basis financial statements, governmental funds are considered to
be a major fund when total assets, liabilities, revenues, or expenditures of the individual
governmental fund under consideration constitutes 25% of the total for the
governmental fund category
B)With respect to fund basis financial statements, governmental funds are considered to
be a major fund when total assets, liabilities, revenues, or expenditures of individual
governmental or enterprise fund under consideration are 15% of the total of the
governmental funds and enterprise categories, combined
C)Both A and B are required for a governmental fund to be a major fund
D)Neither A nor B are correct
26) Which of the following is True regarding the reporting of expenses by private
sector, not-for-profit hospitals?
A)All expenses are considered reductions in unrestricted net assets
B)Expenses must be reported by natural (i.e. salaries, supplies, etc.) classification in the
statements
C)Both (a) and (b) above
D)Neither (a) nor (b) above
27) How are Fiduciary Funds presented in the Government-wide Financial Statements?
A) Combined with Internal Service Funds
B) Combined with Business activities
C) Combined with governmental activities
D) None of the Above
28) For landfills accounted for as enterprise funds, a portion of the estimated cost of
closure of solid waste landfills should be charged as an expense and a liability of the
landfill operation each year on a:
A)Actual cost method
B)Units-of-production method
C)Estimated cost method
D)None of the above
29) Government financial audits must comply with the following:
A)Generally Accepted Auditing Standards
B)Government Auditing Standards
C)Both A and B
D)Generally Accepted Accounting Principles
30) The ______ Fund accounts for and reports the proceeds of specific revenue sources
that are restricted or committed to expenditure for specified purpose other than debt
service or capital projects.
A) Agency
B) Enterprise
C) General
D) Special revenue
31) Which of the following is True regarding fiduciary funds?
A)Fiduciary funds are included in the fund basis statements but not in the
government-wide
B)Fiduciary funds are reported by fund type, not as major funds
C)Both of the above
D)Neither of the above
32) The difference between assets and liabilities in the government-wide statements is
called_________.
A)Fund Balance
B)Net Position
C) Net Equity
D) Accrued Equity
33) Which of the following would not be an example of a voluntary health and welfare
organization?
A)A state community college
B)A private mental health facility
C)A senior citizen center
D)A food bank
34) The FASB has the authority to establish accounting and financial reporting
standards for:
A)Federal government
B)Private not-for-profits
C)Public not-for-profits
D)State and local governments
35) During the fiscal year ended December 31, 2015, the City of Johnstown issued 6%
general obligation serial bonds in the amount of $2,000,000 at 102 ($2,040,000) and
used $1,980,000 of the proceeds to construct a fire station. The $40,000 premium was
transferred to a debt service fund. The $20,000 left in the capital projects fund at the
end of the project was later transferred to the debt service fund. The bonds were dated
April 1, 2015 and paid interest on October 1 and April 1 . The first of 10 equal annual
principal payments was due on April 1, 2016 .
How would the $40,000 premium be accounted for?
A)Amortized to interest expenditure in the debt service fund
B)As an other financing source in the debt service fund
C)Both (a) and (b) above
D)None of the above
36) GASB Concepts Statement No. 3, Communication Methods in General Purpose
External Financial Reports that Contain Basic Financial Statements, states that
A)notes to the financial statements may not include managements objective
explanations
B)required supplementary information should be objective but may also include
predictions or subjective assessments if management deems it necessary for
understanding of the financial statements
C)disclosure in the notes is not an adequate substitute for recognition in the financial
statements
D)All of the above are correct
37) A certain government passed its budget for the fiscal year ended December 31, 2015
. Estimated Revenues amounted to $13,000,000; Appropriations amounted to
$12,000,000; Estimated Other Financing Uses amounted to $700,000; and Estimated
Other Financing Sources amounted to $200,000. In the budgetary entry (combining
entry):
A)Budgetary Fund Balance would be credited for $500,000
B)Budgetary Fund Balance would be debited for $500,000
C)Budgetary Fund Balance would be debited for $1,000,000
D)Budgetary Fund Balance would be credited for $1,500,000
38) Grant proceeds received from the state for a capital project would be recorded in a
capital projects fund of a city government as a (an):
A)Revenue
B)Other Financing Source
C)Direct addition to Fund Balance
D)Other Financing Use
39) Which of the following provisions of the Sarbanes-Oxley Act already existed in
governmental auditing standards?
A)Auditors are required to report deficiencies in the design or operation of internal
controls
B)Not-for-profit organizations are required to establish audit committees composed of
non-management board members
C)All nonaudit services performed by the auditors must be approved by the audit
committee
D)All of the above
40) Which of the following items, helpful for analysis, could be found in the statistical
section of the CAFR?
A)Assessed and actual (market) value of property
B)Population trends
C)Debt limit and margin
D)All of the above
41) Which of the following is not prohibited of organizations receiving tax-exempt
status under IRS Section 501(c)(3)?
A)Earning a profit (increase in net assets)
B)Distributing earnings to the benefit of members or officers
C)Endorsing political candidates or attempting to influence legislation
D)None of the above. All of these are prohibited of Tax-exempt organizations
42) Fund Balance with Treasury is an example of which type of federal government
account?
Budgetary Proprietary
Account Account
A) Yes Yes
B) No Yes
C) Yes No
D) No No
43) Which of the following is correct with respect to accounting for supplies inventories
in a governmental fund?
A)Supplies inventories may be recorded using either the purchase method or the
consumption method
B)An amount equal to the ending balance of supplies is reported as Nonspendable Fund
Balance
C)The consumption method is preferable over the purchase method since it requires no
adjustment to supplies expense when preparing the government-wide statements
D)All of the above are correct
44) The journal entry to record an encumbrance would include:
A)A debit to Encumbrance Control
B)A debit to Budgetary Fund Balance Reserve for Encumbrances
C)A credit to Budgetary Fund Balance Reserve for Encumbrances
D)A and C would both be included in the journal entry
45) GASB Statement 34 requires supplementary information (RSI) for what two major
areas?
46) Identify three types of restrictions placed on temporarily restricted net assets and
outline the accounting requirements for each type.
47) Contrast the economic resources measurement focus and the current financial
resources measurement focus with regard to the accounting treatment of long-term debt.
48) What are the five environmental factors relating to how governments are different
from commercial businesses as described by GASB in a white paper entitled: Why
Governmental Accounting and Financial Reporting Is and Should Be Different:
49) Identify income items which should not be included in the determination of the
performance indicator by a hospital
50) What are the revenue recognition requirements for:
(1)unconditional promises to give (i.e. pledges),
(2)conditional promises to give,
(3)multi-year pledges,
(4)donated services, and
(5)Donated materials or fixed assets.
