The FASB Codification requires the following financial statements for all not-for-profit
organizations:
A. Statement of financial position, statement of activities, statement of cash flows, and
statement of functional expenses.
B. Statement of financial position, statement of operations, statement of cash flows, and
statement of functional expenses.
C. Statement of financial position, statement of activities, and statement of cash flows.
D. Statement of financial position, statement of revenues and expenses, statement of
cash flows, and statement of functional expenses.
The following are key terms in Chapter 17 that relate to accounting and financial
reporting for federal agencies and the federal government:
A. Apportionment
B. Budgetary resources
C. Expended appropriation
D. Governmental assets
E. Heritage assets
F. Intragovernmental assets
G. Stewardship investments
H. Stewardship land
For each of the following definitions, indicate the key term from the list above that best
matches by placing the appropriate letter in the blank space next to the definition.
___1. Federal capital assets that possess educational, cultural, or natural characteristics
___2. Claims by or against a reporting entity that arise from transactions between that
entity and other reporting entities
___3. Assets that arise from transactions of the federal government or an entity of the
federal government with nonfederal entities
___4. Dividing a federal appropriation into amounts that are available during specific
time periods
___5. Federal land other than that included in a general property, plant and equipment
___6. New budgetary authority for the period plus unobligated budgetary authority
carried over from the prior period and offsetting collections, if any, plus or minus any
budgetary adjustments
___7. An account used when goods or services have been received.
According to FASB standards, which of the following entities would not be considered
a health care organization?
A. The Heart Research Institute.
B. The St. George Hospital.
C. The Family Practice Medical Clinic.
D. The Northeast Health Maintenance Organization.
Under a single audit:
A. An annual audit must be performed encompassing the nonfederal entity’s financial
statements and schedule of expenditures of federal awards.
B. The audit must be conducted by an independent auditor in accordance with generally
accepted government auditing standards (GAGAS) and cover the operations of the
entire nonfederal entity.
C. For each major program, the auditor must obtain an understanding of the internal
controls pertaining to the compliance requirements for the program, assess control risk,
and perform tests of controls, unless the controls are deemed to be ineffective.
D. All of the above statements regarding a single audit are true.
Which of the following statements regarding costs under federal awards is not true?
A. Only items of cost specifically mentioned in a grant, contract, or other agreement
document are allowable.
B. Several costs are allowable under highly restrictive conditions and generally require
the explicit approval of the grantor agency.
C. For major not-for-profit organizations and institutions of higher learning, indirect
costs must be classified within two broad categories termed “facilities” and
“administration.”
D. Direct costs are those that can be identified specifically with a particular cost
objective.
Balsam City’s library board is appointed by the city council, which has agreed to
subsidize the operating costs of the library at a material amount to be determined each
year. In addition, the city is paying debt service on general obligation bonds issued to
construct the library. Based on generally accepted accounting principles (GAAP)
criteria for defining the reporting entity:
A. The library is a component unit.
B. The library is a special purpose government.
C. The library is a joint venture.
D. The library is a jointly governed organization.
Revenues that are legally restricted for expenditure on specified operating purposes
should be accounted for in special revenue funds, including
A. Endowment where the investment earnings are to be used for public purposes.
B. Pension trust fund revenues.
C. Accumulation of resources for payment of general long-term debt principal and
interest.
D. Gasoline taxes to finance road repairs.
A single audit conducted pursuant to the Single Audit Act Amendments of 1996
requires which of the following types of audits?
A. Financial Audit: Yes; Performance Audit: No
B. Financial Audit: No; Performance Audit: No
C. Financial Audit: No; Performance Audit: Yes
D. Financial Audit: Yes; Performance Audit: Yes
During January 2017 General Fund supplies ordered in the previous fiscal year and
encumbered at an estimated amount of $2,000 were received at an actual cost of $2,200.
The entry to record this transaction will require a debit to:
A. Expenditures-2017 in the amount of $2,200.
B. Expenditures-2016 in the amount of $200.
C. Expenditures-2017 in the amount of $200.
D. Expenditures-2016 in the amount of $2,200.
Combining financial statements for nonmajor funds of a government should be included
A. In the basic financial statements.
B. In the notes to the financial statements.
C. As a part of the financial section of the comprehensive annual financial report
(CAFR).
D. As part of the statistical section of the comprehensive annual financial report
(CAFR).
The following are key terms in Chapter 8 that relate to accounting for pension plans.
A. Agent multiple-employer pension plan
B. Cost-sharing multiple-employer pension plan
C. Covered payroll
D. Defined benefit plan
E. Defined contribution plan
F. Net pension liability
G. Service cost
H. Total pension liability
For each of the following definitions, indicate the key term from the list above that best
matches by placing the appropriate letter in the blank space next to the definition.
_____ 1) A pension plan which specifies the amount or rate of contribution that the
employer and employees must contribute to the members’ accounts in the pension plan.
_____ 2) The portion of the present value of projected benefit payments to be provided
through the pension plan to current active and inactive employees that is attributed to
those employees’ past periods of service.
_____ 3) The portion of the actuarial present value of projected benefit payments that is
attributed to the current year, interest on the total pension liability, benefit payments,
and other changes to the total pension liability.
_____ 4) The pension obligations of many employers are pooled and plan assets can be
used to pay the benefits of the employees of any employer that provides pensions
through the pension plan.
_____ 5) Plan assets of numerous employers are pooled for investment purposes but
accounts are maintained for the individual employer participants.
Under the modified accrual basis of accounting, revenues should be recognized when
A. Realizable.
B. Earned.
C. Available.
D. Spent.
Which of the following governments would have publicly accessible information
available through the Electronic Municipal Market Access (EMMA)?
A. A city that had issued revenue bonds.
B. A county that has entered into a capital lease.
C. All state and local governments over 25,000 in population.
D. Those state and local governments who have issued debt subject to Securities and
Exchange Commission (SEC) oversight.
The section of the comprehensive annual financial report that presents tables and charts
showing social and economic data in addition to financial trends, fiscal capacity, and
operating information of the government is the:
A. Introductory section.
B. Management’s discussion and analysis section.
C. Statistical section.
D. Financial section.
A measure of the adequacy of the amount of the government’s total unrestricted net
position or deficit at the measurement date is:
A. Unrestricted net position/total revenues.
B. Business-type activities revenues/business-type activities expenses.
C. Total net position (governmental activities and business-type activities) less total net
position at the beginning of the year.
D. Total revenues/total expenses.
Which of the following transactions is classified as an exchange transaction?
A. Property taxes.
B. Fees charged by a municipal airport.
C. Bequest left to the city by a wealthy citizen.
D. State grant to conduct an after school program for children.
The General Fund has transferred cash to the appropriate fund for eventual retirement
of term bonds maturing in 10 years. Which funds would record this transaction?
General Fund Capital Projects Fund Debt Service Fund A) Yes No Yes B) No No Yes C)
Yes No No D) Yes Yes Yes
A. Choice A.
B. Choice B.
C. Choice C.
D. Choice D.
The following are key terms in Chapter 9 that relate to the reporting entity:
A. Component unit
B. Financial reporting entity
C. Financial accountability
D. Joint venture
E. Other stand-alone government
F. Primary government For each of the following definitions, indicate the key term from
the list above that best matches by placing the appropriate letter in the blank space next
to the definition.
____1. A separate government or agency that is combined for purpose of reporting on
the whole entity
____2. The responsibility that exists when a primary government appoints a voting
majority of an the organization’s governing board and it is able to (a) impose its will on
the organizations or (b) there is a potential for the organization to provide financial
benefits or impose a financial burden on the primary government
____3. A state government, general purpose local government, or special purpose
government that is independent of other state or local governments
____4. A legally separate governmental organization that does not have a separately
elected government body
____5. Primary government and all related component units
Which of the following activities or transactions would normally not be accounted for
in a capital projects fund?
A. Construction of a new city jail.
B. Construction of airport runways financed by revenue bonds and to be repaid from the
revenues of the city airport, an enterprise fund.
C. Lease of a building to be used as a city office building.
D. Construction of a new city park to be maintained primarily from General Fund
revenues.
A donor provides a large cash contribution that is to be used for acquisition of a new
building. Under FASB standards, how would this contribution be reported by a
not-for-profit organization on its statement of cash flows?
A. Operating activity.
B. Investing activity.
C. Financing activity.
D. Capital and related financing activity.
Which of the following is not a budgetary account?
A. Encumbrances.
B. Encumbrances Outstanding.
C. Estimated Revenues.
D. Appropriations.
Which of the following would be included in a properly prepared comprehensive
annual financial report (CAFR), but not in the minimum requirements for general
purpose financial reporting specified by GASB standards?
A. Management’s discussion and analysis (MD&A).
B. Government-wide financial statements.
C. Notes to the financial statements.
D. Combining and individual fund financial statements.
During the year, a wealthy local merchant donated a building to the City of Rosewood.
The original cost of the building was $300,000. Accumulated depreciation at the date of
the gift amounted to $250,000. The appraised fair market value of the donation at the
date of the gift was $600,000, of which $40,000 was the value of the land on which the
building was situated. At what amount should this contribution be recorded in the
governmental activities accounts at the government-wide level?
A. $50,000.
B. $300,000.
C. $600,000.
D. $0.
Indicate whether the following revenues should be classified as program revenues or
general revenues on the government-wide statement of activities.
a. Unrestricted operating grants that can be used at the discretion of the city council.
b. Capital grants restricted for highway construction.
c. Charges for building inspections.
d. A special assessment for snow removal.
e. Fines and forfeits.
f. Motor vehicle fuel taxes restricted for road repair.
g. Unrestricted investment earnings
The General Fund of the City of Castle Rock transfers $115,000 to the debt service fund
for a $100,000 bond principal and $15,000 interest payment. Subsequent payment of
the principal and interest would include:
A. A debit to Expenditures Bond Interest in the debt service fund.
B. A debit to Other Financing Uses Principal and Interest Payments in the debt service
fund.
C. A debit to Interest Expenditures in the General Fund.
D. A debit to Interest Expenditures in the governmental activities accounts.
The Form 990 consists of 12 parts (core form) and several schedules. Which of the
following would not be included as one of the parts of the core form of the Form 990?
A. Statement of program service accomplishments.
B. Management analysis of the financial condition of the organization.
C. Balance sheet.
D. A checklist of required schedules.
When a cash and investment pool of a certain city was established, the debt service
fund transferred investments to the pool having a cost of $3,000,000 but a current fair
market value of $2,900,000. To record this transaction, the journal entry made by the
debt service fund will include:
A. A debit to Equity in Pooled Cash and Investments in the amount of $3,000,000.
B. A debit to RevenuesChange in Fair Value of Investments in the amount of $100,000.
C. A debit to Investments in the amount of $2,900,000.
D. A credit to Investments in the amount of $100,000.
Which of the following financial statements is prepared by fiduciary funds?
A. Statement of net position.
B. Statement of activities.
C. Statement of cash flows.
D. All of the above.
Which of the following is required as part of a complete set of financial statements for a
private college or university?
A. Statement of changes in operations.
B. Statement of revenues, expenses, and changes in net assets.
C. Statement of activities.
D. Statement of functional expenses.
Which of the following statements regarding the financial reporting of agency funds is
not true?
A. Agency activities are reported only in the fiduciary fund financial statements.
B. Agency fund financial information is reported in a separate column of the
government-wide statement of activities.
C. Trust funds are included in the statement of changes in fiduciary net position.
D. GASB standards allow disclosure of the assets and liabilities of agency funds in a
separate column of the statement of fiduciary net position.
A private college would report which of the following assets differently than a public
college?
A. Land.
B. Intangible assets.
C. Collections.
D. Equipment.
Which of the following is not one of the criteria specified in the FASB Codification for
determining whether joint costs with a fund-raising appeal can be reported with
program expenses rather than as fund-raising expenses?
A. Purpose.
B. Audience.
C. Time period.
D. Content.
Where does a nongovernmental not-for-profit health care entity report increases that
have occurred in its temporarily restricted net assets?
A. Statement of changes in net assets.
B. Statement of operations.
C. Balance sheet.
D. Similar to governmental health care entities, it would not report the change on the
face of a financial statement.
Which of the following statements usually will not be included in the annual financial
report of a governmentally owned public university engaged only in business-type
activities?
A. Statement of cash flows.
B. Statement of net position.
C. Statement of activities.
D. Statement of revenues, expenses, and changes in net position.