Archives: Quiz

1) The term fiduciary funds include agency, pension trust, investment trust, and private purpose trust funds. 2) The required financial statements for agency funds includea Statement of Fiduciary Net Position, and a Statement of Changes in Fiduciary Net Position. Answer: […]

1) Capital projects funds are always included in the Budgetary Comparison Schedule. 2) Allotmentsare made at the agency level and assign portions of the appropriation to subunits or programs. Answer: True 3) To apply for tax-exempt status, an organization must […]

1) Inflows from self-supporting university operations, known as auxiliary enterprises, are unrestricted. 2) Supporting expenses are included in the numerator of the program expense ratio. Answer: False 3) Public higher education institutions that report as special-purpose entities engaged in business-type […]

1) In a governmental audit the auditor is required to report directly to appropriate officials in addition to the board or audit committee. 2) An asset may be considered impaired if either the decline in the service utility is unexpected […]

1) Assuming an auditee is not considered low-risk, the auditor is required to express an opinion on compliance on major programs, which must add up to 90 percent of federal funds expended by the auditee. 2) Governments and other nonprofits […]

1) Budgetary comparison schedules are not required for proprietary funds. 2) The GASB Concept Statement on Service Efforts and Accomplishments Reporting requires state and local governments to include inputs of nonmonetary resources in their financial reporting. Answer: False 3) General […]

1) The Financial Accounting Standards Board and the Governmental Accounting Standards Board are parallel bodies under the oversight of the Financial Accounting Foundation. 2) General-purpose governments are those that offer more than one type of basic governmental service, while special-purpose […]

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 […]

1) In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental, proprietary and fiduciary funds. 2) Unexpended Appropriations Balance may be interpreted as how much a government may continue to spend and remain within […]

1) Revenue for reimbursement grants may be recognized before expenditures take place as long as the grant has been awarded. 2) The Fiduciary Funds are included in the Government-Wide Financial Statements. Answer: False 3) There are no expenses in modified […]

1) Special-purpose governments engaged in business type activities only are required to prepare both proprietary fund and government-wide financial statements. 2) The Single Audit Actis intended to provide assurance to the federal government that federal funds are protected through a […]

1) Fiduciary funds include agency, pension trust, investment trust, and permanent funds. 2) Escheat property, often collected by the state, is to be reported either in a private-purpose trust fund or in the fund to which the property ultimately reverts. […]

1) Business activities fund statements must be changed to the accrual basis from the modified accrual basis when preparing government-wide financial statements. 2) When preparing the government-wide statements, an entry is required to record depreciation expense on general capital assets […]

1) When converting from governmental fund financial statements to the governmental activities column of the government-wide statements, the proceeds from the sale of capital assets which were listed as an other financing source are eliminated and the gain or loss […]

1) Government-wide statements are to be prepared using the current financial resources measurement focus and modified accrual basis of accounting. 2) FASB requires that the reconciliation of income and cash flows from operations starts with operating income. Answer: False 3) […]

1) A fire protection district is anexample of specialpurpose local government. 2) The residual classification for governmental funds other than the General Fund is Assigned. Answer: True 3) When closing the General Fund and Special Revenue Funds of a state […]

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. Answer: True 3) Governmental Auditing Standards identifies four categories […]

1) Examples of budgetary accounts include Estimated Revenues, Appropriations, and Estimated Other Financing Uses. 2) The Governmental Accounting Standards Board sets financial reporting standards for all units of government: federal, state, and local. Answer: False 3) According to the rules […]

1) The FASB requires private not-for-profit organizations to report net assets (the excess of assets over liabilities) separated by unrestricted, temporarily restricted and permanently restricted. 2) Special-purpose governments that are engaged in both governmental and business-type activities are required to […]

1) Churches must file a Form 990 . 2) All donated services are recognized as revenue. Answer: False 3) The introductory and statistical sections of a CAFR are required to be audited. Answer: False 4) Contributions of assets other than […]

1) According to GASB 34, restricted Net Position does not include those that are the results of constraints imposed by creditors, grantors, contributors, or laws or regulations of other governments. 2) When preparing fund basis financial statements, any funds not […]

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. Answer: False 3) The difference between assets […]

1) Country clubs and labor unions are not included in the category other not-for-profit organizations because they provide benefit to their members only and not to the general public. 2) Both governmental owned and private health care providers use the […]

1) Universities treat athletic scholarships as a reduction in revenue. 2) The Comprehensive Annual Financial Report (CAFR) contains four major sections: introductory, financial, supplementary, and statistical. Answer: False 3) Private-purpose Trust Funds benefit individuals, private organizations, or other governments. Answer: […]

1) A Charitable lead trust is a type of split-interest agreement. 2) NACUBO guidelines treat estimates of uncollectible accounts as reductions in revenue. Answer: True 3) Positive fund balances of capital projects funds are classified as nonspendable, restricted, committed, or […]

1) The single audit requirements apply only to state and local governments. Private not-for-profits do not have to comply with these requirements, even if they receive federal grants. 2) For most state and local governments, the budget, when adopted according […]

1) The 2) According to the rules for accounting for colleges and universities under the jurisdiction of the FASB, depreciation is recorded. When reporting by function, depreciation is allocated to functional categories. Answer: True 3) NACUBO guidelines require both revenues […]

1) The government-wide financial statements present the government as a whole, including component units and including fiduciary activities. 2) Special-purpose governments generally provide a limited set of services or programs. Answer: True 3) A non exchange transaction is one where […]

1) According to the rules for accounting for colleges and universities under the jurisdiction of the FASB, expenses are reported by function, either in the statements or in the notes. 2) A Statement of Functional Expenses is not required for […]

1) The Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Net Position must include a performance indicator, such as operating income. 2) If a private not-for-profit fails to comply with donor restriction on contributions received, the organization must […]

1) The program expense ratio is calculated as Program service expenses / Total expenses. 2) FASB sets the reporting standards for private not-for-for profits. Answer: True 3) Governments must capitalize infrastructure assets in the government-wide statements Answer: True 4) Capital […]

1) An investment trust fund is used to account for the internal portion of a multi-government investment pool, when the reporting government is trustee. 2) Long term liabilities of an enterprise fund are reported in the proprietary fund statement and […]

1) Present and potential donors are the primary users of private not-for-profit financial statements. 2) GASB standards for property tax revenue recognition under the modified accrual basis of accounting provide that revenue is permitted to be recorded if the expected […]

1) The increase side of all accounts is the normal balance. 2) Manufacturers use labor, plant, and equipment to convert direct materials into finished products. Answer: TRUE 3) The amortization of a premium on bonds payable decreases bond interest expense. […]

1) Depreciation expense on factory equipment is part of factory overhead cost. 2) The Limited Liability Company may elect to be manager managed rather than member managed which means that only authorized members may legally bind the corporation. Answer: TRUE […]

1) Under the periodic inventory system, the cost of merchandise sold is recorded when sales are made. 2) The contribution margin ratio is the same as the profit-volume ratio. Answer: TRUE 3) Once an account has been closed for the […]

1) After analyzing transactions, the next step would be to post the transactions in the ledger. 2) The market rate of interest is affected by a variety of factors, including investors’ assessment of current economic conditions. Answer: TRUE 3) It […]

1) Free cash flow is the measure of operating cash flow available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity and dividends. 2) An example of deferred revenue is Unearned Rent. Answer: TRUE 3) […]

1) A deficit in Retained Earnings is reported in the stockholders’ equity section of the balance sheet. 2) The process of transferring the debits and credits from the journal entries to the accounts is known as updating the accounts. Answer: […]

1) When the effective interest method of amortization is used, the amount of interest expense for a given period is calculated by multiplying the face rate of interest by the bonds carrying value at the beginning of the given period. […]

1) The statement of cost of goods manufactured is an extension of the income statement for a manufacturing company. 2) Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or […]

1) Cost of Merchandise Sold is often the largest expense on a merchandising company income statement. 2) Gains and losses on the redemption of bonds are reported as other income or other expense on the income statement. Answer: TRUE 3) […]

1) The FIFO method separates work done on beginning inventory in the previous period from work done on it in the current period. 2) When a business receives a bill from the utility company, no entry should be made until […]

1) The stock dividends distributable account is listed in the current liability section of the balance sheet. 2) The cost of a patent with a remaining legal life of 10 years and an estimated useful life of 7 years is […]

1) The erroneous arrangement of digits, such as writing $45 as $54, is called a slide. 2) If the buyer bears the freight costs related to a purchase, the terms are said to be FOB destination. Answer: FALSE 3) In […]

1) The reduction in the par or stated value of common stock, accompanied by the issuance of a proportionate number of additional shares, is called a stock split. 2) If ending inventory for the year is understated, net income for […]

1) At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $2,000. The Accounts Receivable balance is analyzed by aging the accounts and the amount estimated to be uncollectible is $15,000. The amount […]

1) The cash payback method of capital investment analysis is one of the methods referred to as a present value method. 2) When a corporation issues stock at a premium, it reports the premium as an other income item on […]

1) All costs of the processes in a process costing system ultimately pass through the Cost of Goods Sold account. 2) A chart of accounts is a listing of accounts that make up the journal. Answer: FALSE 3) After the […]

1) If a new partner is given a 20% interest in the firm then the new partner will receive a 20% interest in earnings. 2) The amount journalized showing the cost added to finished goods is taken from the cost […]