NONPROFIT FINAL!!!!!!!!!

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state and local government prepare financial reports using which two general accounting methods?

1. economic resources measurement focus and accrual basis 2. current financial resources measurement focus and modified accrual accounting

governmental funds include:

1. generic fund 2. capital projects fund 3. debt service fund 4. special revenue fund 5. permanent fund

what categories are the 11 fund types organized into?

1. governmental 2. proprietary 3. fiduciary

What are the find basis financial statements?

1. governmental 2. proprietary 3. fiduciary

27. Which type of audit opinion is appropriate if an auditor is not deemed to be independent? A) Disclaimer of opinion. B) Unqualified. C) Qualified. D) Adverse.

A) Disclaimer of opinion.

111. When a government is the sponsor of a multi-government investment pool, the government should report the external portion of those trust assets in a(n): A) Pension Trust Fund. B) Investment Trust Fund. C) Private-Purpose Trust Fund. D) Agency Fund.

B) Investment Trust Fund

Which of the following funds is used to account for the external portion of investment pools? A) Special Revenue Fund B) Investment Trust Fund C) Enterprise Fund D) Private-purpose Trust Fund

B) Investment Trust Fund

How are revenues classified in the activity accounts of governmental funds?

By Source

1. A college receives $ 500,000 of Pell Grants to be applied to current year student accounts for tuition and fees. What account should be credited upon receipt of the $ 500,000, assuming: The College is a private institution The College is a public institution A) Non-operating revenue Non-operating revenue B) Non-operating revenue Liability: Due to student accounts C) Liability: Due to student accounts Non-operating revenue D) Liability: Due to student accounts Liability: Due to student accounts

1. A public college had tuition and fees of $21,000,000. Scholarships, for which no services were required, amounted to $2,500,000. Graduate assistantships, for which services were required, amounted to $1,600,000. The amount to be reported by the public college as net tuition and fees would be:

How are Revenues defined as a source of funds in the activity account of governmental funds?

as all other inflows

which of the following best describes how many funds a government should use?

as many as necessary to fulfill legal requirements and sound financial administration

Under modified accrual basis of accounting, when are expenditures recognized?

at the time a liability is incurred

Which of the following financial statements must special-purpose governments include in their financial statements if the special purpose government is engaged in a single business type activity? a. Government-wide financial statements b. Fund basis financial statements c. Both A and B d. Neither A nor B

b. Fund basis financial statements

modified accrual accounting:

basis of accounting required for use by governmental funds in which revenues are recognized in the period in which they become available and measurable

what objectives should be followed in federal financial reporting

budgetary integrity operating performance stewardship systems and controls

______ funds are created when individuals or organizations contribute resources with the agreement that principal and/or income will be used to benefit individuals or nongovernmental organizations. A) Agency B) Investment trust C) Private-purpose trust D) Permanent

C) Private-purpose trust

66. The program expense ratio is calculated as follows: A) Total expenses / Program service expenses B) Program service expenses + supporting service expenses / Total expenses C) Program service expenses / Total expenses D) Total expenses / (Program service expenses + supporting service expenses)

C) Program service expenses / Total expenses

Which of the following is true regarding the recording of unconditional pledges of support received by a not-for-profit organization?

Multiyear pledges should be recorded at the present value of future collections and contribution revenue should be reported net of an allowance for estimated uncollectible.

What are the primary sources of GAAP?

FASAB FASB GASB

A private not-for-profit college follows whose standards?

FASB

Health care organizations that are privately owned and operated to provide a return to investors follow which standards: - GASB. - FASB, including standards specifically for not-for-profits. - FASB, excluding standards specifically for not-for-profits. - None of the choices are correct.

FASB, excluding standards specifically for not-for-profits. Private for-profit health care organizations follow FASB standards excluding those written specifically for-not-for profits.

Not-for-profit health care organizations that are not government-owned follow which standards?

FASB, including standards specifically for not-for-profits

Which of the following is true regarding fiduciary fund statements?

Financial statements include a Statement of Net Assets (or balance sheet), Statement of Revenues, Expenses, and Changes in Fund Net Assets, and Statement of Cash Flows

Which of the following is true regarding the proprietary funds statements?

Financial statements include a Statement of Net Assets (or balance sheet), Statement of Revenues, Expenses, and Changes in Fund Net Assets, and Statement of Cash Flows

Which of the following is not true of private colleges and universities. Reclassifications of temporarily restricted and unrestricted net assets should be made?

If the governing board permanently designates resources for endowment

Which of the following statements is true of a special-purpose government?

Special-purpose governments that are engaged in a single governmental-type activity may combine the fund and government-wide financial statements.

11. Which of the following is a governmental audit type that has a primary concern with providing reasonable assurance about whether financial statements are presented fairly? A) Attestation Engagement. B) Performance Audit. C) Financial Audit. D) Nonaudit services.

C) Financial Audit.

45. To apply for tax-exempt status, a non-profit organization must file: A) IRS Form 501(c)(3). B) IRS Form 990. C) IRS Form 1023. D) None of the above.

C) IRS Form 1023.

deferred inflows of resources:

taxes that have been deferred to a future period when they are expected to be available for operations

What are Other Financing Sources in Activity Accounts?

include transfers in from other funds and the proceeds of long-term borrowing

What are encumbrances

the governments expressed intent to use resources for a particular purposed and therefore these resources should not be classified as unassigned.

What is not recorded in governmental fund balance sheets?

long term assets/ capital fixed assets long term debt

What are government accounting practices intended to do?

to satisfy the information needs of a variety of users

What are Nonexchange transactions?

transactions in which a government receives resources without directly giving equal value in exchange.

what are the types of fiduciary funds

pension investment trust funds private purpose trust finds custodial funds

State and local governments using _________ fund types

fund accounting:

"Accounting system organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures, or expenses, as appropriate."

both state and local governments and federal agencies are required to provide what?

MD&A

During the month of December, Mary & David Memorial Hospital billed patients $45,000, billed 3rd parties $55,000, and provided $15,000 of charity care. How much should the hospital report as Patient Service Revenue? $55,000. $115,000. $45,000. $100,000.

$100,000. $45,000 billed to patients + $55,000 billed to third parties = $100,000. Charity care is not included in revenues.

A private sector, not-for-profit hospital received a pledge of $150,000 in 2019 to be used for a building to be constructed in 2020 but contingent on the hospital being able to raise an equivalent amount from other donors. As of the end of 2019, two-thirds of the amount had been raised from other donors. In 2020, the hospital raised the remaining amount from other donors. The donor gave the $150,000 to the hospital in 2020 and the building was completed in 2021. In which year should the hospital recognize the $150,000 from the pledge? $150,000 in 2021. $100,000 in 2020 and $50,000 in 2021. $100,000 in 2019 and $50,000 in 2020. $150,000 in 2020.

$150,000 in 2020. The pledge is recorded after the full amount of matching funds had been raised which would be in 2020.

During the month of December, Mary & David Memorial Hospital billed patients $75,000, billed 3rd parties $90,000, and provided $22,000 of charity care. How much should the hospital report as (gross) Patient Service Revenue? $165,000. $90,000. $187,000. $75,000.

$165,000. $75,000 billed to patients + $90,000 billed to third parties = $165,000. Charity care is not included in revenues.

1. Private colleges and universities recognize contribution revenue in the year in which the unconditional pledge is made.

True

1. Public colleges typically report as special-purpose entities engaged only in business-type activities.

True

What are the permanent accounts of Governmental Funds?

1. Assets 2. Deferred Outflows of Resources 3. Liabilities 4. Deferred Inflows of Resources 5. Fund Balances

What are Financial Statements for Governmental Accounts?

1. Balance Sheet 2. Statement of Revenues, Expenditures, and Changes in Fund Balance.

What are the nominal accounts?

1. Budgetary Accounts 2. Encumbrances Financial Statement Activity Accounts 3. Expenditures 4. Other Financing Sources 5. Other Financing Uses

What are the 3 Character Groupings of Outflow Classifications in the activity accounts for governmental funds

1. Current 2. Capital 3. Debt Service

What the journal entry to record the current portion of expenditure and recognize revenue from the receipt of deferred grants from mandated and voluntary nonexchange revenues under the modified accrual basis?

1. Debit: Expenditures Control Credit: Accounts Payable/Cash 2. Debit: Deferred Revenues- Grants Credit: Revenues Control

What are the journal entries for reimbursement type grants

1. Debit: Expenditures Control Credit: Accounts Payable/Cash 2. Debit: Due from Grantor Credit: Revenues Control

What are the 2 ways in which constraints on resources are placed on Restricted Funds?

1. Externally Imposed 2. Imposed by law

What accounts does GASB require governments to report a comparison of budgeted and actual results

1. For the General Fund 2. Special Revenue Funds with legally adopted budgets.

What are Examples of Voluntary Nonexchange Transactions?

1. Grants 2. Donations

What are the 4 types of nonexchange transactions

1. Imposed Nonexchange Revenues 2. Derived Tax Revenues 3. Government Mandated Transactions 4. Voluntary Nonexchange Transactions

What do nonspendable resources include?

1. Inventories and prepaids 2. Assets held for sale and long-term receivables 3. the principal (corpus) of a Permanent Fund

What are the 5 Categories in which Fund Balance is reported for Governmental-Type Funds?

1. Nonspendable 2.Restricted 3. Committed 4. Assigned 5. Unassigned

What are Examples of Imposed Nonexchange Revenues?

1. Property Tax 2. Special Assessments 3. Fines/Forfeits

What are the steps of revenue recognition for mandated and voluntary nonexchange revenues under the modified accrual basis?

1. Record the receivable and revenue when all eligibility requirements have been met.

How do you report fund balance classification when there are net resources with restrictions imposed by law or as a result of requirements imposed by outside creditors,contributors, or granting agencies when the balance is negative?

1. Reduce any assigned fund balances by the amount of the negative balance. 2. If a negative balance still remains report the remaining balance as "Unassigned Fund Balance".

How do you report fund balance classifications if there are residual funds other than the General Fund, or if there are net resources in the General Fund that are intended for identified purposes, and the fund balance is negative?

1. Reduce any assigned fund balances by the amount of the negative balance. 2. If a negative balance still remains report the remaining balance as "Unassigned Fund Balance".

How do you report the fund balance classification when the governing body has formally committed net resources to specific activities, or there are contractual obligations outstanding, and the balance is negative?

1. Reduce any assigned fund balances by the amount of the negative balance. 2. If a negative balance still remains report the remaining balance as "Unassigned Fund Balance".

What is the order of the Fund Balance Constraint Hierarchy?

1. Restricted Funds 2. Committed Funds 3. Assigned Funds 4. Unassigned Funds

What is the 2 step process for when expenditures are actually incurred?

1. Reverse the original Encumbrance Entry 2. Record the Liability

What are some expenditures that may be recognized in the activity accounts of governmental funds?

1. Salaries (Current) 2. Land, Buildings, or Equipment (Capital) 3. Payment of interest and principal on debt (Debt Service)

What are Examples of Derived Tax Revenues?

1. Sales 2. Income 3. Motor Fuel Taxes

government wide financial statements?

1. Statement of net position 2. Statement of activities combine the governmental and business type (proprietary) activities of the government for the purpose of presenting an overall picture of the financial position and the results of operations of the government

What do sources of revenues for the activity accounts in governmental funds include?

1. Taxes 2. Charges for Services 3. Amounts provided by other entities (such as the state or federal government).

How is Derived Tax Revenue recognized in the Modified Accrual Approach

1. The receivable is recorded when the taxpayer's underlying transaction takes place 2. revenues are recognized when available and measurable 3. Revenues not expected to be collected in time to settle current liabilities are deferred

what are the 5 environmental differences between governments and for profit business enterprises

1. organization purposes 2. sources of revenue 3. potential for longevity 4. relationship with stakeholders 5. role of the budget

What are the steps to recording Imposed Nonexchange Revenue

1. record the receivable, and an allowance for uncollectables, when an enforceable claim exists. 2. Revenues should be recognized in the period for which the taxes are levied (budgeted), but are also subject to a sixty day rule.

two conditions must be met for a fund to exist

1. there must be a fiscal entity 2. there must be a double entry accounting entity created to account for the fiscal entity

What are the eligibility requirements a revenue resulting from nonexchange transaction must meet?

1.Required Characteristics of Recipients 2. Time Requirement 3. Reimbursement 4. Contingencies

The statistical section typically presents ____ years of information in each table or schedule.

One of the two conditions for funds other than the General Fund to be considered major is that total assets, liabilities, revenues or expenditures of the individual governmental fund are:

10% of the total of the governmental and enterprise categories combined

A donor pledged $100,000 to a not-for-profit hospital in 2014 to purchase imaging equipment. The equipment was purchased was purchased in 2015 and the donor transferred the funds to the hospital in 2015. In which year would the revenue be recognized?

2014

A donor pledged $100,000 to a private not-for-profit hospital in 2019 to purchase imaging equipment. The equipment was purchased in 2020 and the donor transferred the funds to the hospital in 2020. In which year would the revenue be recognized?

2019 The revenue is recorded when the pledge is made.

A donor pledged $1,000,000 to a not-for-profit hospital in 2019 to conduct medical research, conditional on the hospital raising $1,000,000 from other donors. The other donors met the condition in 2019. The donor transferred the funds to the hospital in 2020. In which year would the revenue be recognized? - 2019. - 2020. - Half in 2019 and half in 2020. - None of the above; the hospital would only recognize revenue when the amounts had been expended according to the donor's wishes.

2019 The pledge is recorded after the full amount of matching funds had been raised which would be in 2019.

FASAB has issued what?

8 Statements of Federal Financial Accounting Concepts (SFFACs)

FASB has issued what?

8 concepts for financial reporting of not for profit entities

1. Inflows from self-supporting operations by a private college are known as auxiliary enterprises and are classified as A) Unrestricted Revenue B) Temporarily Restricted Revenue C) Permanently Restricted Revenue D) Either A or B

1. Private universities follow the authoritative standards of _____ and use the _____ basis of accounting. A) FASB, Accrual. B) FASB, Modified-accrual. C) GASB, Accrual. D) GASB, Modified-accrual.

1. Which of the following is not true regarding the Statement of Revenues, Expenses, and Changes in Net Position for a public college? A) Revenues are required to be presented in the categories of Permanently Restricted, Temporarily Restricted and Unrestricted, while all expenses are classified as Unrestricted. B) Tuition fees waived by the institution in return for services provided by employees and student assistants are shown as expenses. C) Interest expense is accrued and bond premiums and discounts are amortized. D) None of the above.

1. Which of the following is not true regarding the Statement of Revenues, Expenses, and Changes in Net Position for a public college? A) State appropriations and Pell Grants are reported as operating revenue B) Revenues from residence halls, dining services and bookstores are reported as Auxiliary Enterprises - within operating revenue. C) Expenses associated with central management, planning and administration are classified as Institutional Support D) None of the above, these are all true.

1. Which of the following is true of a Statement of Cash Flows for a private college or university? A) Either the direct or indirect method is acceptable. B) Four categories are used: Operating, Capital Related Financing, Non-capital Related Financing, and Investing. C) Cash flows must be presented separately for Unrestricted, Temporarily Restricted, and Permanently Restricted categories. D) All of the above are true.

1. With respect to public colleges and universities, state appropriations for operating purposes are shown as: A) Nonoperating revenue. B) Operating revenue. C) Nonexpendable endowments. D) None of the above.

Budgets are typically recorded for which of the following: A) Special Revenue Funds. B) Capital Projects Funds. C) Debt Service Funds. D) None of the above

A Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Budgets are typically recorded for the general fund and special revenue funds. Budgets are not typically recorded for capital projects, debt service and permanent funds.

Regarding capital projects funds, which of the following is correct? A) Capital projects funds exist only for the duration of the project for which it is created. B) Expenditures are recorded as temporary assets until the project is completed C) Capital projects funds use accrual accounting D) Monies received from the general fund are recorded as revenues in the capital projects funds.

A Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Capital projects funds use modified accrual accounting exist for the duration of the project for which it is created. Expenditures are not recorded as temporary assets in the capital projects fund. Resources transferred to the debt service fund from the General Fund would typically be classified as Other Financing Sources by the debt service fund.

Which of the following is an example of an Internal Service Fund? A) State Risk Management Fund B) County Water and Sewer Utilities. C) State Lotteries. D) Municipal Golf Courses.

A Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Examples of an internal service fund would be purchasing services, printing services, repair garages, janitorial services and risk management activities. Enterprise funds provide services to the public. Utilities, lotteries and golf courses would be recorded in an enterprise fund.

Which of the following funds use accrual accounting? A) Internal Service Fund. B) Special Revenue Fund. C) Permanent Fund. D) Both A & B.

A Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Internal service and enterprise funds are proprietary funds and use the accrual basis of accounting. Permanent funds and special revenue funds are governmental funds and use the modified accrual basis of accounting.

Internal service funds account for A) Activities that produce goods or services to be provided to other governmental units on a cost reimbursement basis. B) Activities that produce goods or services to be provided to outside consumers units on a cost reimbursement basis. C) Both A and B. D) None of the above.

A Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Internal service funds provide services to other government departments and charge those departments for the services rendered.

Which of the following statements is true regarding proprietary funds? A) Accruals and deferrals common to business accounting are recorded in proprietary funds. B) GASB standards require budget-actual reporting for proprietary funds. C) The purchase of a capital asset is recorded as an expenditure in proprietary funds. D) Proprietary funds use the modified accrual basis of accounting.

A Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Proprietary funds use the accrual basis of accounting and record revenues and expenses similar to business organizations.

Internal service and enterprise funds are both proprietary funds. Which of the following statements is correct? A) They both use the economic resource focus and accrual accounting B) Enterprise funds are used to report on activities that provide goods and services to other funds, departments who are charged on a cost-reimbursement basis. C) Enterprise funds are appropriate when the predominant user of goods and services is the government. D) Depreciation is not recorded in proprietary funds

A Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Proprietary funds use the accrual basis of accounting and the economic resources measurement focus. Activities that produce goods or services to be provided to other departments or other governmental units on a cost-reimbursement basis are accounted for by internal service funds. Internal service funds are used when the predominate user of goods and services is the government.

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

A Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: A major source of funding for capital projects funds is the issuance of long-term debt. Fixed assets that are acquired with governmental fund resources are recorded as expenditures in the governmental funds but are displayed as capital assets in the governmental-wide financial statements.

Which of the following statements is false? A) Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Assigned Fund Balance B) The residual classification for funds other than the General Fund is Assigned. C) If a bond sinking fund is required by creditors or law, the unexpended resources would be classified as Restricted. D) The corpus (principal) from a permanent fund should be classified as Nonspendable.

A Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: Intergovernmental grants and taxes dedicated to capital improvements are likely to be classified as restricted.

With respect to Debt Service Funds, which of the following is true? A) Payments under capital lease obligations may be reported in debt service funds B) Debt service funds use accrual accounting C) Each separate long-term obligation must be accounted for in a separate debt service fund D) All of the above are true

A Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: Debt service funds may be required to service capital leases. Debt service funds use modified accrual accounting. All debts to be serviced from tax revenues may be accounted for by a single debt service fund if permitted by law.

Moving cash from the General Fund to a debt service fund for payment of debt service is an example of a (an) A) Interfund transfer. B) Interfund loan. C) Interfund reimbursement. D) Quasi-external transaction.

A Learning Objective: 1 Topic: Interfund transactions Feedback: The transfer of resources from the General Fund to a debt service is an interfund transfer.

In the current year, the Village of Cheshire collected delinquent taxes in the amount of $530,000, on which interest and penalties of $25,000 had been accrued at the end of 2016; further $4,000 additional interest was collected for the period from the first day of 2017 to the dates on which the delinquent taxes were collected. What is the journal entry to record the above? A) Interest and Penalties Receivable 4,000 Revenue Control 4,000 Cash 559,000 Taxes receivable 530,000 Interest and Penalties Receivable 29,000 B) Interest and Penalties Receivable 4,000 Interest revenue 4,000 Cash 559,000 Taxes receivable 530,000 Interest and Penalties Receivable 29,000 C) Cash 555,000 Taxes receivable 555,000 D) Cash 534,000 Interest revenue 4,000 Taxes receivable 530,000

A Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: First the journal entry to write-off the taxes must be reversed for the amount accrued in 2016. Once this is done, the journal entry is a debit to Interest and Penalties Receivable and a credit to Revenue Control for $4,000 and a debit to Cash for $559,000 and credit to Taxes receivable for $530,000 and Interest and Penalties Receivable for $29,000.

A December 2017 year-end government should record which of the following as expenditures: A) Salaries Payable due January 20, 2017. B) Bond Payable that matures January 30, 2017. C) Bond Payable that matures February 14, 2017. D) Both A & B.

A Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: Only Salaries payable would be recorded at year end. Bonds payable would be recorded when due. Debt service expenditures are not accrued, but are recognized and fund liabilities are recorded on the maturity date. Recorded when due but may be accrued at year end if the debt service due date is less than 30 days after year end.

Which of the following statements is true regarding estimated closure costs for municipal solid waste landfills, assuming that it is operating as an enterprise fund? A) A portion of those future estimated costs is to be charged as an expense and a liability recorded based on a units-of-production method. B) Modified accrual principles apply and the amount expensed is limited to amounts expected to be paid during the year and within 60 days of year end. C) The estimated closure costs are expensed fully at the time of the estimate. D) None of the above is true.

A Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: GASB requires that a portion of future estimated costs be charged as an expense and a liability of the landfill operation on a units-of-production method as waste is accepted. These costs are measured in current costs, not at the present value or estimated future costs. Enterprise funds use accrual accounting.

Which of the following is true with respect to Special revenue funds? A) Special revenue funds are used when it is desirable to provide separate reporting of resources that are restricted or committed as to expenditure for purposes other than debt service or capital projects. B) Special revenue funds are used when it is desirable to provide separate reporting of resources that are designated for specific purposes. C) Special revenue funds are used when it is desirable to provide separate reporting for funds provided by other governments to support capital projects. D) Both B and C

A Learning Objective: 1 Topic: Special revenue funds Feedback: GASB standards require that special revenue funds be used only if a substantial portion of the resources are provided by one or more restricted or committed revenue source. Special revenue funds are not used if resources are required to be used to acquire capital assets or for the payment of interest and principle on long-term debt. Resources appropriately reported within proprietary or fiduciary funds are also excluded from special revenue funds.

In addition to a Statement of Net Position and Statement of Revenues, Expenses and Changes in Fund Net Position, which of the following statements is (are) required for proprietary funds? A) Statement of Cash Flows. B) Budgetary Comparison Schedule. C) Both A and B above D) Neither A nor B above

A Learning Objective: 2 Topic: Classification and preparation of financial statements for proprietary funds Feedback: The required statements for proprietary funds include the Statement of Net Position, Statement of Revenues, Expenses, and Changes in Fund Net Position, and the Statement of Cash Flows.

Which financial statements are required for proprietary funds? A) Statement of Net Position; Statement of Revenues, Expenses, and Changes in fund Net Position; Statement of Cash Flows. B) Budgetary comparison schedule; Statement of revenues, expenditures, and changes in fund balance; Statement of Net Position. C) Statement of Net Position; Statement of revenues, expenditures, and changes in fund balances; Statement of Cash Flows. D) Statement of Net Position; Statement of Revenues, Expenses, and Changes in fund net position;

Which of the following is correct regarding Government Trust Accounting? A) If a trust is to benefit individuals, private organizations, or other governments, it should be accounted for in a private-purpose trust fund. B) The journal entry to establish a permanent fund would include a credit to Restricted Fund Balance. C) Trust funds accounted for in a permanent fund use accrual accounting D) If a trust is to benefit individuals, private organizations, or other governments, it may be accounted for in a permanent or special revenue fund, depending upon whether the principal must be maintained.

A Learning Objective: 3 Topic: Classification and reporting of trust agreements Feedback: Trusts that generate income for the benefit of individuals, private organizations or other governments are reported in private-purpose trust funds. The journal entry to establish a permanent fund would be a debit to cash and a credit to Revenues-Additions to Permanent Endowments.

The city of Canandaigua receives proceeds from the sale of land, the transaction is considered to be a special item. Where are the proceeds reported on the Statement of Revenues, Expenditures and Changes in Fund Balance? A) Separately after other financing sources and uses. B) As a revenue. C) As an item that changes the Fund Balance. D) The proceeds are not recorded but the gain on the sale is.

A Learning Objective: 3 Topic: Financial statement display and preparation Feedback: Extraordinary and special items are reported separately after other financing sources and uses on the Statement of Revenues, Expenditures and Changes in Fund Balance. Special items are significant transactions or other events that are either unusual or infrequent but within the control of management.

When preparing the Statement of Cash Flows for the Proprietary Funds, cash flows from noncapital financing activities include all of the following EXCEPT: A) Receipts from customers. B) Proceeds and repayment of debt not clearly related to capital outlay. C) Grants received from and paid to other governments for noncapital purposes. D) Transfers to and from other funds.

A Learning Objective: 4 Topic: GASB format cash flow statements Feedback: Receipts from customers would be categorized as an operating activity.

The following items were included in the City of Wilson's General Fund expenditures for the year ended June 30, 2017: Computer for City Clerk $ 3,000 Maintenance on heating units for City Hall $ 9,000 How much should be classified as capital assets in Wilson's General Fund balance sheet at June 30, 2017? A) $ -0-. B) $ 3,000. C) $ 9,000. D) $12,000.

A Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Capital assets are not recorded in the General Fund.

The asset, equipment, used by a department accounted for by the General Fund of a governmental unit should be reported in the: A) Government-wide statements. B) General Fund. C) Both (a) and (b). D) None of the above.

A Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Long - term assets are reported in the government-wide statements, but not in the general fund.

Which account would be debited when the City of Corfu issued purchase orders for materials and supplies? A) Encumbrances Control. B) Budgetary Fund Balance -- Reserve for Encumbrance. C) Expenditures. D) Expenditures Control.

A Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: The journal entry to record an encumbrance is a debit to Encumbrances Control and a credit to Budgetary Fund Balance - Reserve for Encumbrances.

Under modified accrual accounting, revenues are recognized when measurable and: A) Available. B) Collected. C) Earned. D) Expenditures have been made.

Which of the following statements is false with respect to modified accrual accounting? A) Generally, expenditures are recorded and fund liabilities are recognized when goods and services are received, but only to the extent that there are resources available in the fund. B) Many expenditures are accrued, even in governmental funds. C) Expenditures for claims and judgments, compensated absences, pensions and landfill closure and postclosure care costs of governmental funds should be recognized to the extent that the liabilities are going to be paid with available resources. D) Debt service expenditures for principal and interest are recorded when due. This means that debt service expenditures are not accrued, but are recognized and fund liabilities are recorded on the maturity date.

A Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Under modified accrual accounting, revenues are recognized when measurable and available to finance expenditures of the current period. Expenditures are decreases in net financial resources and are generally recognized when the liability is incurred. Generally, expenditures are recorded and fund liabilities are recognized when goods and services are received, regardless of whether resources are available in the fund. As a result, many expenditures are accrued, even in governmental funds. Expenditures for claims and judgments, compensated absences, pensions and land-fill closure and postclosure care costs should be recognized in the General Fund to the extent that the liabilities are to be paid with available resources. Debt service expenditures for principal and interest are not accrued. They are recorded when due and are recognized and fund liabilities are recorded on the maturity date.

Which of the following is true regarding capital projects funds? A) Capital projects funds are considered to be governmental funds. B) Capital projects funds use the economic resources measurement focus and accrual basis of accounting. C) Encumbrance accounting is not used. D) Fixed assets are depreciated in capital projects funds.

A Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Capital projects funds are governmental funds. Governmental funds use the modified accrual basis of accounting and the current financial resources measurement focus. Capital project funds record encumbrances and do not record fixed assets or depreciation.

Which of the following projects would normally be accounted for in a capital projects fund? A) The construction of a police station addition. B) The construction of a parking garage operated as an enterprise fund. C) Payment of interest on bonds issued to finance the construction of a new city hall. D) Both A and B would be accounted for in a capital projects fund.

A Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: The construction of a police station would be accounted for in a capital projects fund. The parking garage would be accounted for in the enterprise fund, and payment of interest on bonds would be accounted for in a debt service fund.

Activities that produce goods or services to be provided to other departments or other governmental units would be reported in which fund? A) Internal service fund. B) Advance fund. C) Enterprise fund. D) Agency fund.

A Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Activities that produce goods or services to be provided to other departments or other governmental units on a cost-reimbursement basis are accounted for by internal service funds.

When the materials and supplies are received and the invoice is more than the related purchase order, this entry should be made: A) Debit Expenditures Control for the amount of the invoice. B) Debit Expenditures Control for the amount of the purchase order. C) Credit Accounts Payable for the amount of the purchase order. D) Credit Encumbrances Control for the amount of the invoice.

A Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Budgetary Fund Balance - Reserve for Encumbrances and credit Encumbrance Control for the amount of the purchase order and Expenditures Control would be debited and Accounts Payable would be credited for the amount of the invoice.

In addition to reporting Bonds Payable and (unamortized) Bond Premium in the government-wide Statement of Net Position, how would the bond sale be reported? A) A $4,040,000 other financing source in the capital projects fund, a $40,000 other financing use in the capital projects fund, and a $40,000 other financing source in the debt service fund. B) As a $4,000,000 liability in the government-wide Statement of Net Position and as a $4,000,000 other financing source in the debt service fund. C) As a $4,040,000 liability in the government-wide Statement of Net Position, as a liability of $ 4,040,000 in the capital projects fund, and as an other financing source of $4,040,000 in the capital projects fund. D) The $4,000,000 liability in the government-wide Statement of Net Position and the $40,000 would also be recorded as a bond premium in the Statement of Net Position.

A Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: The journal entry to issue the bond for the capital projects fund would a debit to Cash for $4,040,000 and credits to Other Financing Sources - Proceeds of Bonds for $4,000,000 and Other Financing Sources - Premium on Bonds for $40,000. The premium is transferred to the debt service fund by debiting Other Financing Uses - Transfers Out and a credit to Cash for $40,000. The debt service fund will debit Cash and credit Other Financing Sources - Transfers In for $40,000.

When a purchase order is issued under a Capital Projects fund, how should the transaction be recorded? A) Debit Encumbrances Control and credit Budgetary Fund Balance -- Reserve for Encumbrances. B) Debit Expenditures and credit Vouchers payable. C) Debit Encumbrances Control and credit Vouchers payable. D) Debit Expenditures and credit Budgetary Fund Balance -- Reserve for Encumbrances.

A Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: The journal entry would be a debit to Encumbrances Control and a credit to Budgetary Fund Balance - Reserve for Encumbrances.

How would the government account for the transfer of the unused bond proceeds? A) As an other financing source in the debt service fund and as an other financing use in the capital projects fund. B) As a revenue in the debt service fund and as an expenditure in the capital projects fund. C) As an other financing source in the capital projects fund and as an other financing use in the debt service fund. D) As a special item in both the debt service and capital project funds.

A Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: Unused bond proceeds remaining in a capital projects fund would be transferred to a debt service fund. The capital projects fund would record Other Financing Use - Transfers Out and the debt service fund would record Other Financing Sources - Transfers In

The amount of capital outlay expenditures reported by the capital projects fund would be: A) $1,980,000. B) $2,000,000. C) $2,040,000. D) $3,000,000.

A Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: $2,040,000 total proceeds from bond issue - $40,000 premium transferred to debt service fund - $20,000 ending balance in the capital projects fund = $1,980,000.

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.

A Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: Grants, entitlements, or shared revenues received by a capital projects fund from another governmental unit are considered to be revenues of the capital projects fund.

With respect to Debt Service Funds, which of the following is correct? A) Debt service funds may be required to service term and serial bonds, notes, capital leases, or warrants B) Debt service funds are used to account for financial resources that are intended to provide payments of principal only as they come due. C) Debt service funds are created for debt issues where the activities of proprietary funds generate sufficient cash to make interest and principal payments. D) If taxes and/or special assessments are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized as transfers in for the debt service fund.

A Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: Debt service funds may be required to service term and serial bonds, notes, capital leases, or warrants

A transfer from the General Fund to a debt service fund to make annual payments on principal and interest would be recorded in the debt service fund as a (an): A) Other Financing Source. B) Revenue. C) Direct addition to Fund Balance. D) Other Financing Use.

A Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: The journal entry would be a debit to cash and a credit to Other Financing Sources - Transfers In

A donor pledged $200,000 to the fund raising drive of a local government to assist its police officers in obtaining the latest technology. The pledge was made on July 16, 2016, but was conditioned on the government raising an additional $200,000 from other donors. By the fiscal year-end of June 30, 2017, the local government had raised only $5,000 from other donors. What entry would be made for the initial pledge by the local government during the year ended June 30, 2017? A) No entry is required until the condition is fully met. B) Debit a receivable and credit deferred inflows. C) Debit a receivable and credit Fund Balance. D) Debit a receivable and credit revenue

A Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: No entry is made until the required $200,000 is collected in full.

The journal entry to record the re-establishment of encumbrances that were outstanding at the close of the prior period would include: A) A credit to Budgetary Fund Balance - Reserve for Encumbrances B) A debit to Budgetary Fund Balance - Reserve for Encumbrances C) A credit to Encumbrance Control D) A and B would both be included in the journal entry

A Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry to re-establish an encumbrance is a debit to Encumbrance Control and a credit to Budgetary Fund Balance - Reserve for Encumbrances.

Which of the following funds would not be included in the government-wide financial statements A) Private Purpose Trust Fund. B) Capital Project Fund. C) Enterprise Fund. D) Permanent Fund.

General Fund resources were expended in the amount of $185,000 to purchase a new fire truck. The General Fund would debit: A) Expenditures Control. B) Capital assets -Motor Vehicles. C) Both (a) and (b) above. D) None of the above; no entry is made in the General Fund when a motor vehicle is purchased because only current financial resources are recorded in the General Fund.

A Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Expenditures Control and a credit to a liability or cash.

How should customer deposits held for water meters that cannot be spent for operating purposes be classified? A) As restricted cash in an Enterprise Fund. B) As both cash and a liability in an Agency fund. C) As Nonspendable fund balance in a Permanent Fund. D) Any of the above are acceptable alternatives.

A Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: Customer deposits held for water meters would be classified as restricted cash on the Statement of Revenues, Expenses and Changes in Fund Net Position.

Pollution remediation costs: A) Are to be accrued as a liability in the financial statements. B) Are recorded as expenses if they will be paid from current resources. C) Are not an issue is the state or local government merely used (but did not operate) the polluted site. D) All of the above

A Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: GASB requires governments to accrue the cost of pollution remediation as a liability in the basic financial statements. If the site is operated as an enterprise fund, the entries would be made in that fund. Otherwise, fund expenditures equal to the amount to be paid with available resources would appear in a governmental fund and the long-term portion of the liability in the government-wide Statement of Net Position. Governments can be held responsible for the cleanup even if they did not operate a site, but merely used it.

Impact fees imposed on commercial developers by an enterprise fund and not associated with specific projects or improvements are recorded as: A) Capital contributions to the enterprise fund. B) Operating revenues to the enterprise fund. C) Unearned revenue to the enterprise fund. D) Transfers from the enterprise fund to a capital projects fund.

A Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: Impact fees charged to real estate developers are recorded in an enterprise fund as capital contributions. Capital Contributions is a nominal account that will increase Net Position and is reported separately in the Statement of Revenues, expenses and Changes in Fund Net Position.

Which of the following is not true regarding enterprise funds? A) Similar to commercial businesses, enterprise funds equity accounts include both contributed capital and retained earnings. B) A Statement of Revenues, Expenses, and Changes in Fund Net Position would be the primary operating statement for enterprise funds. C) Enterprise funds' Cash Flow Statements could have up to four categories. D) None of the above; all are true.

A Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: The difference between assets and liabilities of an enterprise fund is termed Net Position. The categories are Net Investment in Capital Assets, Restricted Net Position and Unrestricted Net Position. Impact fees charged to real estate developers are recorded in an enterprise fund as capital contributions. Capital Contributions is a nominal account that will increase Net Position and is reported separately in the Statement of Revenues, expenses and Changes in Fund Net Position.

An internal service fund provided services to a General Fund department. At the time of billing, the credit entry in the internal service fund would be: A) Operating Revenues—Charges for Sales and Services. B) Other Financing Sources—Charges for Services. C) Due from General Fund. D) Other Financing Sources—Transfers In.

A Learning Objective: 1 Topic: Recording and reporting transactions of internal service funds Feedback: The journal entry would be a debit to Due from General Fund and a credit to Operating Revenues - Charges for Sales and Services

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 as qualified expenditures are incurred. B) Only after work is completely finished for the project. C) When a plan for use of the funds has been developed and approved. D) When the grant is first approved by the granting agency.

A Learning Objective: 1 Topic: Special revenue funds Feedback: As qualified expenditures are incurred and recognized, grant revenues and receivables are recognized. Funds are released after expenditures are made to fulfill grant requirements.

A non-expendable trust which benefits a government or its citizenry and which stipulates that earnings only (not principal) may be used for its provided purpose should be reported in a: A) Permanent Fund. B) Special Revenue Fund. C) Private-purpose Trust Fund. D) None of the Above.

A Learning Objective: 3 Topic: Classification and reporting of trust agreements Feedback: Trusts that generate income for the benefit of the government or its citizens and require the principal to be maintained are reported in permanent funds.

According to GASB, enterprise funds must be used in which of the following circumstances? A) When debt is backed solely by fees and charges. B) When services are provided to other governmental units for a fee. C) When the activities are expected to make a profit to be used to fund other government programs. D) None of the above; enterprise funds are optional.

A Learning Objective: 3 Topic: Conditions Requiring the use of enterprise funds Feedback: According to GASB Statement 34, enterprise funds must be used when certain criteria are met. They are (1) When debt is backed solely by fees and charges. (2) When a legal requirement exists that the cost of providing services for an activity, including capital costs, be recovered though fees or charges. Or (3) When a government has a policy to establish fees and charges to cover the cost of providing services for an activity. Enterprise funds provide services to the public.

Which of the following is true regarding Government-wide financial statements?

A Statement of Cash Flows is not required for Government-wide statements

governmental funds:

A generic classification used by the GASB to refer to all funds other than proprietary and fiduciary funds. The General Fund, special revenue funds, capital projects funds, debt service funds, and permanent funds are the types of funds referred to as governmental funds.

Which of the following is true regarding revenue recognition for property taxes, when reporting in the government-wide statements? A) Assets are recognized when an enforceable legal claim has arisen or when resources are received, whichever is first. B) Revenues are recognized when measurable and available; that is, when collected during the current period or no more than 60 days after the end of the current period. C) Both of the above are true. D) Neither of the above is true.

Which of the following is true regarding the government-wide Statement of Activities? A) Fiduciary activities are not reported. B) Discretely presented component units are not reported. C) Both of the above. D) Neither of the above.

Which of the following is true regarding the reporting of general capital assets by state and local governments? A) Capital assets are reported in the government-wide Statement of Net Assets. B) Capital assets are reported in the governmental funds Balance Sheet. C) Both of the above. D) Neither of the above.

Which of the following would be considered a program revenue in the Statement of Activities of a local government? A) A grant from the state to construct utility plant. B) A motor fuel tax, restricted for road repairs. C) Both of the above. D) Neither of the above.

The NACUBO Financial Accounting and Reporting Manual treats estimates of uncollectible student accounts as?

A reduction in tuition and fee revenue

In addition to a Statement of Financial Position and a Statement of Activities, a private college or university is required to present?

A statement of cash flows

A local government issued bonds and recorded the event by debiting Cash and crediting Other Financing Source - Proceeds of Bonds and Other Financing Source - Premium on Bonds. What is the worksheet entry when preparing the government-wide statements? A) Debit Other Financing Sources - Proceeds of Bonds and Other Financing Sources - Premium on bonds and Credit Bonds Payable and Premium on Bonds B) Debit Cash and Credit Bonds Payable and Premium on bonds C) Debit Other Financing Sources - Proceeds of Bonds and Credit Bonds payable and Premium on Bonds D) No adjustment is necessary

A local government purchased a building and recorded the event by debiting Expenditures - Capital Outlay and crediting Cash. What would be the worksheet entry to prepare the government-wide statements? A) Debit to Capital Assets and credit to Expenditures - Capital Outlay B) Debit to Capital Assets and credit to Cash C) Debit to Capital Assets and credit to Accumulated Depreciation-Capital Assets and Expenditures - Capital Outlay D) Debit to Capital Assets for the book value of the asset and credit to Expenditures - Capital Outlay

The governmental funds follow __________ where the government-wide statements follow ___________. A) Modified accrual accounting, accrual accounting. B) Accrual accounting, modified accrual accounting. C) Accrual accounting, accrual accounting. D) None of the above.

When converting from fund basis reporting to government-wide reporting, which of the following would require an adjustment? A) Property taxes expected to be collected 61-90 days after the end of the fiscal year. B) A state grant received as reimbursement for a summer jobs program. C) Sales tax collected for sales from the current year. D) Receipt of advance funding on a grant.

When using the modified approach to account for infrastructures, expenditures to exten the life of the infrastructure assets are: A) Expensed B) Capitalized C) Either A or B D) Neither A nor B

The City of Sycamore has investments in bonds. These bonds have an amortized cost of $1,996,000. At year end, the financial press reports a market value of $2,002,000 for these bonds. The original cost of the bonds was $1,992,000. The par value at maturity will be $2,000,000. The amount at which the investments would be reported is: A) $2,002,000 B) $2,000,000 C) $1,996,000 D) $1,992,000

A) $2,002,000

19. Which of the following is true regarding the Single Audit Act and its amendments? A) A risk-based approach is used. B) An opinion is required on compliance of all programs. C) Both A and B above. D) Neither A nor B above.

A) A risk-based approach is used.

A fund that is used to account for assets held by a government acting as agent for one or more other governments units or for individuals or private organizations is a(n): A) Agency fund B) Private-Purpose Trust Fund C) Investment Trust Fund D) Pension Trust Fund

A) Agency fund

Which of the following statements is not correct with respect to Agency Funds? A) Agency funds use modified accrual accounting B) Assets accounted for in an agency fund belong to the party or parties for which the government acts as agent. C) Assets are offset by an equal amount of liabilities. D) Assets and liabilities are recognized at the time the government becomes responsible for the assets.

A) Agency funds use modified accrual accounting

Which of the following statements is not true regarding agency funds? A) Agency funds use modified accrual accounting. B) Agency funds report only assets and liabilities; no fund equities, revenues, or expenditures are recorded. C) Agency funds are reported in the fiduciary funds Statement of Fiduciary Net Assets. D) None of the above; all are true.

A) Agency funds use modified accrual accounting.

Which is true regarding the basis of accounting for fiduciary funds? A) All are accounted for using the same basis of accounting and measurement focus as proprietary funds. B) Agency funds are accounted for using the same basis of accounting and measurement focus as governmental funds, trust funds are accounted for using the same basis of accounting and measurement focus as proprietary funds. C) Trust funds are accounted for using the same basis of accounting and measurement focus as governmental funds, and agency funds are accounted for using the same basis of accounting and measurement focus as proprietary funds. D) All are accounted for using the same basis of accounting and measurement focus as governmental funds.

A) All are accounted for using the same basis of accounting and measurement focus as proprietary funds.

20. Which of the following is true regarding the Single Audit Act and its amendments? A) All governmental entities with expenditures of federal funds in excess of $500,000 must have a single audit, if more than one program exists. B) An audit must be designed to cover 25 percent of federal funds expended, unless the organization is deemed to be low risk. C) Both A and B above. D) Neither A nor B above.

A) All governmental entities with expenditures of federal funds in excess of $500,000 must have a single audit, if more than one program exists.

14. Which of the following would be a financial audit (or a part of a financial audit) under the Government Auditing Standards? A) An audit expressing an opinion on the basic financial statements of a state or local government audit. B) An examination to determine whether purchasing procedures are appropriately designed to assure program supplies meet standards. C) Both A and B above. D) Neither A nor B above.

A) An audit expressing an opinion on the basic financial statements of a state or local government audit.

Governments that contribute to single employer and agent multiple-employer plans compute annual pension cost as the _________? A) Annual required contribution. B) Normal cost. C) Unfunded actuarial liability. D) Net pension obligation.

A) Annual required contribution.

Agency fund assets and liabilities are to be recognized : A) At the time the government becomes responsible for the assets. B) When they are available and measurable. C) Only in the government-wide financial statements. D) When the earnings process is complete and collection is reasonably assured.

A) At the time the government becomes responsible for the assets.

26. 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.

A) Auditors are required to report deficiencies in the design or operation of internal controls.

Which of the following statements is correct with respect to GASB Statement No. 53 which establishes reporting requirements for governments entering into derivative instruments? A) Changes in the value of hedge derivatives are reported in the Statement of Net Assets. B) If a derivative is an investment derivative, the changes in the value of the derivative are deferred and reported in the statement of net assets. C) Statement No. 53 does not apply to proprietary or fiduciary funds. D) Statement No. 53 applies to government financial statements prepared using the modified accrual basis of accounting.

A) Changes in the value of hedge derivatives are reported in the Statement of Net Assets.

Clinton County maintains an investment trust fund for the investments of governments within its borders. All the investments had determinable fair values. Which of the following is true regarding investment trust funds and investments in general? A) Clinton County would report the investments of the other governments at fair value in the investment trust funds. B) Clinton County would report its own investments at fair value in the investment trust funds. C) Both of the above. D) Neither of the above.

A) Clinton County would report the investments of the other governments at fair value in the investment trust funds.

Which type of pension plan is required to pay out a certain sum, generally based on a percentage of salary upon retirement and the number of years of service? A) Defined Benefit B) Defined Contribution C) Contributory D) Noncontributory

A) Defined Benefit

Which type of pension plan most commonly results in an unfunded actuarial liability? A) Defined benefit plan. B) Defined contribution. C) Both A and B. D) Neither A or B.

A) Defined benefit plan.

36. 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.

A) Earning a profit (increase in net assets).

Investment Trust Funds are restricted to: A) External investment pools. B) Open-end mutual funds. C) Debt securities. D) All the above.

A) External investment pools

Which of the following is true regarding fiduciary funds? A) Fiduciary funds use the economic resources measurement focus and accrual accounting. B) Fiduciary funds include pension (and other employee benefit) trust, investment trust, agency, and permanent funds. C) Both of the above. D) Neither of the above.

A) Fiduciary funds use the economic resources measurement focus and accrual accounting.

67. A measure of performance that expresses how much an organization expends in raising a dollar of donations is: A) Fund-raising efficiency. B) Program expense ratio. C) Working capital ratio. D) None of the above.

A) Fund-raising efficiency.

63. A downtown shopping district desires additional police patrols and agrees to pay for the service through a special assessment property tax. Which fund should be used to account for the special assessment tax proceeds? A) General. B) Capital projects. C) Agency. D) Debt service.

A) General.

1. What organization oversees the promulgation of Government Auditing Standards? A) Government Accountability Office. B) Governmental Accounting Standards Board. C) Public Companies Accounting Oversight Board. D) Government Accounting Oversight Committee.

A) Government Accountability Office.

12. Government Auditing Standards, published in a document called the Yellow Book, incorporate the AICPA standards and provide extensions that are necessary due to the unique nature of public entities. Which of the following is not one of the extensions? A) Higher materiality thresholds than in the private sector. B) Public availability of audit reports. C) Written evaluation of internal controls. D) Requirement that auditors have knowledge of government accounting and auditing.

A) Higher materiality thresholds than in the private sector.

59. Which of the following is true with respect to special assessment levies? A) If the government is not liable for the special assessment debt directly or through guarantee, the special assessment is accounted for in an agency fund B) Taxpayers may opt out of a service-type special assessment if they agree to not use the service funded by the assessment C) Service-type special assessments may not be accounted for in the General or special revenue fund. D) Construction-type special assessments are accumulated until there is enough money to finance the construction project

A) If the government is not liable for the special assessment debt directly or through guarantee, the special assessment is accounted for in an agency fund

A county treasurer maintains an investment pool in which several different towns in the county hold investments. Where should the towns' investments be recorded? A) Investment Trust Fund. B) Agency Fund. C) Private-purpose Trust Fund. D) None of the above.

A) Investment Trust Fund.

Which of the following is true regarding accounting for investments by state and local governmental units? A) Investments in all securities with determinable fair values (including bonds held to maturity) are to be reported at fair value. B) Realized gains and losses are to be reported separately from unrealized gains and losses in the Statement of Changes in Fiduciary Net Assets. C) Both of the above. D) Neither A nor B above.

A) Investments in all securities with determinable fair values (including bonds held to maturity) are to be reported at fair value.

30. In a governmental audit the auditor: A) Is required to report directly to appropriate officials in addition to the board or audit committee B) Is only required to report to the board or audit committee C) Is only required to report directly to the appropriate officials D) None of the above

A) Is required to report directly to appropriate officials in addition to the board or audit committee

79. Which of the following is true regarding pension accounting and reporting? A) Local governments include only the pension plans for which it is trustee in pension trust funds Statement of Fiduciary Net Position. B) The Net Pension Liability reported by local governments include only the pension plans for which the local government is trustee, no liability needs to be reported for state sponsored plans in which the local government participates. C) Both A and B. D) Neither A nor B.

A) Local governments include only the pension plans for which it is trustee in pension trust funds Statement of Fiduciary Net Position.

18. Which of the following is true regarding the Single Audit Act and its amendments? A) Major programs selected for audit must equal 50 percent or more of federal expenditures, unless the organization is deemed to be low risk. B) Separate reports are filed with every federal agency from which the audited organization receives funds. C) Both A and B above. D) Neither A nor B above.

A) Major programs selected for audit must equal 50 percent or more of federal expenditures, unless the organization is deemed to be low risk.

44. Which of the following is an example of a special-purpose government? A) Park district B) Village government C) Community college D) City government

A) Park district

Which of the following is not an example of the function of an Agency Fund? A) Payment of pension benefits to retired government employees B) Collection of local government sales taxes by the state government C) Collection of property taxes for the school district by an elected county government official. D) Periodic distribution by the state government of county sales taxes

A) Payment of pension benefits to retired government employees

When a contributor and a government agree that the principal and/or income of trust assets are for the benefit of individuals, private organizations, or other governments, which fund is formed? A) Private-purpose trust. B) Agency. C) Investment trust. D) Pension trust.

A) Private-purpose trust.

71. When accounting for defined benefit pensions, the net pension liability for employees of governmental activities is: A) Reported in the government-wide statements. B) Reported in the governmental fund-basis statements. C) Both A and B. D) Neither A nor B.

A) Reported in the government-wide statements.

61. Service Efforts and Accomplishments reporting is relevant because: A) SEA reporting provides more complete information about a government entity's performance than can be provided by the basic financial statements. B) The GASB requires supplemental reporting of service efforts and accomplishments. C) Enterprise fund statements do not do a good job of measuring efficiency or effectiveness. D) All of the above.

A) SEA reporting provides more complete information about a government entity's performance than can be provided by the basic financial statements.

60. Which of the following is true regarding Service Efforts and Accomplishments Reporting? A) SEA reporting utilizes both financial and non-financial performance measures. B) GASB standards require the reporting of service efforts and accomplishments for public school systems. C) Service efforts and accomplishments reporting is commonly covered by the auditor's opinion. D) All of the above.

A) SEA reporting utilizes both financial and non-financial performance measures.

51. Assume a government is a special-purpose entity engaged in fiduciary activities only. Which of the following financial statements would be required? A) Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position. B) Statement of Net Position and Statement of Activities. C) Statement of Net Position, Statement of Activities, Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position. D) Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position, and Statement of Cash Flows.

A) Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position.

The City of DeKalb contributes to three pension plans: (1) a statewide pension plan for nonuniformed personnel, (2) a locally administered plan for police officers, and (3) a locally administered plan for firefighters. The City is trustee for the plans for police officers and firefighters. Which of the following is true? A) The City would maintain trust funds for the police and fire plans but not the statewide plan. B) When making contributions from General Fund resources to the police and fire plans, the General Fund would debit Other Financing Sources-Transfers Out and the Pension Trust Fund would credit Transfers In. C) Both of the above. D) Neither of the above.

A) The City would maintain trust funds for the police and fire plans but not the statewide plan.

2. Government auditing standards are commonly known as: A) The Yellow book. B) The Green Book. C) The Blue Book. D) The Red book.

A) The Yellow book.

49. Which of the following conditions would exempt income-producing activities from the Unrelated Business Income Tax (UBIT)? A) The business is carried on regularly but sells donated merchandise. B) Majority of labor is performed by paid employees. C) The business is carried on regularly but is unrelated to the organization's tax-exempt purpose. D) The business is operated for a profit.

A) The business is carried on regularly but sells donated merchandise.

The operations of agency funds will be included in which of the following statements? A) The fiduciary funds Statement of Fiduciary Net Assets B) The Statement of Changes in Fiduciary Net Assets C) The Government-wide Financial Statements D) All of the above

A) The fiduciary funds Statement of Fiduciary Net Assets

According to GASB Statement 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, investments of internal investment pools are to be reported in: A) The funds providing the resources for the investments. B) An investment trust fund. C) An agency fund. D) Either A and B.

A) The funds providing the resources for the investments.

74. A government offering a defined benefit pension plan changes the plan terms with the result that pension benefit are increased. How would the resulting increase in the net pension liability be recognized in the financial statements in the year the plan is changed? A) The increase in net pension liability would be expensed in the period the plan is changed. B) The increase in net pension liability would be deferred and amortized over the remaining service life of the employees. C) The increase in net pension liability would be deferred and amortized over five years. D) The increase in net pension liability would be deferred and amortized over ten years.

A) The increase in net pension liability would be expensed in the period the plan is changed.

45. Which of the following is not an example of a special-purpose government? A) Village government B) Tollway authority C) Library district D) Fire protection districts

A) Village government

80) Which of the following is true regarding fiduciary funds? A) When a government provides employees a defined benefit pension plan, the government is required to present a ten year Schedule of Changes in Net Pension Liability and Related Ratios as required supplementary information B) Governmental type funds report a net pension liability representing the unfunded pension obligation. C) Both of the above. D) Neither of the above.

A) When a government provides employees a defined benefit pension plan, the government is required to present a ten year Schedule of Changes in Net Pension Liability and Related Ratios as required supplementary information

debt service fund:

Account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest.

special revenue fund

Account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purpose other than debt service or capital projects activities funded by federal or state grants or by taxes specifically restricted to certain activities

Why is fund balance similar to Retained Earnings?

Activity accounts are closed to this account at the end of each accounting period.

What happens when there is advanced receipt of mandated and voluntary nonexchange revenues under the modified accrual basis?

Advance receipts are deferred until expenditures are incurred, and is subject to the available and measurable criteria.

The AICPA Audit and Accounting Guide: Health Care Organizations applies to: Private not-for-profit health care organizations. Governmentally owned health care organizations. Investor-owned health care organizations. All of the choices are correct.

All of the choices are correct. The AICPA Audit and Accounting Guide: Health Care Organizations applies equally to private not-for-profit, governmentally owned and investor-owned health care organizations.

What are Spendable Resources?

All remaining net resources of a fund after removing those determined to be nonspendable

For Governmental Funds, other than the General Funds, this is the category for what?

All remaining positive amounts.

According to the National Association of College and Business Officers, scholarship discounts and allowances provided to students when no services are required by the recipients:

Are reported as a reduction of revenue through use of a contra-revenue account

According to NACUBO guidelines, what is the correct treatment for recognizing summer school revenues and expenses when a college's fiscal year ends on June 30 and summer school takes place in both June and July?

Allocate the revenues and expenses to the two fiscal years, following accrual accounting practices similar to those employed by commercial enterprises.

Which of the following could be recognized as contributed services revenue by a not-for-profit hospital? - A high school student class volunteered to answer the telephone during the Friday night midnight shift. - An architect developed building plans for a new outpatient clinic. - Both of the choices are correct. - Neither of the choices is correct.

An architect developed building plans for a new outpatient clinic. Contributed services are recognized as revenue only specific circumstances; if the service (1) creates or enhances nonfinancial assets or (2) requires specialized skills, is provided by someone possessing those skills, and typically would be purchased if not provided by donation. An architect developed building plans for a new outpatient clinic would qualify but not a volunteer answering the phone.

1. Scholarships (tuition discounts) provided to students where no service is required: A) Are included in tuition revenue and recorded as an expense. B) Are reported as a reduction of revenue by directly reducing the revenue account or increasing a contra- revenue account. C) Are not included in tuition revenue but are included as an "other source". Are reported as an adjustment to tuition revenue in the government-wide statements.

Which of the following is not true regarding the Statement of Cash Flows for proprietary funds?

At the bottom of the statement, net income is reconciled to cash flows from operations

1. A private college had tuition and fees for the year ended June 30, 2017 in the amount of $45,000,000. Scholarships, for which no services were required, amounted to $4,800,000. Graduate assistantships, for which services were required, amounted to $2,300,000. The amount to be reported by the college for net tuition and fee revenue would be: A) $37,900,000. B) $40,200,000. C) $42,700,000. D) $45,000,000.

1. How should the following revenues be reported by a private college? − $15,000 for the improvement of a study lounge, − $5,600 in unrestricted contributions, − $600 unrestricted investment income on endowment investments, − $11,600 sales of services by auxiliary enterprises. Unrestricted Restricted A) 32,800 0 B) 17,800 15,000 C) 17,200 15,600 D)5,600 27,200

1. Private colleges are required to report residual equity in the following categories: A) Unrestricted and Restricted B) Temporarily Restricted , Permanently Restricted and Unrestricted C) Unrestricted, Temporarily Restricted and board designated D) Restricted, Unrestricted and Temporarily Restricted

Which of the following is true concerning infrastructure assets? A) Cap of infrastructure is optional B) Cap of infrastructure is required C) Gov must depreciate D) Gove rarely posses

1. The equity section of the balance sheet for investor-owned colleges and universities includes which of the following designations? A) Unrestricted Net Assets, Temporarily Restricted Net Assets, and Permanently Restricted Net Assets. B) Paid in Capital and Retained Earnings. C) Net Investment in Capital Assets, net of related Debt; Restricted Net position; and Unrestricted Net position. D) None of the above.

1. Which of the following statements is true regarding accounting and financial reporting for public colleges and universities? A) Public colleges and universities may choose to report in the same manner as private colleges and universities, using FASB standards. B) Public colleges and universities may choose to report as special-purpose entities. C) Both A and B are true. D) Neither A nor B is true.

1. Which of the following would not be correct with respect to accounting for colleges and universities under the jurisdiction of the FASB? A) Contributed services should be recognized only when the services create or enhance nonfinancial assets or require specialized skills, are provided by an individual possessing those skills, and would typically be purchased if not provided by donation B) Unconditional pledges are deferred and recognized as revenue when collected. C) Depreciation is recorded D) Investments in stock with determinable fair values and all debt securities are reported at market value

The operation of internal service funds has important implications for other funds. Which of the following statements is incorrect? A) Charges for services of the internal service fund are recorded as expenditures in the governmental fund purchasing the services. B) GASB standards require the use of internal service funds to facilitate comparisons between governments C) If the expenditures for the purchasing entity is recorded in the General Fund, a positive operating income in the internal service fund would mean that the expenditures reported in the General Fund exceed the true cost of operating the government. D) The problems created by internal service funds are resolved when the government-wide statements are prepared.

B Learning Objective: 1 Topic: Recording and reporting transactions of internal service funds Feedback: GASB standards do not require the use of internal service funds.

Which of the following statements is true with respect to the use of budgetary accounts? A) Once the budget is set, it may not be changed. B) GASB does not require governments to record budgets C) Budgetary accounts are presented with actual results in the general purpose financial statements. D) GASB requires budgetary accounts for the General Fund

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: GASB does not require governments to record budgets.

With respect to reimbursement grant accounting, which of the following statements is true? A) Under GASB, revenues are recorded when monies are received from the granting government. B) Under GASB, revenues are recorded at the same time that expenditures are incurred. C) Under GASB, excess cash at the end of the project must be returned to the granting government. D) Under GASB, the granting government makes an initial payment to the receiving government and then makes reimbursement payments thereafter.

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: As expenditures are incurred and recognized, grant revenues and receivables are recognized. Funds are released after expenditures are made to fulfill grant requirements.

Which of the following statements is not true regarding modified accrual accounting? A) Expenditures and fund liabilities are recorded when goods and services are received. B) Debt service expenditures for principal and interest are accrued. C) Expenditures for claims and judgments and landfill post-closure care costs of governmental funds should be recognized to the extent that the liabilities are going to be paid with available resources. D) Compensated absences and special termination benefits of governmental funds that will not be paid with available resources should be reported as liabilities in the government-wide statements.

Under which fund type would you debit expenditure when land is acquired? A) Proprietary. B) Governmental. C) Both of the above. D) None of the above.

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Governmental funds records expenditures when an asset such as land is acquired. The land will appear on the government-wide statements.

The expenditures account equals the amount of supplies purchased during a period under which of the following inventory methods? A) Perpetual. B) Purchases. C) Periodic. D) Consumption.

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Under the purchases method, expenditures are debited when supplies are received. Expenditures are charged for purchases made during the year and at the end of the year the supplies inventory and Nonspendable Fund Balance are adjusted to reflect actual supplies on hand. The expenditure account reflects the amount of supplies purchased during the year.

Which of the following statements is false? A) All of the governmental funds use the modified accrual basis of accounting. B) Debt service funds are required to report accrued interest payable. C) General fixed assets that are acquired with governmental fund resources are recorded as expenditures in the governmental funds but are displayed as capital assets in the governmental-wide financial statements. D) Permanent funds reflect resources that are legally restricted so that principal may not be expended and earnings are used to benefit the government or its citizenry.

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Interest on long term debt is not generally accrued. GASB permits one exception: If a government has resources available for payment in a debt service fund and the period of time until interest or principal payment is due no more than one month, then the interest or principal payment may be accrued.

Capital project funds record the proceeds of debt issued as: A) Liabilities. B) Other Financing Sources. C) Revenues. D) Expenses.

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Proceeds of a debt issue would be a debit to cash and credit to Other Financing sources - Proceeds of Bonds

All of the following are true about proprietary funds EXCEPT: A) They include Internal Service Funds and Enterprise Funds. B) A Statement of Cash Flows is required in accordance with FASB standards. C) The economic resources measurement focus is used. D) Accrual accounting is used as the basis of accounting.

B Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: A Statement of Cash Flows is required in accordance with GASB standards.

The two types of proprietary funds include: A) Enterprise funds and capital projects funds. B) Enterprise funds and internal service funds. C) Internal service funds and capital project funds. D) Agency funds and enterprise funds.

B Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Enterprise funds and internal service funds are proprietary funds.

In the government-wide statements, Internal Service Funds are a(n) ______ activity, whereas Enterprise Funds are typically a(n) ______activity. A) business-type; governmental. B) governmental; business-type. C) restricted; unrestricted. D) unrestricted; restricted.

B Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Internal service funds are governmental activities and enterprise funds are business-type activities.

This fund accounts for activities that produce goods or services to be provided to other departments or other governmental units. A) Enterprise fund. B) Internal Service fund. C) Special Revenue fund. D) Debt Service fund.

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.

Long-term liabilities of an enterprise fund should be reported in the: Proprietary Fund Statements Government-Wide Statements A) No No B) Yes Yes C) Yes No D) No Yes

B Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Long-term liabilities of an enterprise fund would be reported in both the Proprietary Fund and Government-Wide Statements

Proprietary funds: A) Are required to present budget-actual statements in the fund statements. B) Are required to present a reconciliation between the Statement of Revenues, Expenses, and Changes in Fund Net Position and the Cash Flow Statement. C) Are not required to accrue interest due more than 30 days after the end of the fiscal year. D) Are required to present a Statement of Revenues and Expenses and Balance sheet.

B Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Proprietary funds are required to present a reconciliation between the Statement of Revenues, Expenses, and Changes in Fund Net Position and the Cash Flow Statement. The reconciliation starts with operating income and ends with Cash provided by Operating Activities.

Revenue bonds A) Carry less risk than general obligation bonds. B) Are intended to be paid from the revenues of an enterprise. C) Are no longer in existence. D) Are backed by the full faith and credit of the government in addition to enterprise revenues.

B Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Revenue bonds are payable solely from the revenues of the enterprise.

With respect to Debt Service Funds, which of the following is not correct? A) Typically, resources are provided through transfers from the General or other funds. B) Encumbrances are recorded to reflect principal payments that are expected to come due within the current accounting period. C) There are two types of debt service expenditures: interest and principal D) In most cases, interest and principal payments are not recorded until payment is due.

B Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: Debt service funds do not record encumbrances.

Regarding interfund transactions, which of the following is not correct? A) Transaction between funds are not assumed to be arm's length in nature B) Interfund transactions must be repaid. C) Failure to properly report interfund transactions will result in two funds being misstated. D) Interfund reimbursement is a payment by one fund to second fund to repay it for a purchase which belongs in the first fund.

B Learning Objective: 1 Topic: Interfund transactions Feedback: Interfund transactions are of particular interest to financial statement preparers and users because failure to properly report these transactions results in two funds being misstated. Transactions between funds of the same government may not be assumed to be arm's length in nature. Not all interfund transactions must be repaid; interfund loans must be repaid, but interfund transfers do not. Interfund reimbursements represent repayments to the funds that initially recorded expenditures or expenses by the funds responsible.

Nonreciprocal interfund activity: A) Includes interfund services provided and used B) Includes interfund transfers and reimbursements C) Includes exchange-like transactions D) Includes interfund loans

B Learning Objective: 1 Topic: Interfund transactions Feedback: Nonreciprocal interfund transactions include interfund transfers and interfund reimbursements. Reciprocal interfund transactions are the internal counterpart to exchange and exchange-like transactions and includes interfund loans and interfund services provided and used.

Reciprocal interfund activity: A) Does not include interfund loans B) Includes interfund transfers C) Is the external counterpart to exchange transactions D) Is the internal counterpart to exchange transactions

B Learning Objective: 1 Topic: Interfund transactions Feedback: Reciprocal interfund transactions are the internal counterpart to exchange and exchange-like transactions and includes interfund loans and interfund services provided and used. Nonreciprocal interfund transactions include interfund transfers and interfund reimbursements.

Which of the following statements is correct? A) All the expenditures of a capital project fund are for capital assets and are recorded as restricted fund balance in the fund-basis statements. B) The principal of a permanent fund is classified as nonspendable fund balance. C) Long-term assets are depreciated in the capital projects fund. D) Interest on bonds issued for a school building would be paid by the capital projects fund.

B Learning Objective: 1 Topic: Permanent fund transactions and reporting requirements Feedback: The principal of a permanent fund must be maintained so it is classified s nonspendable fund balance. The remaining unexpended resources would be classified as restricted or assigned fund balance.

The entry to re-establish encumbrances related to purchase orders from the prior year would include: A) A debit to Budgetary Fund Balance - Reserved for Encumbrances. B) A debit to Encumbrances Control. C) A credit to Accounts Payable D) None of the above.

B Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry to re-establish an encumbrance is a debit to Encumbrance Control and a credit to Budgetary Fund Balance - Reserve for Encumbrances.

The journal entry to record an encumbrance would include: A) A debit to Budgetary Fund Balance - Reserve for Encumbrances B) A credit to Budgetary Fund Balance - Reserve for Encumbrances C) A debit to Appropriations Control D) A credit to Encumbrance Control

B Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry to record an encumbrance is a debit to Encumbrances Control and a credit to Budgetary Fund Balance - Reserve for Encumbrances.

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) A liability is credited for $200,000. C) Budgetary Fund Balance -- Reserve for Encumbrances is credited for $200,000. D) An expenditure is credited for $205,000.

B Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Budgetary Fund Balance - Reserve for Encumbrances and credit Encumbrance Control for $205,000. Expenditures Control would be debited and Accounts Payable would be credited for $200,000.

The journal entry to record the property tax levy for a municipality would include: A) A debit to Bad Debts Expense B) A credit to Estimated Uncollectible Taxes C) A credit to Taxes Receivable D) A and B would both be included in the journal entry

B Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Taxes Receivable and a credit to Estimated Uncollectible Taxes and Revenues Control.

The journal entry to record the budget of a Special Revenue Fund would include: A) No entry; Special Revenue Funds do not record budgets B) A debit to Estimated Revenues Control C) A credit to Estimated Revenues Control D) A debit to appropriations Control

B Learning Objective: 1 Topic: Special revenue funds Feedback: Special revenue funds with legally adopted budgets should record and report budgetary information in the same manner as General Funds

The categories of Net Position for a proprietary fund are classified within which of the following categories? A) Committed Net Position, Assigned Net Position and Unassigned Net Position B) Net Investment in Capital Assets, Restricted Net Position and Unrestricted Net Position C) Spendable Net Position and Spendable Net Position D) Restricted Fund balance, Committed Fund balance, Assigned Fund Balance, and Nonspendable Fund Balance

B Learning Objective: 2 Topic: Classification and preparation of financial statements for proprietary funds Feedback: The categories of Net Position for a proprietary fund are Net Investment in Capital Assets, Restricted Net Position and Unrestricted Net Position.

Which of the following General Fund accounts would be closed at year end? A) Due from State Government. B) Special Items - Proceeds from Sale of Land. C) Taxes Receivable - Delinquent. D) Deferred Inflows - Property Taxes.

B Learning Objective: 2 Topic: Closing entries and classification of fund balances Feedback: Special Items - Proceeds from Sale of Land is an operating statement account and would be closed to Fund Balance.

The following description provides the best definition for which fund: Accounts for resources that are legally restricted and both earnings and principal may be used to support government programs. A) Capital projects. B) Special Revenue. C) General Fund. D) Permanent.

B Learning Objective: 3 Topic: Classification and reporting of trust agreements Feedback: A special revenue fund would be used for a trust that does not distinguish between earnings and principal.

How would the government account for the unused bond proceeds? A) As an other financing source in the government-wide Statement of Activities. B) As an other financing source in the debt service fund and as an other financing use in the capital projects fund C) As a revenue in the debt service fund and as an expenditure in the capital projects fund. D) As an other financing source in the capital projects fund and as an other financing use in the debt service fund.

B Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: Unused bond proceeds remaining in a capital projects fund would be transferred to the debt service fund. The capital projects fund would record Other Financing Use - Transfers Out and the debt service fund would record Other Financing Sources - Transfers In

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.

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: An expenditure is recorded and fund balance is decreased.

Indicate which of the following use Modified Accrual Accounting? Capital Projects Fund Government- wide Financial Statements Special Revenue Fund Internal Service Fund A) No Yes No Yes B) Yes No Yes No C) Yes No Yes Yes D) Yes Yes No No

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Governmental funds (Permanent, Debt Service, Capital Project, Special Revenue and General) use modified accrual accounting and the current financial resources measurement focus. Government-wide statements and proprietary (Internal Service and Enterprise) and fiduciary funds (Private Purpose Trust, Investment Trust, Pension Trust and Agency) use accrual accounting and the economic resources measurement focus.

Which of the following is true regarding modified accrual accounting? A) Modified accrual accounting requires that all expenditures be recognized on the cash basis. B) Revenues are recognized in the period in which they become available and measurable, and expenditures are recognized at the time a liability is incurred, except for principal and interest on long-term debt. C) Modified accrual accounting is required for all fund financial statements. D) All of the above.

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Under modified accrual accounting, revenues are recognized when measurable and available to finance expenditures of the current period. Expenditures are decreases in net financial resources and are generally recognized when the liability is incurred. Generally, expenditures are recorded and fund liabilities are recognized when goods and services are received, regardless of whether resources are available in the fund. Debt service expenditures for principal and interest are not accrued. They are recorded when due and are recognized and fund liabilities are recorded on the maturity date. As a result, many expenditures are accrued, even in governmental funds. Governmental funds use modified accrual accounting while government-wide statements and proprietary and fiduciary funds use accrual accounting.

Debt service expenditures for interest are: A) Accrued. B) Recorded when due but may be accrued at year end if the debt service due date is less than 30 days after year end. C) Recorded when due but may be accrued at year end if the debt service due date is less than 60 days after year. D) Reported only in the government-wide statements.

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Debt service expenditures for principal and interest are recorded when due. This means that debt service expenditures are not accrued, but are recognized and fund liabilities are recorded on the maturity date. Debt service expenditures for principal and interest are generally not accrued but may be accrued at year end if the debt service due date is less than 30 days after year end.

Debt service funds use the same measurement focus and basis of accounting as: A) Internal service funds. B) Special revenue funds. C) Both (a) and (b). D) None of the above.

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: All the governmental funds (general, special revenue, capital projects, debt service and permanent) use the modified accrual basis of accounting and the current financial resources measurement focus. Internal service funds are proprietary and use accrual accounting and the economic resources measurement focus.

Capital project funds A) Receive all of their money from tax revenues. B) Exist only for the duration of the project for which they are created. C) Record debt issuances as revenues. D) all of the above.

B Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Capital project funds exist for the duration of the project for which it is created. Capital projects funds receive funding from a variety of sources including issuance of long-term debt, grants, dedicated taxes, transfers from other funds and gifts. Debt issue is recorded as Other Financing Sources, not revenue.

Which of the following are best described as proprietary funds? I. Pension funds II. Enterprise funds III. Internal Service funds A) I only. B) II and RECORDING AND REPORTING TRANSACTIONS OF INTERNAL SERVICE FUNDS. C) I and RECORDING AND REPORTING TRANSACTIONS OF INTERNAL SERVICE FUNDS. D) I, II, and RECORDING AND REPORTING TRANSACTIONS OF INTERNAL SERVICE FUNDS.

B Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Internal Service and Enterprise funds are proprietary funds. Pension funds are fiduciary funds.

An example of an activity that would not normally be accounted for in an internal service fund would be: A) Print shop. B) Garbage collection. C) Central storeroom. D) Motor pool.

B Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Internal service funds provide services to other government departments and charge those departments for the services rendered. Garbage collection would be services provided to outside consumers and would be accounted for in an enterprise fund.

Proprietary funds utilize what basis of accounting? A) Modified accrual. B) Accrual. C) Cash. D) Budgetary.

B Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Proprietary funds use the accrual basis of accounting and the economic resources measurement focus.

Which of the following is not true regarding proprietary funds? A) Accrual accounting and the economic resource measurement focus are used. B) Statements required are the Balance Sheet, the Statement of Revenues, Expenditures, and Changes in Fund Balances, and the Statement of Cash Flows. C) Long Term debt is recorded directly in the accounts. D) Proprietary funds financial reports include the Statement of Net Position, Statement of Revenues, Expenses, and Changes in Fund Net Position, and Statement of Cash Flows.

B Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: The required statements for proprietary funds include the Statement of Net Position, Statement of Revenues, Expenses, and Changes in Fund Net Position, and the Statement of Cash Flows.

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.

B Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: Premiums generated from the issuance of bonds for a capital projects fund must be used for debt service are generally transferred to the Debt Service Fund. The journal entry would for the debt service fund would be a debt to cash and a credit to Other Financing sources - Transfers In.

In addition to a $5,000,000 liability in the government-wide Statement of Net Position, how would the bond sale be reported? A) As a $4,968,750 revenue in the capital projects fund and a $50,000 revenue in the debt service fund. B) As a $5,050,000 other financing source in the capital projects fund, a $50,000 other financing use in the capital projects fund, and a $50,000 other financing source in the debt service fund. C) As a $5,000,000 other financing source in the capital projects fund, a $50,000 other financing source in the debt service fund, and as a $5,000,000 liability in the debt service fund. D) As a $5,000,000 revenue in the capital projects fund, a $50,000 revenue in the debt service fund, and a $5,000,000 expenditure in the debt service fund.

B Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: The capital projects fund will have Other Financing Sources for $5,100,000 and then transfer the premium to the debt service fund. The capital projects fund will record an Other Financing Use - Transfers Out and the debt service fund will record Other Financing Sources - Transfers In

What would be the amount of debt service expenditures reported in the fiscal year ended June 30, 2018? A) $450,000. B) $445,000. C) $200,000. D) $100,000.

B Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: (5,000,000

The initial transfer of cash from the General Fund to establish a motor pool internal service fund would require the General Fund to credit Cash and debit: A) Investment in Internal Service Fund. B) Other Financing Uses-Transfers Out Control. C) Expenditures - Vehicle maintenance. D) Accounts Receivable-Internal Service Fund.

B Learning Objective: 1 Topic: Interfund transactions Feedback: The journal entry would be a debit to Other Financing Uses - Transfers Out Control and a credit to Cash.

Which of the following is true regarding accounting for investments of permanent funds? A) Gains and losses on investments would not be reported in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances but are reported in the government-wide Statement of Activities B) Investments with determinable fair values must be reported at fair value. C) Both of the above are true. D) Neither of the above is true

B Learning Objective: 1 Topic: Permanent fund transactions and reporting requirements Feedback: GASB requires that investments with determinable fair values be recorded at fair value at year end and unrealized gains reported along with realized gains as "Investment Income-Net Increase in Fair Value of Investments." Use the following to answer the next four questions: On April 1, 2017, the City of Southern Ponds issued $4,000,000 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 $3,990,000 was used to construct the police station, which was completed before December 31, 2017, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2017, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $200,000 is due April 1, 2018.

Under the modified accrual basis of accounting, GASB standards for property tax revenue recognition provide that revenue should not be recognized for property taxes collected: A) More than 90 days after fiscal year end. B) More than 60 days after fiscal year end. C) More than 30 days after fiscal year end. D) After fiscal year end.

B Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: GASB standards require property taxes expected to be collected within 60 days of year end to be included in revenues of the year assessed. Taxes expected to be collected later than 60 days after year-end are deferred and recognized as revenue in the following year.

The City of Pine Cove levied property taxes for the fiscal year ended June 30, 2017, in the amount of $9,600,000. During the year ended June 30, 2017, $8,350,000 in property taxes was collected. It is estimated that $375,000 will be collected during the next 60 days, $695,000 will be collected after 60 days, and $180,000 will not be collected. What is the maximum amount Pine Cove can recognize as property tax revenue for the fiscal year ended June 30, 2017, in its Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances, assuming there were no unpaid property taxes at the end of the previous year? A) $8,500,000. B) $8,725,000. C) $9,815,000. D) $10,000,000.

B Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: Property taxes collected of $8,350,000 + property taxes expected to be collected within 60 days of year end of $375,000 = $8,725,000.

Liabilities incurred, such as for accrued payroll, but still unpaid at year-end, should be recorded in the General Fund by a debit to which one of the following accounts? A) Encumbrances Control. B) Expenditures Control. C) Current Expense. D) Appropriations Control

B Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Expenditures Control and a credit to one or more liability accounts.

When supplies ordered by a governmental unit are received at an actual price which is less than the estimated price on the purchase order, the Encumbrance Control account is: A) Credited for the actual price on the purchase invoice. B) Credited for the original estimated price for the supplies. C) Debited for the original estimated price for the supplies D) Debited for the actual price on the purchase invoice.

B Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Budgetary Fund Balance - Reserve for Encumbrances and a credit to Encumbrances Control for the amount of the encumbrance which is the amount on the purchase order. Expenditures Control would be debited and Accounts Payable would be credited for the invoice amount.

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.

B Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: GASB requires that a portion of future estimated costs be charged as an expense and a liability of the landfill operation on a units-of-production method as waste is accepted.

The estimated costs of closure of solid waste landfills are measured using: A) Estimated future costs. B) Current costs. C) Historical costs. D) Actual closure costs.

Revenue bonds sold by a water utility fund, upon sale, would be recorded in an enterprise fund as: A) Other Financing Sources—Proceeds of Bonds. B) A liability. C) A direct addition to Net Position. D) Nonoperating Revenues—Proceeds of Bonds.

B Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: The journal entry would be a debit to cash and credit to bonds payable.

An internal service fund provided services to a General Fund department. At the time of billing, the debit entry in the General Fund would be: A) Other Financing Sources-Transfers Out. B) Expenditures. C) Operating Revenues-Charges for Services. D) Expenses.

B Learning Objective: 1 Topic: Recording and reporting transactions of internal service funds Feedback: Governmental funds record expenditures, not expenses.

The City of Thomasville had the following debt outstanding: General obligation bonds to be paid from a debt service fund $2,900,000 General obligation bonds to be paid from utility revenues $3,100,000 Revenue bonds to be paid from utility revenues $3,400,000 The amount that should be shown as debt in the utility (enterprise) fund would be: A) $9,400,000. B) $6,500,000. C) $3,400,000. D) $3,100,000.

B Learning Objective: 2 Topic: Classification and preparation of financial statements for proprietary funds Feedback: If payment is to be paid from enterprise revenues, the debt is reflected in the accounts of the enterprise fund. Debt for the utility would be $3,100,000 of general obligation bonds and $3,400,000 of Revenue bonds both to be paid from utility revenues. The General obligation bonds to be paid from a debt service fund would not be included.

GASB requires the ____________ method to report cash flows from operating activities in the Statement of Cash Flows. A) Indirect. B) Direct. C) Modified accrual D) Full accrual

B Learning Objective: 4 Topic: GASB format cash flow statements Feedback: GASB requires the direct method to report cash flows from operating activities for proprietary funds.

Siler City receives a trust donation for the purpose of maintaining flower beds in city parks, but the donor does not specify that the principal must be maintained. This type of trust would be most appropriately accounted for in a: A) Private Purpose Trust Fund. B) Special Revenue Fund. C) Permanent Fund. D) General Fund.

B Learning Objective: t Topic: Classification and reporting of trust agreements Feedback: A special revenue fund would be used for a trust that does not distinguish between earnings and principal. Both may be expended to maintain the flower beds.

A donated collection is not required to be capitalized. If a government decides not to capitalize them, how will they be accounted for at the time of the donation? A) Debit revenue, credit expense/expenditure B) Debit expense/expenditure, credit revenue C) Debit collections, credit revenue D) Debit collections, credit cash

A local government recorded the payment of bond principal by debiting Expenditure: bond principal and crediting Cash. What is the worksheet entry when preparing the government-wide statements? A) Debit Bonds Payable and credit Cash B) Debit Bonds Payable and credit Expenditure: Bond Principal C) Debit Cash and credit Expenditure: Bond Principal D) None of the above

The Difference in between assets and liabilities in the government-wide statements is called.... A) Fund Balance B) Capital Assets C) Net Equity D0 Accrued Equity

The General Fund of the City of Plymouth purchase a police car in the amount of 28,000. which of the following would be true? A) The Government-wide STMT of Activities would report an expense of 28000 B) The General Fund Statement of Revenues, Expenditures, and Change in Fund Balance would report and expenditure of $28,000 C) Both of the Above D) Neither of the Above

The total amount of indebtedness of specified kinds that is allowed by law to be outstanding at any time is known as: A) Debt margin. B) Debt limit. C) Borrowing power. D) Maximum debt.

What would be the appropriate Journal entry to adjust to the accrual basis of accounting for depreciation on general capital assets related to prior years? A) debit D/e, credit A/d B) debit Net position, credit A/D C) Debit A/D , credit Net Position D) Debit machinery, credit A/D

When preparing government-wide financial statements, the modified accrual basis governmental funds are adjusted for all of the following events except? A) Long-term debt related events B) Change in current assets and current liabilities from year to year C) Internal service fund activities D) Interfund activities

Which of the Following is not true regarding Infrastructure assets? A) Governments Can record depreciation in the same manner as for other depreciated fixed assets B) Because they have such long useful lives, infrastructure assets are never depreciated C) Government can choose to expense expenditures that extend the life of infrastructure assets in lieu of depreciation D) Expenditures to add to or improve infrastructure assets must be capitalized

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

Which of the following is true regarding the government-wide Statement of Activities? A) Program revenues include charges for services, operating grants and contracts, capital grants and contracts, and taxes levied for specific purposes. B) The accrual basis of accounting is used to calculate revenues and expenses. C) Both of the above. D) Neither of the above.

Which of the following is true regarding the government-wide financial statements? A) Government-wide statements include the Statement of Net Assets, the Statement of Activities, and the Statement of Cash Flows. B) Government-wide statements are prepared using the economic resources measurement focus and accrual basis of accounting. C) Both of the above are true. D) Neither of the above is true.

With respect to government-wide statement, which of the following statements is correct? A) GASB requires a reconciliation from proprietary fund financial statements to the government-wide statements business-activities columns from modified accrual accounting to accrual accounting. B) General capital assets should not be reported as assets in governmental funds but should be reported in the governmental activities column of the government-wide statement of net assets. C) In addition to the fund basis statement, GASB Statement 34 requires government-wide statements that are prepared on the modified accrual basis using the economic resources measurement focus. D) Fiduciary activities are reported in the government-wide statements in a separate column.

The tax agency fund of Orange County collected $7,000,000 for a school district, $3,000,000 for the county General Fund, and $5,000,000 for a municipality located in the County. County General Fund employees handle the collections, and a 2.5 percent collection fee is charged all units except the county. The total amount of revenue recognized by the county General Fund would be: A) $ 390,000. B) $3,300,000. C) $3,390,000. D) $15,300,000.

B) $3,300,000.

38. What is the maximum threshold for a tax-exempt organization to file a form 990-N (electronic postcard) for tax years after 2011? A) A charity with gross receipts of < $25,000. B) A charity with gross receipts of < $50,000. C) A charity with gross receipts of < $500,000. D) A charity with gross receipts of < $500,000 and total assets of < 2.5 $million.

B) A charity with gross receipts of < $50,000.

The terms used for classification of items on the Statement of Changes in Fiduciary Net Assets are: A) Revenues and Expenses. B) Additions and Deductions. C) Revenues and Expenditures. D) Contributions and Expenses.

B) Additions and Deductions.

78. A government sponsoring a defined benefit pension plan changes an assumption underlying the measurement of the net pension liability. Assuming the estimated of this liability increases, how will this be reflected in the government-wide statements? A) As an increase in the net pension liability and an expense. B) As an increase in the net pension liability and a deferred outflow of resources. C) As an increase in the net pension liability and an intangible asset. D) None of the above, changes in estimated are not recorded.

B) As an increase in the net pension liability and a deferred outflow of resources.

62. A special assessment tax is A) Assessed against all property owners following a referendum in which voters approved the special project being constructed. B) Assessed only against certain property owners who are deemed to benefit from the service or project being paid for by the proceeds of the special assessment levy. C) A waiver of property taxes for businesses willing to locate within a government's jurisdiction. D) None of the above

B) Assessed only against certain property owners who are deemed to benefit from the service or project being paid for by the proceeds of the special assessment levy.

9. Which of the following is a governmental audit that is concerned with examining, reviewing, or performing agreed upon procedures on a subject matter of an assertion and reporting on the results? A) Financial Audit. B) Attestation Engagement. C) Performance Audits. D) Nonaudit Services.

B) Attestation Engagement.

61. When a governmental unit is primarily or secondarily liable for the debt, debt proceeds for special assessment obligations levied for the construction phase of a capital improvement project should be reported in which of the following fund types? A) Special Assessment fund. B) Capital projects. C) Agency. D) Debt service.

B) Capital projects.

34. 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.

B) Churches and public charities with tax-exempt status must file an information return (Form 990, 990EZ or 990-N) with the IRS annually.

7. Which of the following is not a type of governmental audit? A) Attestation engagements. B) Consulting engagements. C) Financial audits. D) Performance audits.

B) Consulting engagements.

37. What is the principle advantage of obtaining section 501(c)3 status? A) The charitable organization is permitted to engage in a trade or business unrelated to its mission without having to pay income taxes. B) Donors to the charitable organization are permitted to deduct contributions to the organization in computing their income taxes. C) Both (a) and (b) above. D) Neither (a) nor (b) above.

B) Donors to the charitable organization are permitted to deduct contributions to the organization in computing their income taxes.

63. All of the following are examples of service outputs, except: A) Enrollment increases. B) Dropout rates. C) The number of gifted or alternative programs. D) Degrees conferred.

B) Dropout rates.

A private-purpose trust fund where the principal is not expendable, normally it is called a/an: A) Donation. B) Endowment. C) Gift. D) Transfer.

B) Endowment.

40. Which of the following is true regarding the Internal Revenue Service's concern regarding tax-exempt organizations? A) Organizations are charging many of their program expenses to fund-raising. B) Executives of tax-exempt organizations are receiving excessive salaries and benefits. C) Both (a) and (b). D) Neither (a) nor (b).

B) Executives of tax-exempt organizations are receiving excessive salaries and benefits.

Investments in a private-purpose trust fund should generally be reported using: A) Cost Basis. B) Fair Market Value. C) Equity Method. D) None of the above.

B) Fair Market Value.

GASB Statement No. 52 requires endowments with investment real estate to report those assets at: A) Historical cost B) Fair market value C) Historical cost net of related debt D) Market value net of related debt

B) Fair market value

Which of the following is true regarding the financial statements of fiduciary funds? A) Fiduciary funds' financial statements include the Statement of Fiduciary Net Assets, the Statement of Changes in Fiduciary Net Assets, and the Statement of Fiduciary Cash Flows. B) Fiduciary funds are accounted for using the economic resources measurement focus and accrual basis of accounting. C) Both of the above. D) Neither of the above.

B) Fiduciary funds are accounted for using the economic resources measurement focus and accrual basis of accounting.

Which of the following is not true regarding postemployment benefit plans other than pension plans? A) Most governments have operated on a pay-as-you-go basis, leaving such plans underfunded. B) GASB Statement No. 43, Financial Reporting for Postretirement Benefit Plans Other Than Pension Plans, requires that such plans be fully funded. C) Similar to pensions, governments are required to present two financial statements, the Statement of Plan Net Assets and the Statement of Changes in Plan Net Assets. D) Two schedules must be included as required supplementary information: the Schedule of Funding Progress and the Schedule of Employer Contributions.

B) GASB Statement No. 43, Financial Reporting for Postretirement Benefit Plans Other Than Pension Plans, requires that such plans be fully funded.

Which of the following statements is not correct with respect to GASB Statement No. 53 which establishes reporting requirements for governments entering into derivative instruments? A) Derivatives include swaps, options, forward contracts and future contracts. B) If a derivative is effective in reducing a government's exposure to identifiable risks, the changes in the value of the derivative are reflected as investment gains or losses in the period that the value changes. C) If a hedge derivative is deemed ineffective it is classified as investment purpose. D) Statement No. 53 applies only to reporting at the government-wide level for derivatives held by governmental funds, not the fund-basis statements.

B) If a derivative is effective in reducing a government's exposure to identifiable risks, the changes in the value of the derivative are reflected as investment gains or losses in the period that the value changes.

A fund that is the result of an agreement between a contributor and a government that the principal and/or income of trust assets is for the benefit of individuals, organizations, or other governments is a(n): A) Agency fund B) Private-Purpose Trust Fund C) Investment Trust Fund D) Pension Trust Fund

B) Private-Purpose Trust Fund

A ___________ is used when a contributor and a government agree that the principal and/or income of trust assets are for the benefit of individuals. A) Investment Trust. B) Private-Purpose Trust. C) Pension Trust. D) Employee Benefit Trust.

B) Private-Purpose Trust.

Which of the following is true regarding fiduciary funds? A) Investment trust funds account for the internal portion of an investment pool, when a government is trustee for that pool. B) Private-purpose trust funds account for resources that are administered by a government for the benefit of others, such as a fund held to distribute resources to local not-for-profit charities. C) Both of the above. D) Neither of the above.

B) Private-purpose trust funds account for resources that are administered by a government for the benefit of others, such as a fund held to distribute resources to local not-for-profit charities.

Escheat property is best described as which of the following? A) Property possessed by a local government, but whose use is restricted by a higher government. B) Property a government obtains and holds for the rightful owner in the absence of claimants or heirs. C) Property gifted to the government by private citizens. D) Property the government obtains via eminent domain.

B) Property a government obtains and holds for the rightful owner in the absence of claimants or heirs.

56. To compute the operating ratio-enterprise funds, one would need to look in the CAFR for the: A) Government-wide Statement of Net Assets. B) Proprietary funds Statement of Revenues, Expenses, and Changes in Fund Net Assets. C) Both A and B above. D) Neither A nor B above.

B) Proprietary funds Statement of Revenues, Expenses, and Changes in Fund Net Assets.

8. The use of opinion units allows the auditor to A) Only allow one opinion for entire entity not its components. B) Provide different opinions on different components of the reporting entity. C) Plan the audit better and increase the effectiveness of substantive procedures. D) Eliminate the need for Test of Controls.

B) Provide different opinions on different components of the reporting entity.

47. Which of the following statements is true of a special-purpose government? A) Special-purpose governments that are engaged in more than one governmental-type activities can combine the fund and government-wide financial statements. B) Special-purpose governments that are engaged in a single governmental-type activity may combine the fund and government-wide financial statements. C) Special-purpose governments engaged in only one business-type activity have to prepare government-wide financial statements. D) Special-purpose governments must be stand-alone local governments.

B) Special-purpose governments that are engaged in a single governmental-type activity may combine the fund and government-wide financial statements.

55. Special purpose governments engaged only in fiduciary-type activities are required to prepare all of the following except: A) Statement of Fiduciary Net Position B) Statement of Cash Flows C) Statement of Changes in Fiduciary Net Position D) Management Discussion and Analysis

B) Statement of Cash Flows

48. Which of the following is not required for a special-purpose local government engaged in only fiduciary type activities? A) Statement of Fiduciary Net position B) Statement of Fiduciary Cash Flows C) Notes to the Financial Statements D) Required Supplementary Information other than MD&A

B) Statement of Fiduciary Cash Flows

Where is the actuarial liability shown in a Comprehensive Annual Financial Report for a pension trust fund? A) The Statement of Fiduciary Net Assets. B) The Schedule of Funding Progress (RSI). C) The General Fund Balance Sheet only. D) The Government-wide Statement of Net Assets.

B) The Schedule of Funding Progress (RSI).

4. Public sector audits differ from those of commercial businesses in which of the following ways? A) The auditor is not required to be independent. B) The auditor reports to outside agencies as well as management of the organization. C) The auditor does not use sampling D) All of the above.

B) The auditor reports to outside agencies as well as management of the organization.

69. Where is the net pension liability shown in a Comprehensive Annual Financial Report for employees of governmental type activities? A) The Statement of Fiduciary Net Position. B) The government-wide Statement of Net Position C) Both A and B. D) Neither A nor B.

B) The government-wide Statement of Net Position

76. A government offering a defined benefit pension plan determines it is necessary to alter actuarial assumptions increasing the estimated cost of pension benefits. How would the resulting increase in the net pension liability be recognized in the financial statements in the year the plan is changed? A) The increase in net pension liability would be expensed in the period the plan is changed. B) The increase in net pension liability would be deferred and amortized over the remaining service life of the employees. C) The increase in net pension liability would be deferred and amortized over five years. D) The increase in net pension liability would be deferred and amortized over ten years.

B) The increase in net pension liability would be deferred and amortized over the remaining service life of the employees.

65. Which of the following lease criteria would not qualify a lease as a capital lease? A) The lease transfers ownership of the property to the lessee by the end of the lease term. B) The lease contains an option to purchase the leased property at its fair market value. C) The lease term is equal to or greater than 75% of the estimated economic life of the leased property. D) The present value of the minimum lease payments equals or exceeds 90% of the fair value of the leased property.

B) The lease contains an option to purchase the leased property at its fair market value.

Which of the following is not true regarding pension accounting and reporting? A) Local governments include only the pension plans for which it is trustee in pension trust funds Statement of Fiduciary Net Assets. B) The pension trust fund Statement of Fiduciary Net Assets reflects the accrued actuarial liability (the excess of the projected benefit obligation over the net assets available for benefits). C) Pension investments are recorded at fair (market) value. D) None of the above; all are true.

B) The pension trust fund Statement of Fiduciary Net Assets reflects the accrued actuarial liability (the excess of the projected benefit obligation over the net assets available for benefits).

Agency Funds are not included in the Government-wide Financial Statements because: A) These Funds use the modified accrual basis of accounting. B) The resources are not available to the reporting unit. C) The government doesn't keep track of these types of funds. D) These funds do not have a material effect on the financial statements.

B) The resources are not available to the reporting unit.

50. Which of the following is true concerning tax-exempt organizations with unrelated business income? A) They may deduct the first $1,000 of unrelated business income. B) They must include income from donated merchandise. C) They must include investment income in computing their tax liability. D) All of the above are true.

B) They must include income from donated merchandise.

42. A tax-exempt organization is required to pay income taxes on A) Profit that is earned. B) Unrelated business income. C) Investment gains or losses. D) Contributions received.

B) Unrelated business income.

Which of the following is true regarding pension (and other employee benefit) trust funds? A) The actuarially computed Pension Benefit Obligation is reported in the Statement of Fiduciary Net Assets. B) While full accrual accounting is used, the terms "additions" and "deductions" are used in the Statement of Changes in Fiduciary Net Assets in lieu of "revenues" and "expenses." C) Both of the above. D) Neither of the above.

B) While full accrual accounting is used, the terms "additions" and "deductions" are used in the Statement of Changes in Fiduciary Net Assets in lieu of "revenues" and "expenses."

81. Which of the following is true regarding pension (and other employee benefit) trust funds? A) The actuarially computed Net Pension Liability is reported in the Statement of Fiduciary Net Position. B) While the accrual basis of accounting is used, the terms "additions" and "deductions" are used in the Statement of Changes in Fiduciary Net Position in lieu of "revenues" and "expenses." C) Both of the above. D) Neither of the above.

B) While the accrual basis of accounting is used, the terms "additions" and "deductions" are used in the Statement of Changes in Fiduciary Net Position in lieu of "revenues" and "expenses."

64. When a government acquires general fixed assets under a capital lease agreement, the asset should be recorded in the General Fund's fund basis financial statements: A) As a capital asset and lease obligation at the inception of the lease agreement at the lesser of the present value of the minimum lease payments or the fair market value of the property B) as debt service expenditures when payments are made C) As a capital asset and lease obligation at the inception of the lease agreement for the total lease payments D) as an expense when payments are made

B) as debt service expenditures when payments are made

54. The document often relied on for financial analysis by investors and creditors for bonds in the secondary market is: A) the official statement issued by the government issuing the bonds. B) the comprehensive annual financial report. C) an analysis prepared by the government's auditor. D) none of the above.

B) the comprehensive annual financial report.

When recording property taxes, the estimated uncollectible amount of property taxes is: A) Recognized as an expenditure. B) Recognized as a reduction of revenue. C) Not recognized. D) None of the above.

B. Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: Revenues Control is credited for the amount of the levy minus the estimated uncollectible taxes.

Which of the following financial statements must special-purpose governments include in their financial statements if the special purpose government is engaged in a single fiduciary-type activity? a. Government-wide financial statements b. Fund basis financial statements c. Both A and B d. Neither A nor b

B. Fund basis financial statements

Why is an Encumbrance NOT a liability?

Because the goods/services have only been ordered, not received.

Which of the following is FALSE regarding the financial reporting entity of a state or local government? A. Many component units are discretely presented, rather than blended. B. Only a primary government is reported in the government-wide statements. C. A school district can be a primary government. D. Both B and C are false.

B. Only a primary government is reported in the government-wide statements

Why are encumbrances recorded?

Because governments recognize that outstanding orders will eventually turn into expenditures and don't want to overspend.

Which of the following is not one of the major sections of the Comprehensive Annual Financial Report (CAFR)?

Budgetary

What are Estimated Other Financing Sources and Estimated Other Financing Uses?

Budgetary accounts that reflect anticipated inflows and outflows of resources from sources other than revenues and expenditures.

1. Fees waived by an educational institution in return for services to be provided by students are reported: A) As a reduction in tuition revenue by directly reducing the revenue account or increasing a contra-revenue account. B) As an adjustment to tuition revenue in the government-wide statements. C) As an expense. D) By deducting the waived fee from tuition revenue before it is recorded.

1. In December 2016, a donor to a college established a trust in which college receives $ 500,000 to be invested. The college receives $ 4,000 of the income per year until the donor dies. At that point, the assets revert to the donor's estate. The college estimates that the present value of the anticipated receipts from the trust amount to $ 120,000. How should this $ 120,000 be recorded in 2016, assuming The College is a private institution The College is a public institution A) Contribution revenue Contribution revenue B) Deferred inflow Contribution revenue C) Contribution revenue Deferred inflow D) Deferred inflow Deferred inflow

1. Public colleges and universities follow __________ guidelines while private colleges and universities follow ________ guidelines A) GAO, FASB. B) FASB, GAO. C) GASB, FASB. D) FASB, GASB.

1. Which of the following is not true of a Statement of Activities prepared for a private college or university? A) Reimbursement type grants are recorded as operating revenue when qualifying expenses are made, not when the grant is approved. B) Reclassifications from temporarily restricted to unrestricted net assets are reported when the donor's restrictions have been met. C) Expenses may be unrestricted or temporarily restricted depending on donor intent. D) All of the above are true.

1. Which of the following is true regarding accounting and financial reporting for private colleges and universities? A) Pell Grants are reported as nonoperating revenue B) Revenues from residence halls, dining services and bookstores are reported as Auxiliary Enterprises - within nonoperating revenue. C) Expenses associated with central management, planning and administration are classified as Institutional Support - within income from operations D) All of the above are all true. Answer: C

1. Which of the following is true regarding the Statement of Cash Flows for a public college? A) The direct method must be used. B) The statement is in the same format required for state and local governmental enterprise funds. C) Both A and B are true. D) Neither A nor B is true.

Which of the following is true regarding the Comprehensive Annual Financial Report (CAFR)? A)The CAFR has three main sections: introductory, financial, and statistical. B)Required Supplementary Information includes a Budgetary Comparison Schedule for the General Fund and all major special revenue funds that have a legally adopted annual budget (unless a statement is prepared). C)Both of the above. D)Neither of the above.

Governmental fund financial statements are to be prepared on the A) Accrual basis of accounting. B) Cash basis of accounting. C) Modified accrual basis of accounting. D) Tax basis of accounting.

C Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Governmental funds use modified accrual accounting and the current financial resources measurement focus. Government-wide statements and proprietary and fiduciary funds use accrual accounting and the economic resources measurement focus.

Encumbrance accounting is only typically used for A) Permanent Funds. B) Debt Service Funds. C) Capital Projects Funds. D) None of the above.

C Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Encumbrance accounting is typically used for the general fund, special revenue fund and capital projects fund.

Which of the following is not correct with respect to the General Fund? A) There can only be one general fund. B) Only the general fund has a positive unassigned fund balance. C) The general fund may be combined with funds that are insignificant in amount for presentation purposes. D) The general fund has an indefinite life

C Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Governments are only required to present separate columns for each major fund. The general fund is always considered to be a major fund.

Premiums generated from the issuance of bonds for a capital projects fund are generally: A) Transferred to the General Fund. B) Retained in the capital projects fund. C) Transferred to the debt service fund. D) None of the above.

C Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Premiums generated from the issuance of bonds for a capital projects fund must be used for debt service are generally transferred to the Debt Service Fund.

How would the construction costs of $4,968,750 be reported at year-end? A) As a capital asset in the Statement of Net Position only. B) As an expenditure of the capital projects fund and an expense in the government-wide Statement of Activities. C) As an expenditure of the capital projects fund and a capital asset in the government-wide Statement of Net Position. D) As an expenditure of the capital projects fund only.

C Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: Construction costs would be recorded as an expenditure of the capital projects fund and a capital asset in the government-wide Statement of Net Position.

Regarding Capital Projects Funds, which of the following is incorrect? A) Expenditures of capital projects funds are reported in the capital outlay character classification in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances. B) Capital outlay expenditures result in additions to the governmental fixed assets reported in the government-wide Statement of Net Position. C) Taxes or other revenues raised specifically for a capital project are recorded as transfers in in the capital projects fund. D) Grants, entitlements, or shared revenues received by a capital projects fund from another governmental unit are considered revenues of the capital projects fund, as is interest earned on temporary investments of the capital projects fund.

C Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: If taxes and/or special assessments are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized as revenue of the debt service fund.

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.

C Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: The journal entry would be a debit to Expenditures - Capital Outlay and credit to Contracts Payable for $1,150,000. Then a debit to Budgetary Fund Balance - Reserve for Encumbrances and credit to Encumbrances Control for $1,150,000.

If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are: A) Included as a liability of the General Fund. B) Recorded as operating transfers to the debt service fund. C) Included as revenues of the debt service fund. D) Both A and B are correct.

C Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: If taxes and/or special assessments are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized as revenue of the debt service fund.

Which of the following is true with respect to long-term debt? A) Term bonds mature in equal installments over the term of the bond. B) If a sinking fund is required by creditor or law, the unexpended resources of its debt service fund would be classified as assigned. C) Resources transferred to the debt service fund from the General Fund would typically be classified as Other Financing Sources by the debt service fund. D) If bonds supporting a capital project are issued at a premium, typically the premium may be used on capital expenditures.

C Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: Resources transferred to the debt service fund from the General Fund would typically be classified as Other Financing Sources by the debt service fund. Serial bonds require principal payments to be made throughout the life of the bond. If a sinking fund is required by creditor or law, the unexpended resources of its debt service fund would be classified as restricted. Premiums generated from the issuance of bonds for a capital projects fund must be used for debt service are generally transferred to the Debt Service Fund.

Interfund services purchased by the General Fund are recognized as: A) Transfers Out. B) Decreases in Fund Balance. C) Expenditures. D) None of the above.

C Learning Objective: 1 Topic: Interfund transactions Feedback: Interfund services provided and used are recognized as revenues or expenditures.

Interfund Transfers are flows of cash or other assets that: A) Require repayment. B) Are an exchange between funds of equal value. C) Do not require repayment. D) Are taxable.

C Learning Objective: 1 Topic: Interfund transactions Feedback: Interfund transfers represent flows of cash or other assets without a requirement for repayment. An example would be a transfer from the General Fund to a debt service fund.

Which of the following is not true regarding permanent funds? A) Permanent funds are considered governmental funds. B) Permanent funds use the current financial resources measurement focus and modified accrual basis of accounting. C) Permanent funds are appropriate when a gift must be invested and the proceeds used to benefit individuals or organizations. D) Major permanent funds would be reported in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances.

C Learning Objective: 1 Topic: Permanent fund transactions and reporting requirements Feedback: A trust to benefit individuals, private organizations or other governments would be accounted for in a private-purpose trust fund.

With respect to Permanent Funds, which of the following is not true? A) The principal is classified as Nonspendable Fund balance B) Permanent Funds are included in the government-wide statements. C) Permanent Funds are fiduciary funds and not reported in the government-wide statements. D) Permanent Funds use the current financial resources measurement focus.

C Learning Objective: 1 Topic: Permanent fund transactions and reporting requirements Feedback: Permanent funds are governmental funds.

In February, X City ordered $550,000 of supplies. On March 17th it received all of the ordered supplies and an invoice of $551,000. Which of the following would be recorded upon receipt of the supplies and invoice? A) Debit Encumbrances Control for $550,000. B) Debit Encumbrances Control for $551,000. C) Debit Budgetary Fund Balance -- Reserve for Encumbrances for $550,000. D) Debit Budgetary Fund Balance -- Reserve for Encumbrances for $551,000.

C Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Budgetary Fund Balance - Reserve for Encumbrances and credit Encumbrance Control for $550,000. Expenditures Control would be debited and Accounts Payable would be credited for $551,000.

The City of Akron increased its revenue budget by $75,000 and the appropriation for the Public Works Department was increased by $100,000. What is the journal entry to record this event in the General Fund? A) Estimated Revenues Control 75,000 Fund Balance 25,000 Appropriations Control 100,000 B) Appropriations Control 100,000 Estimated Revenues Control 75,000 Budgetary Fund Balance 25,000 C) Estimated Revenues Control 75,000 Budgetary Fund Balance 25,000 Appropriations Control 100,000 D) Estimated Revenues Control 75,000 Appropriations Control 75,000

C Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Estimated Revenues Control for $75,000, a debit to Budgetary Fund Balance for $25,000 and a credit to Appropriations Control for $100,000.

The journal entry to write off an uncollectible property tax receivable for a municipality would include: A) A credit to Estimated Uncollectible Taxes B) A debit to Bad Debts Expense C) A credit to Taxes Receivable D) B and C would both be included in the journal entry

C Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Estimated Uncollectible Taxes and a credit to Taxes Receivable.

Which of the following occurs when uncollectible delinquent taxes are written off? (Ignore interest and penalties) A) Delinquent Tax Receivable is increased. B) Accounts receivable goes down and the Estimated Uncollectible Taxes Account is increased. C) Net receivables remain unchanged. D) Uncollectible Delinquent Tax Expense is increased.

$60,000 of property tax owed to the city of Akron will not be collected within 60 days after year end. The year-end journal entry to record this information would include a: A) A debit to Deferred Inflows - Property Taxes. B) A credit to Income Taxes Receivable. C) A debit to Revenues Control. D) A credit to Revenues Control.

C Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Revenues Control and a credit to Deferred Inflow - Property taxes for $60,000.

Norton County operated a landfill, and accounted for it as an enterprise fund. The closure and post-closure care costs are estimated to be $20,000,000. It is estimated that the capacity of the landfill is 5 million tons of waste and that waste will be accepted for 10 years. During 2017, 750,000 tons of waste was accepted by the landfill. The charge for closure and post-closure care costs for 2017 would be: A) $ 750,000. B) $2,000,000. C) $3,000,000. D) Impossible to determine from the information given.

C Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: $20,000,000 estimated costs /5 tons = $4,000,000 per ton. $4,000,000 per ton x .75 ton = $3,000,000

The city is using an internal service fund to self-insure its risk financing activities. Claims accrued or paid by this fund are recorded as: A) Transfers out. B) Special Items. C) Operating Expenses. D) Nonoperating Expenses.

C Learning Objective: 1 Topic: Recording and reporting transactions of internal service funds Feedback: Claims paid/accrued by an internal service fund set up to self-insure would be recorded as an operating expense.

Which of the following is true regarding the use of Special Revenue Funds? A) Special Revenue Funds may be used whenever a government wishes to segregate income for specific purposes. B) Special Revenue Funds are appropriate if the sole source of resources are assigned funds C) Special Revenue Funds may only be used when a substantial portion of the resources are provided by restricted or committed revenue sources. D) Once a Special Revenue Fund is established, it will continue to be a Special Revenue Fund until all resources are exhausted.

C Learning Objective: 1 Topic: Special revenue funds Feedback: GASB standards require that special revenue funds be used only if a substantial portion of the resources are provided by one or more restricted or committed revenue sources. Assignment of resources is not sufficient for the establishment of a special revenue fund. If a government expects that a substantial portion of the resources supporting a special revenue fund's activities will no longer be derived from restricted and committed revenue sources, the government should discontinue the use of a special revenue fund and report the fund's remaining resources in the General Fund.

Which of the following is false with respect to Special revenue funds? A) Resources appropriately reported within proprietary or fiduciary funds are excluded from special revenue funds. B) A special revenue funds would be used to account for taxes which are required by state law to be used by the government to support specific activities. C) Special revenue funds may be used for any designated purpose to segregate revenues and ensure compliance with restrictions. D) None of the above

C Learning Objective: 1 Topic: Special revenue funds Feedback: Resources appropriately reported within proprietary or fiduciary funds are excluded from special revenue funds. Special revenue funds are used when it is desirable to provide separate reporting of resources that are restricted or committed to expenditure for a specified purpose other than debt service or capital projects. Designation of resources is not sufficient for the establishment of a special revenue fund.

Which of the following statements is true? A) Fund balances of debt service funds are classified as Restricted and Unrestricted. B) The fund balance of permanent funds should be classified as Nonspendable, Spendable and Committed. C) The principal of permanent funds are classified as Nonspendable Fund Balance. D) Any governmental fund may have an Unassigned Fund Balance

C Learning Objective: 2 Topic: Financial statement display and preparation Feedback: The principal of a permanent fund must be maintained so it is classified s nonspendable fund balance. The remaining unexpended resources would be classified as restricted or assigned fund balance.

If a trust is to be used for the benefit individuals, private organizations or other governments, the following fund(s) should be used: A) Special revenue fund. B) Permanent fund. C) Private purpose fund. D) Either A or B, depending upon whether the principal must be maintained.

C Learning Objective: 3 Topic: Classification and reporting of trust agreements Feedback: If a trust is to benefit individuals, private organizations, or other governments, it should be accounted for in a private-purpose trust fund.

Which of the following is not correct regarding the GASB Cash Flow Statement? A) The reconciliation of income and cash flows from operations starts with operating income. B) Fixed Assets acquisitions are reported in the Capital and Related Financing Section. C) Cash received from Interest and Dividend Income is recorded in the Operating Section. D) All of the above are correct.

C Learning Objective: 4 Topic: GASB format cash flow statements Feedback: Cash flows from operating activities include receipts from customers, payments to suppliers, payments to employees and receipt and payment of cash for quasi-external transactions (interfund transactions).

Which of the following accounts in the General Fund is credited when a purchase order is approved? A) Appropriations Control. B) Encumbrances Control. C) Budgetary Fund Balance -- Reserve for Encumbrances. D) Vouchers Payable.

C Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: The journal entry would be a debit to Encumbrances Control and a credit to Budgetary Fund Balance - Reserve for Encumbrances.

Which of the following is true regarding modified accrual accounting? A) Revenues are recognized when measurable and available to finance expenditures of the current period. B) Expenditures are generally recognized as the related goods or services are received. C) Both (a) and (b) above. D) None of the above.

C Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Under modified accrual accounting, revenues are recognized when measurable and available to finance expenditures of the current period. Expenditures are decreases in net financial resources and are generally recognized when the liability is incurred. Generally, expenditures are recorded and fund liabilities are recognized when goods and services are received, regardless of whether resources are available in the fund.

When payrolls and other liabilities are incurred and must be paid before substantial amounts of cash will be collected, what type of short-term note is desirable and secured by a government's power to tax? A) Tax Relief Note Payable. B) Tax Budget Note Payable. C) Tax Anticipation Note Payable. D) Tax Encumbrances Note Payable.

C Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: When payrolls and other liabilities are incurred and must be paid before substantial amounts of cash will be collected governments arrange short term borrowing using the taxing power of the government as security. The loan is called a tax anticipation note.

Capital assets of internal service funds should be reported: A) In the internal service funds only. B) In the government-wide statements only. C) In both the internal service funds and the government-wide statements. D) None of the above, they are not reported

C Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Capital assets of internal service funds are reported in both the internal service fund and in the government-wide statements.

Which of the funds listed below would include capital assets in its Statement of Net Position? A) Permanent. B) Special Revenue. C) Internal Service. D) None of the above; no funds in governmental accounting have capital asset accounts.

C Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Internal service fund is a proprietary fund. Proprietary funds include capital assets in its Statement of Net Position. Permanent and Special Revenue funds are governmental funds and do not record capital assets in its statements.

Which of the following would not be true regarding internal service funds? A) Internal service funds use the economic resources measurement focus and accrual basis of accounting. B) Examples of internal service funds would include self-insurance funds, motor pool funds, and print shop funds. C) In the government-wide financial statements, internal service funds are most commonly reported in the business-type activities column. D) None of the above; all are true.

C Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Internal service funds are governmental activities and enterprise funds are business-type activities.

An example of an activity that would not normally be accounted for in an enterprise fund would be: A) Lottery. B) Swimming pool. C) Printing Services. D) Airport.

C Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Printing services would be accounted for in an internal service fund because it would be providing services to other government departments.

Indicate which of the following would not be an example of an internal service fund: A) City Self-Insurance Fund B) City Print Shop. C) City Airport. D) City Data Processing Service Center.

C Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: The City Airport would be accounted for in an Enterprise Fund. Enterprise funds provide services to the public. Internal service funds provide services to other government departments and charge those departments for the services received. Examples would be purchasing services, printing services, repair garages, janitorial services and risk management activities.

When a payment is due to a contractor from capital projects fund resources, the debit would be to: A) A capital asset account. B) Encumbrances Control. C) Expenditures-Capital Outlay. D) None of the above, no entry is made until payment.

C Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: The journal entry would be a debit to Expenditures - Capital Outlay and a credit to Contracts Payable

Proceeds of tax supported bonds are recognized in a capital projects fund as a(an): A) Revenue. B) Liability. C) Other Financing Source. D) Other Financing Use.

C Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: The journal entry would be a debit to cash and a credit to Other Financing sources - Proceeds of Bonds.

What would be the amount of expenditures recorded by the debt service fund for the fiscal year ended December 31, 2018? A) $440,000. B) $324,000. C) $314,000. D) $120,000.

C Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: (2,000,000

What amount would be reported as debt service expenditures for 2018? A) $400,000. B) $362,000. C) $356,000. D) $280,000.

C Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: (4,000,000

Which of the following bond types has a payment schedule in which the amount of annual principal repayment is scheduled to increase each year by approximately the same amount that interest payments decrease? A) Regular. B) Deferred. C) Annuity. D) Irregular.

C Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: The annual debt service payments remain relatively uniform over the term of the issue for an annuity serial bond. The principal repayments increase each year by approximately the same amount that interest payments decrease.

Which of the following statements is not correct? A) Transactions between funds of the same government may not be assumed to be arms' length in nature. B) Most interfund transactions are eliminated in the government-wide statements C) Interfund reimbursements are classified as other financing sources or uses D) Interfund transfers are classified as other financing sources or uses

C Learning Objective: 1 Topic: Interfund transactions Feedback: Interfund reimbursements represent repayments to the funds that initially recorded expenditures or expenses by the funds responsible. Reimbursements result in one fund debiting an expenditure (or expense) and crediting cash. The other fund would debit cash and credit an expenditure (or expense).

The General Fund of the City of Bangor purchased water from its Water Utility Fund in the amount of $20,000. The General Fund would debit: A) Water Expense. B) Other Financing Uses-Transfers Out. C) Expenditures Control. D) None of the above; no entries would be made.

C Learning Objective: 1 Topic: Interfund transactions Feedback: The journal entry would be a debit to Expenditures Control and a credit to a liability or cash.

The General Fund of the City of Lexington approved a tax levy for the calendar year 2017 in the amount of $2,600,000. During 2017, $2,250,000 was collected. During 2018, $95,000 was collected during the first 30 days, $75,000 was collected during days 31-60, and $70,000 was collected during the days 61-90. The balance is expected to be uncollectible. During the post-audit, you discovered that the City showed $2,600,000 in revenues. How much revenue should the City recognize in 2017 from this tax levy? A) $ 2,250,000 B) $ 2,345,000 C) $ 2,420,000 D) $ 2,465,000

C Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: Amount collected of $2,250,000 + $95,000 collected in first 30 days + $75,000 collected in days 31-60 = $2,420,000.

The City of Brownsville had a balance in the Budgetary Fund Balance -- Reserve for Encumbrances account at the end of 2016 in the amount of $90,000. During 2017, 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 2017? (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 2016.

C Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: Expenditures on the statement of Revenues, Expenditures, and Changes in Fund Balances for 2017 for the amount of the invoice; $91,200.

Which of the following accounts of a governmental unit's General fund is debited when supplies previously ordered are received? A) Encumbrances Control. B) Reserve for Supplies. C) Budgetary Fund Balance -- Reserve for Encumbrances. D) Appropriations.

C Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Budgetary Fund Balance - Reserve for Encumbrances and a credit to Encumbrances Control for the amount of the encumbrance. Expenditures Control would be debited and Accounts Payable would be credited for the invoice amount.

Revenue bonds sold by a water utility fund, upon sale, would be recorded: A) In an enterprise fund as "Other Financing Source." B) In the general long-term debt accounts as a liability. C) In an enterprise fund as a liability. D) In an enterprise fund as an addition to Net Position.

C Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: The journal entry recoded in the enterprise fund would be a debit to Cash and a credit to Bonds Payable.

Which of the following is true regarding the recording of long term debt in an enterprise fund? A) When revenue bonds are sold at par, Cash is debited and Bonds Payable is credited. B) The bonds would be reported in both an enterprise fund and in the government-wide statements. C) Both of the above. D) Neither of the above.

C Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: The journal entry would be a debit to cash and credit to bonds payable. The debt would be reported in both the enterprise fund and in the government-wide statements.

Which of the following is not likely to be recorded in a special revenue fund? A) Phone fees restricted to supporting the emergency 911 access system. B) Hotel taxes restricted to promoting tourism. C) Sales taxes restricted to courthouse additions. D) State motor fuel tax restricted to road maintenance.

C Learning Objective: 1 Topic: Special revenue funds Feedback: GASB standards require that special revenue funds be used only if a substantial portion of the resources are provided by one or more restricted or committed revenue source. Special revenue funds are not used if resources are required to be used to acquire capital assets (courthouse additions), or for the payment of interest and principle on long-term debt.

Which of the following is true of the Statement of Net Position for proprietary funds? A) A classified format is used in which current assets, noncurrent assets, current liabilities, and noncurrent liabilities are presented separately. B) Separate disclosure is required for major enterprise funds and a total for all non-major enterprise funds C) Both A and B are correct. D) Neither A nor B are correct.

C Learning Objective: 2 Topic: Classification and preparation of financial statements for proprietary funds Feedback: GASB requires a classified format for the Statement of Net Position. Current assets, noncurrent assets, current liabilities and noncurrent liabilities are presented separately. Major enterprise funds are to be presented, along with columns for nonmajor funds and total enterprise funds.

In addition to a Statement of Net Assets, which of the following are government-wide statements? A) Statement of Revenues, Expenses, and Changes in Fund Net Assets. B) Statement of Cash Flows. C) Neither A nor B. D) Both A and B.

Which financial statements are required for a proprietary fund? A) Statement of Revenues, Expenses and Changes in Fund Net Position and Statement of Net Position B) Income statement, Statement of Net Position and Statement of Cash Flows C) Statement of Revenues, Expenses and Changes in Fund Net Position, Statement of Net Position and Statement of Cash Flows D) Statement of Revenues, Expenses and Changes in Fund Balance and Statement of Net Position, and Statement of Cash Flows

C Learning Objective: 2 Topic: Classification and preparation of financial statements for proprietary funds Feedback: The required statements for proprietary funds include the Statement of Net Position, Statement of Revenues, Expenses, and Changes in Fund Net Position, and the Statement of Cash Flows.

What would be the effect on the General Fund's Fund 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.

C Learning Objective: 2 Topic: Closing entries and classification of fund balances Feedback: The General Fund would record an expenditure which would reduce the fund balance by $5,000.

Which of the following would be accounted for as a permanent fund? A) An intergovernmental grant of $500,000 to a city to be used for low income housing. B) A gift of $500,000 to a city, to be invested permanently, with the proceeds to be distributed as scholarships. C) A gift of $500,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city cemetery. D) A gift of $500,000 to a city to be used for a new caretaker's residence at the local cemetery.

C Learning Objective: 3 Topic: Classification and reporting of trust agreements Feedback: A gift to a city with the proceeds to be used to maintain the city cemetery would be accounted for as non-expendable trust which benefits a government or its citizenry. Because the gift stipulates that earnings only (not principal) may be used for its prescribed purpose would be reported in a Permanent Fund.

Which of the following would be accounted for as a permanent fund? A) A gift of $65,000 to a school district, to be invested permanently, with the proceeds to be awarded as college scholarships to graduating seniors. B) A gift of $65,000 to a school district, to be used for landscaping improvements. C) A gift of $65,000 to a city to be invested permanently, with the proceeds to be used to buy books for the city library. D) Both A and C

C Learning Objective: 3 Topic: Classification and reporting of trust agreements Feedback: Trusts that generate income for the benefit of the government or its citizens and require the principal to be maintained are reported in permanent funds. The scholarships benefits individuals and should be accounted for in a private-purpose trust fund. The landscaping improvements would be accounted for in a special revenue fund.

Which of the following is true regarding the Statement of Cash Flows required by the GASB for proprietary funds? A) Either the direct or indirect method may be used. B) Interest payments would be recorded as investing activities. C) Acquisition of capital assets with bond proceeds would be a decrease in cash provided by capital and related financing activities. D) Interest received on investments is reported as cash flows from operating activities.

C Learning Objective: 4 Topic: GASB format cash flow statements Feedback: Purchases of equipment and interest payments would be reported in the cash flows from capital and related financing activities section of the Statement of Cash Flows. GASB requires the direct method to report cash flows from operating activities for proprietary funds.

Which of the following is false regarding the cash flow statements of a proprietary fund? A) A reconciliation is required between the Statement of Revenues, Expenses, and Changes in Fund Net Position and the cash flows from operating activities section of the Cash Flow Statement. B) Interest payments are reported as increases in cash flows from either capital and related financing or noncapital financing activities, whichever is appropriate. C) Purchases of equipment would be reported in the investing section. D) None of the above - these are all true.

C Learning Objective: 4 Topic: GASB format cash flow statements Feedback: Purchases of equipment would be reported in the cash flows from capital and related financing activities section of the Statement of Cash Flows.

A transfer should be reported in the operating statement of the General Fund as a(an): A) Revenue or Expenditure. B) Due from or Due to Other Funds. C) Other Financing Source or Use. D) None of the above, it is a direct increase or decrease to fund balance.

C Learning Objective:1 Topic: Interfund transactions Feedback: Transfers between funds are reported as Other Financing Sources or Other Financing Uses.

A local government recorded the sale of a capital asset at a gain by recording a debit to cash and credit to proceeds of sale of capital asset. What is the worksheet entry when preparing the government-wide statements? A) Debit to Proceeds of sale of capital asset and credit to Gain on sale of capital asset B) Debit to Cash and credit to capital asset (net) and credit to Gain on sale of capital asset C) Debit to Proceeds of sale of capital asset and credit to capital asset (net) and Gain on sale of capital asset D) None of the above

For Depreciation of infrastructure.. A) Governments Can record depreciation in the same manner as for other depreciated fixed assets B) Because they have such long useful lives, infrastructure assets are never depreciated C) Expenditures to add to or improve infrastructure assets must be capitalized D) Government can choose to expense expenditures that extend the life of infrastructure assets in lieu of depreciation

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) Modified accrual basis, accrual basis. D) Cash basis, accrual basis.

The reconciliations required to be presented on the face of the governmental fund financial statements or in separate schedule immediately after the fund financial statements include: A) Reconciliation from the governmental fund Balance Sheet to the Statement of Net Assets. B) Reconciliation from the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities. C) Both A & B. D) No reconciliations are required to be submitted.

Where in the basic financial statements would one find fiduciary activities reported? A) In the fiduciary funds statements and in the governmental activities column of the government-wide statements. B) In the fiduciary funds statements and in the business like activities column of the government-wide statements. C) In the fiduciary funds statements only. D) In the government-wide statements only.

Which of the following adjustments would be made when moving from the governmental funds balance sheet to the governmental activities column in the government-wide Statement of Net Assets? A) Add balances of internal service fund assets and liabilities. B) Add beginning capital assets, net of depreciation. C) Both of the above. D) Neither of the above.

Which of the following is condidered a source of general revenue in the Government-wide Statement of Activities? A) Charges for Services B) Operating Grants C) Sales Tax D) None of the above

Which of the following is false regarding government-wide financial statements? A) Government-wide financial statements are prepared using the accrual method of accounting B) General capital assets are required to be reported on the government-wide balance sheet. C) Worksheet entries are required to change the enterprise fund financial statements to the accrual basis of accounting D) GASB requires a reconciliation from fund financial statements to government-wide financial statements

Which of the following is not a reconciliation required by GASB? A) From governmental fund balance sheet to the Government-wide Statement of Net Assets. B) From governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities. C) From enterprise fund balance sheet to the Government-wide Statement of Net Assets. D) None of the above, all these reconciliations are required.

Which of the following is true regarding revenue recognition for sales taxes, when reporting in the government-wide statements? A) Assets are recognized when the underlying exchange (retail sale) has occurred or when resources are received, whichever occurs first. B) Revenues are recognized when the underlying exchange (retail sale) has occurred. C) Both of the above are true. D) Neither of the above is true.

Which of the following is true regarding the government-wide Statement of Net Assets? A) Discretely presented component units are reported separately. B) Governmental and business-type activities are reported separately and are consolidated within columns. C) Both of the above. D) Neither of the above.

Which of the following is true regarding the government-wide statements? A) Balances from enterprise funds' statements are entered in the business-type activities sections of the government-wide statements without adjustment. B) Government-wide statements eliminate interfund transactions, within columns. C) Both of the above. D) Neither of the above.

Which of the following situations would be unlikely to result in the recognition of an asset impairment? A) A city warehouse is damaged by fire. B) Recently purchased city-owned voting booths are rendered obsolete by a federal law requiring a new technology. C) Ridership on city buses declines. D) Construction on a municipal sports complex stops when the city's major league baseball team moves to another city.

Which of the following statements is not correct with respect to the preparation of government-wide statements? A) A worksheet entry is required to record depreciation expense on capital assets of governmental activities B) Enterprise funds are reported in the business-type activities column of the government-wide statements. C) Worksheet entries must be made to eliminate operating profits earned by enterprise funds. D) A worksheet entry is required to eliminate the charge to expenditures for capital outlay and record those expenditures as capital assets

Which of the following would be included in the Equity section of the Statement of Net Assets? A) Retained Earnings. B) Unassigned Fund Balance. C) Invested in capital assets, net of related debt. D) Nonspendable fund balance.

64. A government publishes information about its fire department. What type of service efforts and accomplishments measure would Fire Loss per Capita represent? A) Input B) Output C) Outcome D) Efficiency

C) Outcome

James McHughes gave the following to the City of Carnesville in order to establish a private-purpose trust: o Land - cost, $500,000; fair market value as of the date of the gift, $400,000. o Securities - cost, $1,600,000; fair market value as of the date of the gift, $1,800,000. The amount to be recorded as additions for gifts by the private-purpose trust fund would be: A) $2,000,000. B) $2,100,000. C) $2,200,000. D) $2,300,000.

C) $2,200,000.

28. If an auditee is not considered low-risk, what percent of federal funds expended are auditors required to express an opinion on? A) 100%. B) 70%. C) 50%. D) 25%.

C) 50%.

29. Currently, a single audit is required for organizations receiving what amount of federal funds? A) > $100,000. B) > $300,000. C) > $500,000. D) > $700,000.

C) > $500,000.

GASB provides which method(s) for including component unit financial information with that of the primary government? A) Discrete Presentation B) Blending C) A and B D) None of the above

C) A and B

24. The term "opinion unit" refers to which of the following: A) A division of a CPA firm B) A state or local government together with its component units C) A level of reporting of a government that requires a separate materiality level D) One of the four statements required in the second paragraph of an unqualified audit opinion

C) A level of reporting of a government that requires a separate materiality level

82. Which of the following local governments is least likely to report a net pension liability for underfunded pension obligations? A) A local government acting as trustee for a defined benefit pension plan. B) A local government participating in a state sponsored defined benefit pension plan. C) A local government participating in a state sponsored defined contribution pension plan. D) None of the above, local governments do not report net pension liabilities.

C) A local government participating in a state sponsored defined contribution pension plan.

52. The highest bond rating assigned by Moody's is: A) A+ B) A C) AAA D) AAA+

C) AAA

Fund equity will not be found in... A) Investment trust funds. B) Pension trust funds. C) Agency funds. D) Private-purpose trust funds.

C) Agency funds.

73. Which of the following items does not increase the net pension liability and pension expense for a government offering a defined benefit pension plan? A) Service cost B) Interest C) Benefit payments to retired employees D) None of the above, all of these increase net pension liability and pension expense.

C) Benefit payments to retired employees

15. Which of the following would be considered a performance audit under the Government Auditing Standards? A) An investigation into whether a purchasing department of a government was operated efficiently. B) An investigation into whether a social service agency of a state government improved the lives of its clients. C) Both A and B above. D) Neither A nor B above.

C) Both A and B above.

16. Which of the following is true regarding the Single Audit Act and its amendments? A) Governments and not-for-profit organizations that exceed $50 million in federal awards are normally assigned a cognizant agency to provide guidance. B) Smaller governments report to oversight agencies; typically the agency providing more funding than any other agency. C) Both A and B above. D) Neither A nor B above.

C) Both A and B above.

5. The Single Audit Act intends that auditors conducting regular financial audits of state and local governments and not-for-profits organizations provide assurance to the federal government that: A) Federal funds have been expended in accordance with laws and regulations. B) Federal funds are protected through a system of internal controls and sound financial management practices. C) Both A and B above. D) Neither A nor B above.

C) Both A and B above.

55. To compute the unassigned fund balance/revenues—General Fund, one would need to look in the CAFR for the: A) Governmental funds Balance Sheet. B) Governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. C) Both A and B above. D) Neither A nor B above.

C) Both A and B above.

3. 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.

C) Both A and B.

47. A public charity is: A) An organization founded and operated exclusively for public benefit. B) An organization that receives more than one-third of its support from a combination of contributions, membership fees, and gross receipts from exempt activities. C) Both A and B. D) Neither A nor B.

C) Both A and B.

70. Where is the net pension liability shown in a Comprehensive Annual Financial Report for employees of enterprise fund activities? A) The enterprise fund Statement of Fund Net Position B) The government-wide Statement of Net Position C) Both A and B. D) Neither A nor B.

C) Both A and B.

72. When accounting for pension benefits, the net pension obligation for employees of proprietary activities is: A) Reported in the government-wide statements. B) Reported in the proprietary fund-basis statements. C) Both A and B. D) Neither A nor B.

C) Both A and B.

83. Which of the following is true for a city government participating in a state sponsored pension plan for its law enforcement employees. A) The General Fund will report pension expenditure for the annual required contribution to the State Retirement System. B) The Government-wide Statement of Net Position will report a liability to the extent the city's share of the total pension liability exceeds the net fiduciary position of the state plan. C) Both A and B. D) Neither A nor B.

C) Both A and B.

When accounting for other postemployment benefits, the OPEB obligation for employees of governmental activities is: A) Reported in the government-wide statements, but not the fund basis statements. B) The cumulative difference between the amount funded and the annual required contribution. C) Both A and B. D) Neither A nor B.

C) Both A and B.

In addition to a Statement of Net Assets, Proprietary Fund level financial statements include which of the following? A) Statement of revenues, expenses, and changes in fund net assets. B) Statement of cash flows. C)Both of the above. D)Neither of the above.

C) Both of the above

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.

C) Both of the above

Which of the following is true regarding the governmental fund statements? A)The Governmental Funds Balance Sheet does not reflect capital assets or long-term debt. B)The Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances reports columns for major funds, non-major funds (in total), and total. C)Both of the above. D)Neither of the above.

C) Both of the above

Which of the following is true regarding the proprietary fund financial statements? A)The proprietary fund financial statements include the Statement of Net Assets, the Statement of Revenues, Expenses, and Changes in Fund Net Assets, and the Statement of Cash Flows. B)The proprietary fund financial statements are prepared using the economic resources measurement focus and the accrual basis of accounting. C)Both of the above. D)Neither of the above.

C) Both of the above

Which of the following is true regarding the reporting of Budget-Actual Comparisons? A)A Budget-Actual Comparison Schedule is required for the General Fund and all major special revenue funds that have a legally adopted annual budget. B)A Budget-Actual Comparison Statement may be prepared in lieu of the Schedule. C)Both of the above. D)Neither of the above.

C) Both of the above

Which of the following is true regarding the reporting of major funds in the governmental funds financial statements? A)The General Fund is always considered a major fund. B)A fund is considered major if its revenues, expenditures, assets, or liabilities exceed 10% of the total governmental fund categories and if the same element (revenues, expenditures, assets, or liabilities) exceeds 5% of the governmental and enterprise funds combined. C)Both of the above. D)Neither of the above.

C) Both of the above

56. Which of the following is true regarding financial reporting of special-purpose entities? A) Special purpose entities might include park districts, school districts, and public colleges and universities. B) Special-purpose entities, in some cases, have more limited reporting requirements than general-purpose entities. C) Both of the above are true. D) Neither of the above is true.

C) Both of the above are true.

54. Which of the following is true regarding the financial statements for special-purpose entities? A) Special-purpose entities that are engaged only in one governmental activity may combine government-wide and governmental fund statements. B) Special-purpose entities that are engaged in fiduciary activities only prepare the statements required for fiduciary funds (Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position). C) Both of the above. D) Neither of the above.

C) Both of the above.

Which of the following is true regarding agency funds? A) Agency funds report assets and liabilities, but not net assets, revenues or expenses. B) Agency funds are often used to account for property tax collections by county governments for other governments. C) Both of the above. D) Neither of the above.

C) Both of the above.

Which of the following is true regarding fiduciary funds? A) Fiduciary funds are not included in the government-wide financial statements. B) Fiduciary funds include agency, pension (and other employee benefit) trust, private-purpose trust, and investment trust funds. C) Both of the above. D) Neither of the above.

C) Both of the above.

Which of the following is true regarding fiduciary funds? A) When a government is trustee for a defined benefit pension plan, two RSI schedules are required: a schedule of funding progress and a schedule of employer contributions. B) Escheat property proceeds must be reported in either a private-purpose trust fund or the fund to which the property ultimately escheats. C) Both of the above. D) Neither of the above.

C) Both of the above.

Which of the following is true regarding pension accounting and reporting for state and local governments? A) When the General Fund makes a contribution to a pension trust fund, the account "Expenditures" is debited. B) The Statement of Changes in Fiduciary Net Assets reports "additions" and "deductions," computed on the accrual basis. C) Both of the above. D) Neither of the above

C) Both of the above.

Which of the following is true regarding the reporting of investments by state and local governmental units? A) Investments, for which a determinable fair value can be obtained, are to be reported at fair value. B) Realized and unrealized gains and losses are to be combined in the relevant operating statement (for example, the Statement of Changes in Fiduciary Net Assets). C) Both of the above. D) Neither of the above.

C) Both of the above.

Which of the following statements about agency funds is true? A) An agency relationship that usually results in the creation of an agency fund is the collection of taxes and other revenues by an official of one governmental unit for other governmental units. B) GASB mandates that governments report special assessment resources in an agency fund only if the reporting government has no obligation to assume debt service on special assessment debt in the event property owners' default but merely perform the functions of billing and collecting the special assessments and paying interest and principal on the special assessment debt. C) Both of the above. D) Neither of the above.

C) Both of the above.

An employee enrolls in a pension plan that will pay out 3% of the employee's average salary for the last 3 years for each year of service that the employee worked. What type of pension plan does the employee have? A) Defined Contribution Plan. B) Normal Payout Plan. C) Defined Benefit Plan. D) None of the above.

C) Defined Benefit Plan.

33. What is the principal advantage to an organization of having 501(c) (3) status? A) The organization does not have to pay federal income tax. B) The organization does not have to pay state sales taxes on purchases. C) Donors to the organization may deduct their contributions as charitable donations. D) All of the above.

C) Donors to the organization may deduct their contributions as charitable donations.

25. Which of the following audit opinions is issued when a government fails to comply with generally accepted accounting principles? A) Qualified B) Adverse C) Either of the above, depending on the severity of the noncompliance D) Neither (a) or (b) above

C) Either of the above, depending on the severity of the noncompliance

An endowment to support scholarships would most likely be accounted for in which of the following fund types? A) Agency Fund. B) Investment Trust Fund. C) Private-Purpose Trust Fund. D) None of the Above.

C) Private-Purpose Trust Fund.

58. In order to compute the operating ratio-enterprise funds, one would look in the CAFR in which of the following sections? A) In the government-wide Statement of Net Assets. B) In the proprietary funds Statement of Net Assets. C) In the proprietary funds Statement of Revenues, Expenses, and Changes in Net Assets. D) In the proprietary funds Statement of Cash Flows.

C) In the proprietary funds Statement of Revenues, Expenses, and Changes in Net Assets.

A fund that exists when the government is the sponsor of a multigovernment investment pool and accounts for the external portion of the trust assets is a(n): A) Agency fund B) Private-Purpose Trust Fund C) Investment Trust Fund D) Pension Trust Fund

C) Investment Trust Fund

In an agency fund, assets are equal to: A) Liabilities + Net Assets B) Net Assets C) Liabilities D) There are no assets in an Agency Fund

C) Liabilities

Pension trust fund financial statements would be found in the Comprehensive Annual Financial Report of a governmental reporting entity: A) Only if the governmental unit desires to disclose the status of employee retirement plans to its employees. B) In all cases when the governmental unit has an obligation to provide funding for employee retirement. C) Only if the governmental unit is the trustee for the public employee retirement plan. D) Whenever governmental employees have a retirement plan, whether or not the governmental unit is obligated to provide funding.

C) Only if the governmental unit is the trustee for the public employee retirement plan.

Which of the following is not a required supplementary information schedule for pension pensions? A) Schedule of funding progress B) Schedule of employer contributions C) Schedule of employee contributions D) None of the above, all of these are required.

C) Schedule of employee contributions

50. 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 in multiple fiduciary activities must prepare both fund-basis and government-wide financial statements. D) None of the above - all are true.

C) Special-purpose entities that are engaged in multiple fiduciary activities must prepare both fund-basis and government-wide financial statements.

Which of the following statements is not required for pension trust funds? A) Statement of Fiduciary Net Assets. B) Statement of Changes in Fiduciary Net Assets. C) Statement of Fiduciary Cash Flows. D) None of the above; all three statements should be prepared for pension-trust funds.

C) Statement of Fiduciary Cash Flows.

52. Assume a government is determined to be a special-purpose government engaged in business-type activities only. Which of the following financial statements would be required? A) Balance Sheet, Statement of Revenues, Expenditures, and Changes in fund Balances. B) Statement of Net Position, Statement of Activities, Statement of Cash Flows. C) Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows. D) Statement of Net Position and Statement of Activities.

C) Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows.

57. Public colleges and universities that choose to report as special-purpose entities engaged only in business-type activities would have which of the following financial statements? A) Statement of Net Position, Statement of Activities. B) Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position. C) Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows. D) None of the above.

C) Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows.

Churchville County is trustee for a multi-government investment pool and has established an investment trust fund. Included in the investment trust fund, for management purposes, are investments in the amount of $15 million from the County's General Fund, $3 million from the County's special revenue funds, and $112 million from other governments. Which of the following would be true? A) The County would report $18 million in an investment trust fund. B) The County would report the entire $130 million in an investment trust fund. C) The County would report the $112 million in an investment trust fund, the $15 million in its General Fund, and the $3 million in special revenue funds. D) The County would report the $112 million in an investment trust fund and the$18 million in a permanent fund.

C) The County would report the $112 million in an investment trust fund, the $15 million in its General Fund, and the $3 million in special revenue funds.

13. Which organization promulgates the Government Auditing Standards? A) The American Institute of Certified Public Accountants. B) The U.S. Office of Management and Budget. C) The U.S. Government Accountability Office. D) The U.S. Congressional Budget Office.

C) The U.S. Government Accountability Office.

75. The projected returns exceed actual returns on pension plan assets for a government offering a defined benefit pension plan. How would the resulting increase in the net pension liability be recognized in the financial statements in the year this difference is recognized? A) The increase in net pension liability would be expensed in the period the plan is changed. B) The increase in net pension liability would be deferred and amortized over the remaining service life of the employees. C) The increase in net pension liability would be deferred and amortized over five years. D) The increase in net pension liability would be deferred and amortized over ten years.

C) The increase in net pension liability would be deferred and amortized over five years.

The "external portion" of an investment trust fund relates to... A) The portion of the investment that legally belongs to the sponsoring government. B) The portion of the investment that is allocated among the sponsoring government's funds. C) The portion of the investment that belongs to other participating governments. D) "External portion" relates only to agency funds, not investment trust funds.

C) The portion of the investment that belongs to other participating governments.

60. If the government is primarily or secondarily liable for the payment of debt principal and interest for a special assessment project: A) The tax levy and debt service expenditures should be recorded in an internal service fund. B) A special revenue fund should account for the proceeds of the debt and construction expenditures C) The project is accounted for within governmental type funds as if it were a governmental project D) The debt is not recorded in the government-wide statements

C) The project is accounted for within governmental type funds as if it were a governmental project

65. A ratio that measures a not-for-profit organization's solvency is: A) Net assets/expenses. B) Program expense ratio. C) Working capital ratio. D) Fund-raising efficiency.

C) Working capital ratio.

A statewide pension plan exists for all local governments in a certain state. The provisions of the plan indicate that each qualifying retiree receive 2% multiplied by the number of years active employment multiplied by the average salary for the past four years of service. The government calculates the actuarial liability on a statewide basis, not by individual government. The plan would be known as a (an): A) multiple-employer, defined benefit, agency plan. B) multiple-employer, defined contribution plan. C) multiple-employer, defined benefit, cost-sharing plan. D) Single employer plan.

C) multiple-employer, defined benefit, cost-sharing plan

22. Under the terms of the Single Audit Act and its amendments, what percentage of federal awards expenditures must be selected for audit? A) High Risk Auditee: 100%; Low Risk Auditee: 50% B) High Risk Auditee: 100%; Low Risk Auditee: 25% C) High Risk Auditee: 50%; Low Risk Auditee: 25% D) High Risk Auditee: 50%; Low Risk Auditee: 0%

C)High Risk Auditee: 50%; Low Risk Auditee: 25% 23.

Which of the following is one of the criteria to determine if a governmental fund is considered to be a major fund? A. Total assets, liabilities, revenues or expenditures of the individual governmental fund constitutes 10 percent of the governmental funds category. B. Total assets, liabilities, revenues or expenditures/expenses are 5 percent of the total of the governmental and enterprise category. Other funds may be designated major funds at the discretion of management. C. Both A and B are required D. Either A or B will qualify a fund to be a major fund

C. Both A and B are required

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 that individual governmental fund constitutes 10% 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 that individual governmental or enterprise fund are 5% of the total of the governmental and enterprise categories, combined. C. Both A and B are required for a governmental fund to be a major fund. D. Either A or B would fulfill the requirements.

C. Both A and B are required for a governmental fund to be a major fund

What is the primary report for meeting the diverse needs for State and Local Government?

CAFR Comprehensive Annual Financial Report

Which of the following statements is FALSE? A. With respect to fund basis financial statements, a government may designate any fund to be a major fund if reporting that fund separately would be useful. B. When preparing fund basis financial statements, any funds not reported separately are aggregated and reported in a single column under the label non-major funds. C. When preparing fund basis financial statements, any funds not reported separately are reported by function D. In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental, proprietary and fiduciary funds.

C. When preparing fund basis financial statements, any funds not reported separately are reported by function

Interfund transfers occur between individual funds in the same government system without the requirement of repayment. If the General Fund transferred money to the Debt Service Fund, how would the General Fund account for the transaction? A) As a non-operating expense. B) As an operating expense. C) As a use of funds on the activities statement. D) As a source of funds on the activities statement.

C: Learning Objective: 1 Topic: Interfund transactions Feedback: The journal entry would be a debit to Other Financing Uses - Transfers Out Control and a credit to Cash. (Or a credit to Due to Debt Service Fund and then a debit to Debt Service Fund and credit to cash when paid).

Which of the following is NOT true regarding the Statement of Cash Flows for a public college?

Cash purchases of capital assets are reported as outflows in the investing activities section

St. David's is a not-for-profit business-oriented hospital. What is the journal entry for the following transaction: Cash was received for pledges made in the prior year in the amount of $85,000. That amount has been recorded as temporarily restricted net assets, based on time restrictions.

Cash85,000 Contributions receivable 85,000 Reclassification from Net Assets with Donor Restrictions-Expiration of Time Restrictions 85,000 Reclassification to Net Assets without Donor Restrictions-Expiration of Time restrictions 85,000

Which of the following is true regarding component units?

Component units may be reported discretely in the government-wide statements or may be blended as a fund in the fund financial statements (and thus also included in the government-wide financial statements)

What is the definition of Government Mandated Nonexchange Transaction

Commonly grants from higher levels of government (state or federal) given to support a program.

CAFR=

Comprehensive Annual Financial Report state and local government

Which of the following statements is correct with respect to contributions to a private not-for-profit?

Contributions, including pledges, to a not-for-profit are recorded at fair market value at the date of receipt. AND Contributions to a not-for-profit may be restricted as to purpose or time or for plant acquisition

Contributed services are recognized as revenue by a private not-for-profit when the service?

Creates or enhances a non-financial asset (i.e. a building) or requires specialized skills, is provided by someone possessing those skills, and typically would be purchased if not provided by donation

Encumbrances decrease with a?

Credit

The budgetary account of Appropriations is increased with a?

Credit

The budgetary account of Budgetary Fund Balance is increased with a?

Credit

The budgetary account of Estimated Other Financing Sources is decreased with a?

Credit

The budgetary account of Estimated Other Financing Uses is increased with a?

Credit

The budgetary account of estimated revenues is decreased with a?

Credit

Governmental fund statements are prepared using:

Current financial resources measurement focus and modified accrual basis of accounting

1. For private colleges and universities, reclassifications of temporarily restricted and unrestricted net assets could be made: A) For satisfaction of purpose restrictions. B) When time restrictions expire. C) If the resources donated for fixed assets have been expended on such assets. D) All of the above.

1. Which of the following is not true regarding the Statement of Revenues, Expenses, and Changes in Net Position for a public college? A) Reimbursement type grants are recorded as operating revenue when qualifying expenses are made. B) Auxiliary enterprise activities represent revenues and expenses related to units of the college that provide services to students on a user fee basis and is classified as operating revenue. C) Student financial aid is a revenue contra account D) All of the above are true.

Which of the following is true regarding the Budgetary Comparison Schedule? A)The Budgetary Comparison Schedule compares the actual results to the original budget, but display of variances is optional. B)The Budgetary Comparison Schedule must be prepared for the General Fund and each major special revenue fund that has a legally adopted budget. C)The Budgetary Comparison Schedule is considered part of the basic financial statements. D) Both A and B

When accounting for the General Fund, the Encumbrances Control account is credited when: A) A purchase order is approved. B) The budget is approved. C) An invoice is paid. D) A purchase order is filled or canceled.

D Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: The journal entry when a purchase order is filled or canceled would be a debit to Budgetary Fund Balance - Reserve for Encumbrances and a credit to Encumbrances Control.

What is false regarding the two methods for recording inventories in governmental funds? A) The consumption method debits inventory when purchased and charges expenditures for the amount consumed. B) The purchases method debits expenditures when inventories are purchased and adjusts the inventory balance at year end. C) The amount of expenditure reported at year end will differ from method to method. D) The purchases method is preferable since it requires no adjustment to supplies expense when preparing the government-wide statements.

D Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Under the consumption method, supplies inventory is debited when supplies are acquired. When supplies are consumed, the expenditure account is debited and the supplies inventory account is credited. At the end of the year, the expenditure account has the amount of supplies used. Under the purchases method, expenditures are debited when supplies are received. Expenditures are charged for purchases made during the year and at the end of the year the supplies inventory and Nonspendable Fund Balance are adjusted to reflect actual supplies on hand. The expenditure account reflects the amount of supplies purchased during the year. The consumption method is preferable over the purchase method since it requires no adjustment to supplies expense when preparing the government-wide statements.

Short-term loans which are backed by the taxing power of the governmental unit and used to meet working capital requirements are called: A) Appropriation loan. B) Inter-fund loans. C) Other financing sources. D) Tax anticipation notes.

D Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: When payrolls and other liabilities are incurred and must be paid before substantial amounts of cash will be collected governments arrange short term borrowing using the taxing power of the government as security. The loan is called a tax anticipation note.

Which of the following is a common source of funding for capital projects? A) Issuance of long term debt B) Proceeds of dedicated taxes C) Grants from other governments D) All of the above are sources of funding for capital projects

D Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: A major source of funding for capital projects funds is the issuance of long-term debt. In addition to debt proceeds, capital projects may receive grants from other governmental units, proceeds of dedicated taxes, transfers from other funds, gifts from individuals or organizations, or a combination of several of these sources.

Which of the following is/are true regarding Capital Projects Funds? A) A major source of funding for capital projects funds is the issuance of long-term debt. B) Capital project funds only exist for the duration of the project for which it is created. C) Capital Project funds use the Modified Accrual Basis of Accounting. D) All of the above are true.

Which of the following funds typically record budgets? A) General Funds, special revenue funds, capital projects, debt service, and permanent. B) Only General Funds. C) General Funds and permanent funds. D) General Funds and special revenue funds.

D Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Budgets are typically recorded for the general fund and special revenue funds. Budgets are not typically recorded for capital projects, debt service and permanent funds.

Which of the following accounts of a governmental unit's General Fund is credited to close it at the end of the fiscal year? A) Appropriations Control. B) Other Financing Sources-Transfers In. C) Budgetary Fund Balance -- Reserve for Encumbrances. D) None of the above.

D Learning Objective: 2 Topic: Closing entries and classification of fund balances Feedback: Appropriations Control, Other Financing Sources - Transfers In and Budgetary Fund Balance would all be debited.

The following are sources of funds for the debt service fund except: A) Tax levies specifically designed for debt service. B) General taxes levied by the General Fund and transferred to the debt service fund. C) Special assessments levied against property. D) All of the above are sources of funds for the debt service fund.

D Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Sources of funds for a debt service fund would include taxes and/or special assessments are levied specifically for payment of interest and principal or undesignated taxes levied by the General Fund and transferred to a debt service fund.

Which of the following would be found in an Enterprise Fund Financial Statement? A) Expenditure - Supplies. B) Reserve for Encumbrance. C) Appropriations. D) Depreciation Expense.

D Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Depreciation on capital assets is recognized as an expense. Enterprise funds do not record expenditures, encumbrances or appropriations (budgets).

Which of the following is not an example of an Enterprise Fund? A) Electric and Water Utilities. B) Public Libraries. C) Municipal Sports Stadiums. D) All of the above are commonly reported as enterprise funds.

D Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Enterprise funds provide services to the public. Examples are utilities, mass transit systems, airports, landfills, hospitals, toll bridges, municipal golf courses, parking lots, parking garages, lotteries, municipal sports stadiums and public housing projects.

Centralized purchasing, computer services, and janitorial services are examples of activities that are commonly reported in: A) Enterprise funds. B) Capital project funds. C) Debt service funds. D) Internal service funds.

D Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Internal service funds provide services to other government departments and charge those departments for the services received. Examples would be purchasing services, printing services, repair garages, janitorial services and risk management activities.

Which of the following is not correct with respect to proprietary funds? A) Proprietary funds are used to account for activities similar to those often engaged in by commercial businesses. B) Users of goods or services are charged amounts at least sufficient to cover the costs of providing the goods or services. Thus, in the pure case, proprietary funds are self-supporting. C) Budgets may be prepared for proprietary funds to facilitate management of fund activities, but GASB standards do not require budget-actual reporting. D) Proprietary funds record only current financial resources and liabilities that will be settled with current financial resources.

D Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Proprietary funds record long-term assets and liabilities.

Which of the following is a source of funding for capital projects funds? A) Gifts from individuals and corporations. B) Proceeds from issuance of Long-term debt. C) Grants. D) All of the above.

D Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: A major source of funding for capital projects funds is the issuance of long-term debt. In addition to debt proceeds, capital projects may receive grants from other governmental units, proceeds of dedicated taxes, transfers from other funds, gifts from individuals or organizations, or a combination of several of these sources.

If bonds issued to fund a capital project are sold at a premium, the additional money received is: A) Recorded as Other Financing Sources - Premium on Bonds in the capital projects fund. B) Transferred from the capital projects fund to the debt service fund. C) Transferred from the capital projects fund to the General Fund. D) Both A and B are correct.

D Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: The journal entry in the capital projects fund would be a debit to cash and credits to Other Financing sources - Proceeds of Bonds and Other Financing sources - Premium on Bonds. Premiums generated from the issuance of bonds for a capital projects fund must be used for debt service are generally transferred to the Debt Service Fund.

What is the correct debit or credit for the following scenario: A contract was issued for the major part of work to be done by a private contractor in the amount of $1,200,000 for a new County court house? A) Debit: Budgetary Fund Balance -- Reserve for Encumbrances. B) Debit: Construction expenditures. C) Credit: Cash. D) Debit: Encumbrances Control.

D Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: The journal entry would be a debit to Encumbrances Control and a credit to Budgetary Fund Balance - Reserve for Encumbrances.

What amount would be reported as debt service expenditures in the year ended June 30, 2017? A) $250,000. B) $200,000. C) $450,000. D) $100,000.

D Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: (5,000,000

When taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized: A) As revenues in the General Fund with transfers made to the debt service funds for payments. B) As Other Financing Sources in the debt service fund. C) As revenues in the capital projects fund with transfers made to the debt service funds for payments. D) As revenues in the debt service fund.

D Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: If taxes and/or special assessments are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized as revenue of the debt service fund.

Which of the following serial bonds has the first scheduled installment delayed for a period of more than 1 year after the date of the issue? A) Annuity Serial Bonds. B) Regular Serial Bonds. C) Irregular Serial Bonds. D) Deferred Serial Bonds.

D Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: If the first principal payment is delayed for more than a year with equal payments thereafter, the bonds are deferred serial bonds.

Which of the following statements regarding serial bonds is false? A) The principal on serial bonds is paid over the term of the bonds. B) The assets of a debt service fund may include Cash with Fiscal Agent C) If the first payment is delayed for more than a year with equal payments thereafter, the bonds are deferred serial bonds D) The principal repayment on an annuity serial bonds decreases each year as the outstanding balance decreases

D Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: The annual debt service payments remain relatively uniform over the term of the issue for an annuity serial bond. The principal repayments increase each year by approximately the same amount that interest payments decrease. Serial bonds require principal payments to be made throughout the life of the bond. The assets of the fund may include Cash with Fiscal Agent. The fiscal agent makes the interest and principal payments. If the first principal payment is delayed for more than a year with equal payments thereafter, the bonds are deferred serial bonds.

The journal entry for the Debt Service fund upon the receipt of money from the General Fund would be: A) Debit to Cash and credit to Other Financing Uses - Transfer Out. B) Debit to Cash and a credit to Transfers Payable. C) Debit to Other Financing Sources - Transfer In and credit to Cash. D) Debit to Cash and credit to Other Financing Sources - Transfer In.

D Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: The journal entry would be a debit to Cash and a credit to Other Financing sources - Transfers In. Use the following to answer the next six questions: During the fiscal year ended December 31, 2017, 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, 2017 and paid interest on October 1 and April 1. The first of 10 equal annual principal payments was due on April 1, 2018.

Interfund services: A) Provided and used represent transactions involving sales and purchases of goods and services between funds. B) Are sometimes called quasi-external transactions. C) Are recorded as if they were transactions with parties outside the government. D) All of the above apply to interfund services.

D Learning Objective: 1 Topic: Interfund transactions Feedback: Interfund services provided and used represent transactions involving sales and purchases of goods and services between funds. One fund records a revenue and the other fund records an expenditure or expense. These transactions are sometimes called quasi-external transactions because these transactions are reported as if they were transactions with parties outside the government.

The journal entry to record the prior year's deferred Inflows: property taxes (those expected to be collected more than 60 days beyond year-end) as revenue in the current year would include: A) A debit to Revenues Control B) A debit to Deferred Inflows: Property Taxes C) A credit to Revenues Control D) B and C would both be included in the journal entry

D Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: The journal entry would be a debit to Deferred Inflows - Property Taxes and a credit to Revenues Control.

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

D Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: Under the consumption method, supplies inventory is debited when supplies are acquired. When supplies are consumed, the expenditure account is debited and the supplies inventory account is credited. At the end of the year, the expenditure account has the amount of supplies used. Under the purchases method, expenditures are debited when supplies are received. Expenditures are charged for purchases made during the year and at the end of the year the supplies inventory and Nonspendable Fund Balance are adjusted to reflect actual supplies on hand. The expenditure account reflects the amount of supplies purchased during the year. The consumption method is preferable over the purchase method since it requires no adjustment to supplies expense when preparing the government-wide statements.

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.

D Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: Accrual accounting does not require a journal when a building contract is signed.

When governments operate landfills as enterprise funds, which of the following is correct? A) GASB requires that certain post-closure costs be estimated and accrued during the period the landfills receive solid waste. B) GASB requires that a portion of future estimated costs be charged as an expense and liability of the landfill using units-of-production method as waste is accepted. C) The purpose of recording post-closure expenses and liabilities is to match the estimated costs with the revenues during the period of time the waste is accepted. D) All of the above are correct

D Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: GASB requires that certain postclosure costs be estimated and accrued during the period the landfill receives solid waste. The purpose of the charge is to match the estimated costs with the revenues during the period of time waste is accepted. GASB requires that a portion of future estimated costs be charged as an expense and a liability of the landfill operation on a units-of-production method as waste is accepted. These costs are measured in current costs, not at the present value or estimated future costs.

General fixed assets that are acquired with governmental fund resources are reported as assets in the: A) General Fund. B) Capital Projects Fund. C) General Fund or Capital Projects Fund, depending upon which fund provided the resources. D) None of the above.

D Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Fixed assets are not reported in governmental funds. They are recorded in the government-wide statements

Which of the following is correct with respect to Internal Service Funds? A) Internal service funds use modified accrual accounting and the current financial resources measurement focus B) Net position is to be reported in two categories: assigned and unassigned C) Internal service funds account for long-term debt but not capital assets D) All of the above are false statements

D Learning Objective: 1 Topic: Recording and reporting transactions of internal service funds Feedback: Internal service funds use the accrual basis of accounting and the economic resources measurement focus. The categories of Net Position for a proprietary fund are Net Investment in Capital Assets, Restricted Net Position and Unrestricted Net Position. Internal service funds account for capital assets and long-term debt.

Which of the following statements is correct? A) GASB standards require the use of internal service funds. B) Net position is unrestricted for an internal service fund. C) Internal service funds do not record long-term debt. D) Revenues for an internal service fund would be called Charges for Services rather than sales.

D Learning Objective: 1 Topic: Recording and reporting transactions of internal service funds Feedback: Internal service funds use the term Charges for Services instead of Sales. GASB standards do not require the use of internal service funds. The categories of Net Position for an internal service fund are Net Investment in Capital Assets, Restricted Net Position and Unrestricted Net Position. Internal service funds record long-term debt.

Which of the following is not true regarding proprietary funds? A) Enterprise funds are used by governments to account for services provided to the general public on a user-charge basis. B) General obligation bonds that will be paid from enterprise revenues must be reflected in the accounts of enterprise funds. C) Internal service self-insurance should set fees based on anticipated charges or a long-range plan to break even over time. D) The operation of internal service funds has no impact on other funds because it is run as a business and provides services that would have been purchased elsewhere by the other funds.

D Learning Objective: 1 Topic: Recording and reporting transactions of internal service funds Feedback: The operation of internal service funds has important implications for other funds. Charges for services are recorded as an expenditure in the governmental fund purchasing the service (expense for enterprise). Since internal service records the cost of proving the service an operating expense, the cost of the services are recorded in two funds in the same set of fund-basis statements. If an internal service fund makes a profit, it might be overcharging other funds.

The Town of Little River expects to collect $90,000 in sales tax from the state government within 30 days of the end of fiscal year 2017 for retail sales taking place in fiscal year 2017. What entry, if any, would Little River make at the end of 2017? A) Taxes receivable 90,000 Deferred Inflows 90,000 B) Taxes receivable - deferred 90,000 Revenues control 90,000 C) Taxes receivable 90,000 Due from state government 90,000 D) Due from state government 90,000 Revenues control 90,000

D Learning Objective: 1 Topic:Preparation of journal entries for transactions of General and special revenue funds Feedback: Sales taxes are a derived tax revenue. Under modified accrual accounting, revenues are recognized in the same year that the underlying transaction (the sale) takes place. The journal entry is a debit to Due from state government and a credit to Revenues control.

Restricted Net Position for a proprietary fund is: A) Net resources whose use is restricted by users of the services. B) Reported net of depreciation. C) Reported net of accumulated depreciation and any outstanding debt used to acquire the asset. D) Net resources whose use is restricted by creditors, grantors or laws or regulations of other governments.

D Learning Objective: 2 Topic: Classification and preparation of financial statements for proprietary funds Feedback: Restricted Net Position is defined as net resources whose use it is restricted by external parties (creditors, grantors, or other governments) or by internally imposed laws.

When closing out the General Fund and Special Revenue Funds of a state or local governmental unit, the balance of the operating statement accounts are closed to: A) Budgetary Fund Balance - Reserved for Encumbrances. B) Appropriations Control. C) Other Financing Sources - Transfer Out. D) Fund Balance.

D Learning Objective: 2 Topic: Closing entries and classification of fund balances Feedback: Operating statement accounts for the year are closed to Fund Balance

Which of the following statements is false? A) Resources representing supplies and prepaid items are classified in governmental funds as Nonspendable Fund balance. B) Capital Projects, debt service and permanent funds do not typically record budgets. C) Debt service and permanent funds do not record encumbrances. D) Principal of permanent funds is classified as Committed Fund Balance

D Learning Objective: 2 Topic: Financial statement display and preparation Feedback: The principal of a permanent fund must be maintained so it is classified s nonspendable fund balance.

When delinquent taxes are written off: A) Fund balance will decrease B) Expenditures will increase C) Taxes receivable will be unaffected. D) Fund balance will be unaffected

D Learning Objective: 2 Topic: Closing entries and classification of fund balances Feedback: The journal entry would be a debit to Estimated Uncollectible Taxes and a credit to Taxes Receivable. These are offsetting accounts so net receivables remains unchanged. Fund balance is unaffected.

Which of the following fund(s) should be used if resources are provided by a donor with the stipulation that they be used for the benefit of the citizenry? A) Special revenue fund. B) Permanent fund. C) Private purpose fund. D) Either A or B, depending upon whether the principal must be maintained.

D Learning Objective: 3 Topic: Classification and reporting of trust agreements Feedback: Since it is to be used for the benefit of the citizenry and the principal must be maintained, the appropriate fund would be a permanent fund. If the principal may be expended, the appropriate fund would be a special revenue fund.

What amount would be reported as debt service expenditures for 2017? A) $560,000. B) $360,000. C) $160,000. D) $ 80,000.

D Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: (4,000,000

Which of the follow schedules are required to be included in RSI of governments that provide pension trust funds and other post employment benefits: A) Schedule of Employer Contributions. B) Schedule of Funding Progress. C) Statement of Changes in Fiduciary Net Assets. D) A and B.

D) A and B.

According to GASB, Enterprise funds must be used when: A) Debt is backed solely by fees and charges. B) A legal requirement exists that the cost of providing services for an activity, including capital costs, be recovered through fees or charges. C) A government has a policy to establish fees and charges to cover the cost of providing services for an activity. D) Any of the above apply.

D Learning Objective: 3 Topic: Conditions Requiring the use of enterprise funds Feedback: According to GASB Statement 34, enterprise funds must be used when certain criteria are met. They are (1) When debt is backed solely by fees and charges. (2) When a legal requirement exists that the cost of providing services for an activity, including capital costs, be recovered though fees or charges. Or (3) When a government has a policy to establish fees and charges to cover the cost of providing services for an activity. Enterprise funds provide services to the public.

What is the difference between an extraordinary item and special item according to GASB? A) Extraordinary items are significant transactions or events that are unusual or infrequent while a special item is a significant transaction that is unusual and infrequent but within management's control. B) Extraordinary items are significant transactions or events that are unusual and infrequent which are outside management's control while a special item is a significant transaction that is unusual and infrequent but within management's control. C) Extraordinary items are significant transactions or events that are unusual and infrequent which are within management's control while a special item is a significant transaction that is unusual or infrequent but within management's control. D) Extraordinary items are significant transactions or events that are unusual and infrequent that are outside management's control while a special item is a significant transaction that is unusual or infrequent but within management's control.

D Learning Objective: 3 Topic: Financial statement display and preparation Feedback: Extraordinary items are significant transactions or other events that are both unusual and infrequent. Special items are significant transactions or other events that are either unusual or infrequent but within the control of management.

The Statement of Cash Flows for a proprietary fund would include which of the following? A) Operating, investing, financing B) Operating, capital and related financing, investing C) Operating, investing, fiduciary and capital related financing activities D) Operating, investing, capital and related financing and noncapital related financing

D Learning Objective: 4 Topic: GASB format cash flow statements Feedback: The four categories required by GASB are: Cash flows from operating activities, cash flows from noncapital financing activities, cash flows from capital and related financing activities and cash flows from investing activities.

Which statement is incorrect with respect to proprietary funds? A) The required financial statements of proprietary funds include a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in Fund Net Position, and a Statement of Cash Flows. B) The net position (i.e., fund equity) section of the Statement of Net Position is displayed within three categories: (1) Net Investment in Capital Assets, (2) Restricted, and (3) Unrestricted Net Position. C) The Statement of Cash Flows must be prepared using the direct method and includes cash flows from operating activities, investing activities, capital and related financing activities, and noncapital-related financing activities. D) Proprietary funds follow FASB rules and may follow GASB rules if not addressed by FASAB

D Learning Objective:1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: If the accounting treatment for a given transaction is not specified by a GASB pronouncement, a government may use nonauthoritative sources for guidance, including FASB standards dealing with similar events.

According to GASB, restricted net assets are those that are the result of constraints from: A) Imposed by law though constitutional provisions B) Imposed by enabling legislation C) Imposed by creditors or grantors D) All of the above

D Learning Objective:2 Topic: Classification and preparation of financial statements for proprietary funds Feedback: Restrictions arise from outside the government or by legislation or constitution

GASB 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.

D Learning Objective:3 Topic: Conditions Requiring the use of enterprise funds Feedback: According to GASB Statement 34, enterprise funds must be used when certain criteria are met. They are (1) When debt is backed solely by fees and charges. (2) When a legal requirement exists that the cost of providing services for an activity, including capital costs, be recovered though fees or charges. Or (3) When a government has a policy to establish fees and charges to cover the cost of providing services for an activity.

Expenditures are generally recorded and fund liabilities are recognized A) When goods and services are received, but only if resources are available in the fund. B) When invoices are paid. C) When purchase orders are issued, regardless of whether or not resources are available in the fund. D) When goods and services are received, regardless of whether or not resources are available in the fund.

D Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: Expenditures are decreases in net financial resources and are generally recognized when the liability is incurred. Generally, expenditures are recorded and fund liabilities are recognized when goods and services are received, regardless of whether resources are available in the fund.

The Revenues Control account of the General Fund is debited when: A) The budget is recorded at the beginning of the year. B) Uncollectible taxes receivable accounts are written off. C) Property taxes are collected. D) None of the above.

D Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: The Revenues Control account is debited when it is closed to Fund Balance.

The Expenditures control account in the General Fund is debited when: A) Supplies are ordered. B) The budget is recorded. C) The books are closed at the end of the year. D) Equipment previously ordered is received.

D Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to General and special revenue funds Feedback: When goods or services are received, Encumbrances are reversed and an expenditure is recorded. The journal entry in the General Fund would be a debit to Expenditures Control and a credit to Accounts Payable.

Governmental funds, other than the General Fund, are considered major if: I. Total Assets, Liabilities, Revenues, or Expenditures of that individual governmental fund are at least 10% of the corresponding total (assets, liabilities, and so forth) for all governmental funds. II. Total Assets, Liabilities, Revenues, or Expenditures of the individual governmental fund are at least 5% of the corresponding total for all governmental and enterprise funds combined. A) I only. B) II only. C) Either I or II, but need not be both. D) Both I and II.

D Learning Objective: 1 Topic: Basic principles of modified accrual accounting as applied to capital projects, debt service, and permanent funds Feedback: Other governmental funds are considered major if both the following criteria exists: (1) Total assets, liabilities, revenues, or expenditures of that individual governments fund are at least 10% of the corresponding total for all governmental funds. And (2) Total assets, liabilities, revenues, or expenditures of the individual governments fund are at least 5% of the corresponding total for all governmental and enterprise funds combined. Use the following to answer the next five questions: On October 1, 2016, the City of Mizner issued $5,000,000 in 4%, general obligation bonds at 101 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $4,968,750 was used to construct the addition, which was completed prior to June 30, 2017. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2016, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $250,000 is due October 1, 2017. The fiscal year for Mizner is July 1- June 30.

Capital assets of an enterprise fund should be reported in the: A) Government-Wide Statement of Net Position only. B) Proprietary Fund Statement of Net Position only. C) General Fixed Asset Account Group only. D) Government-Wide Statement of Net Position and Proprietary Funds Statement of Net Position.

D Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Capital assets are reported in the Proprietary Fund Statements of Net Position and the Government-Wide Statement of Net Position.

Governmental units use which fund type to account for services provided to the general public on a user-charge basis? A) General Fund. B) Internal service fund. C) Permanent fund. D) Enterprise fund.

D Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Enterprise funds are used by governments to account for services provided to the general public on a user-charge basis.

Which of the following would generally be included in the Statement of Net Position of an Enterprise Fund? Reserve for Encumbrances Revenue Bonds Payable A) No No B) Yes Yes C) Yes No D) No Yes

D Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Enterprise funds do not record encumbrances. Revenue bonds are recorded directly in the accounts of an enterprise fund.

Which of the following would not be true regarding internal service funds? A) Internal service funds use the economic resources measurement focus and accrual basis of accounting. B) Examples of internal service funds would include self-insurance funds, motor pool funds, and print shop funds. C) In the basic financial statements, internal service funds are reported in the proprietary funds financial statements. D) None of the above; all are true.

D Learning Objective: 1 Topic: Basics of accrual accounting as applied to proprietary funds Feedback: Internal service funds are proprietary funds that use the accrual basis of accounting and the economic resources measurement focus. Examples would be purchasing services, printing services, repair garages, janitorial services and risk management activities.

How would the bond sale be recorded? A) As a liability in the debt service fund. B) As a liability in the capital projects fund. C) As an other financing source in the debt service fund. D) As an other financing use in the capital projects fund.

D Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: Proceeds of a debt issue would be recorded in the capital projects fund. The journal entry would be a debit to cash for $2,040,000 and credits to Other Financing Sources - Proceeds of Bonds for $2,000,000 and Other Financing Sources - Premium on Bonds for $40,000.

How would the $3,990,000 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).

D Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: The capital projects fund is a governmental fund. Governmental funds do not record capital assets. The government-wide statements will report a capital asset in the Government-wide Statement of Net Position.

When a capital project has been constructed entirely with bond proceeds and funds are left over at the end of the project, which of the following would normally take place? A) The funds would be transferred to a debt service fund; the capital projects fund would debit Expenditures and the debt service fund would credit Other Financing Sources-Transfers In. B) The funds would be transferred to the General Fund and expended for any purpose desired by the management of the government. C) The funds would be returned to the bondholders. D) The funds would be transferred to a debt service fund; the capital projects fund would debit Other Financing Uses-Transfers Out and the debt service fund would credit Other Financing Sources-Transfers In.

D Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: Unused bond proceeds remaining in a capital projects fund would be transferred to a debt service fund. The capital projects fund would record Other Financing Use - Transfers Out and the debt service fund would record Other Financing Sources - Transfers In

Cash provided by the General Fund for a capital project would be recorded in a capital projects fund as a (an): A) Revenue. B) Other Financing Use. C) Direct addition to Fund Balance. D) Other Financing Source - Transfer In.

D Learning Objective: 1 Topic: Capital project fund transactions and reporting requirements Feedback: Revenues raised by the general fund or other funds and transferred to a capital projects are recorded as Transfers In by the capital project fund.

What would be the amount of expenditures recorded by the debt service fund for the fiscal year ended December 31, 2017? A) $320,000. B) $120,000. C) $ 90,000. D) $ 60,000.

D Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: (2,000,000

With respect to Debt Service Funds, which of the following is incorrect? A) Debt service funds are used to account for financial resources that are intended to provide payments of interest and principal as they come due. B) Debt service funds are not created for debt issues where the activities of proprietary funds are intended to generate sufficient cash to make interest and principal payments. C) If taxes and/or special assessments are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized as revenues of the debt service fund. D) Interest on long-term debt is generally accrued; it is recognized as an expenditure in the year in which the interest liability is incurred.

D Learning Objective: 1 Topic: Debt service fund transactions and reporting requirements Feedback: In a debt service fund, interest is generally not accrued. Interest and principle payments are recognized as an expenditure in the year in which the payment is due.

Which of the following is true with respect to interfund loans? A) Interfund loans are resources provided from one fund to another with the understanding that they do not have to repaid in the future. B) The fund providing the resources records a transfer in and the fund receiving the resources records a transfer out. C) Long-term loans use the terms Transfer to Other Funds and Transfer from Other Funds. D) Interfund loan receivables and payables are separately reported on the balance sheets of the affected funds.

D Learning Objective: 1 Topic: Interfund transactions Feedback Interfund loan receivables and payables are separately reported on the balance sheet of the affected funds. Interfund loans are resources provided from one fund to another with the understanding that they will be repaid in the future. The fund providing the resources records a transfer out and an interfund receivable (Due from Other Funds) and the fund receiving the resources records a transfer in and an interfund payable (Due to Other Funds). Long-term loans use the terms Advance to Other Funds and Advance from Other Funds.

Which of the following is an interfund transaction? A) Interfund services provided and used B) Interfund transfers C) Interfund loans D) All of the above are interfund transactions

D Learning Objective: 1 Topic: Interfund transactions Feedback: Interfund loans, interfund services provided and used, interfund transfers and interfund reimbursements are interfund transactions.

A local government was awarded a federal grant in the amount of $800,000 to provide for a summer youth employment program for young people. The grant was a reimbursement grant, and a notification of the grant award was received on Apri1 30, 2017. The local government expended the resources as follows: ● June 2017: $250,000 ● July 2017: $285,000 ● August 2017: $265,000 The federal government sent the funds in the month following the expenditure. The local government would recognize revenues for the fiscal year ended June 30, 2017 in which amount? A) $800,000 B) $ -0-. C) $550,000. D) $250,000.

D Learning Objective: 1 Topic: Preparation of journal entries for transactions of General and special revenue funds Feedback: As expenditures are incurred and recognized, grant revenues and receivables are recognized for the same amount. Expenditures fulfilling grant requirements amounted to $250,000 for fiscal year ended June 30, 2017 so that would be the amount of the revenue.

Montgomery County operates a landfill as an enterprise fund. The closure and post-closure care costs are estimated to be $40 million. It is estimated that the capacity of the landfill is 16 million tons of waste and that waste will be accepted for 6 years. During 2017, 4 million tons of waste was accepted. The charge for closure and post-closure care costs for 2017 would be: A) $ 2.5 million. B) $ 8 million. C) $ 6.67 million. D) $ 10 million.

D Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: $40,000,000 estimated costs /16 tons = $2,500,000 per ton. $2,500,000 per ton x 4 tons = $10,000,000.

Solid waste landfills are required to estimate the cost of closure which include: A) Cost of equipment used. B) Cost of landfill cover. C) Cost of caring for the site for 30 years. D) All of the above.

D Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: Costs of closure include the cost of equipment used, the cost of the landfill cover, and the cost of caring for the site for a period of 30 years after closure, or whatever period is required by regulations.

Which of the following is not true regarding enterprise funds? A) Enterprise funds record long-term debt directly in the fund accounts. B) Enterprise funds record capital assets directly in the fund accounts. C) Enterprise funds report a Statement of Cash Flows. D) The difference between assets and liabilities of enterprise funds is termed "Fund Balance."

D Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: The difference between assets and liabilities of an enterprise fund is termed Net Position

If a government decides to account for its risk management activities in a single fund, it must use: A) An Internal Service Fund. B) A Fiduciary Fund C) A Special Revenue Fund. D) Either the General Fund or an Internal Service fund.

D Learning Objective: 1 Topic: Recording and reporting transactions of internal service funds Feedback: Internal service funds provide services to other government departments and charge those departments for the services received. Examples would be purchasing services, printing services, repair garages, janitorial services and risk management activities.

Which of the following is true regarding internal service funds? A) Internal service funds provide services primarily to external users on a user charge basis. B) Internal service funds normally record the annual budget in the accounts. C) Internal service funds' capital assets are not accounted for in the accounts. D) Internal service funds use accrual accounting and the economic resources measurement focus.

Which of the following is false regarding proprietary fund accounting? A) The economic resources measurement focus and accrual accounting are used. B) Capital assets are recorded in the accounts and depreciated over their useful lives. C) The Statement of Net Position must be in a classified format, with current assets separated from noncurrent assets and current liabilities separated from noncurrent liabilities. D) In the Statement of Net Position, the Net position is reported as either reserved or unreserved.

D Learning Objective: 2 Topic: Classification and preparation of financial statements for proprietary funds Feedback: The categories of Net Position for a proprietary fund are Net Investment in Capital Assets, Restricted Net Position and Unrestricted Net Position.

Which of the following should be accounted for in a permanent fund? A) A gift of $300,000 to a school board, to be given out $10,000 a year to the class valedictorian as a college scholarship. B) A gift of $300,000 to a city, to be expended next year to purchase books for the city library. C) A gift of $3,000,000 to a city, to be invested permanently, with the proceeds to be used to distribute to one or more nonprofit groups. D) A gift of $3,000,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city war memorials.

D Learning Objective: 3 Topic: Classification and reporting of trust agreements Feedback: Trusts that generate income for the benefit of the government or its citizens and require the principal to be maintained are reported in permanent funds. The gift to maintain the war memorials would be recorded in a permanent fund.

The term special item is defined as: A) Frequent and unusual but within management's control. B) Frequent and unusual and not within management's control. C) Unusual or infrequent and not within management's control. D) Unusual or infrequent but within management's control.

D Learning Objective: 3 Topic: Financial statement display and preparation Feedback: Special items are significant transactions or other events that are either unusual or infrequent but within the control of management.

Funds other than the General Fund must be considered a major fund when A)total assets, liabilities, revenues, or expenditures/expenses of that fund constitute 10 percent of either the governmental or enterprise category. B)total assets, liabilities, revenues, or expenditures/expenses of that fund are 5 percent of the total of the governmental and enterprise category. C) conditions of either A or B exist. D) conditions of both A and B exist.

When preparing government-wide financial statements, the modified accrual basis governmental funds are adjusted for which of the following events? A) Capital asset related events B) Long-term debt related events C) Internal service fund activities D) All of the above

Where in the basic financial statements, in most cases, would one find internal service activities reported? A) In the proprietary funds statements and in the business-type activities column of the government-wide statements. B) In the governmental funds statements and in the governmental activities column of the government-wide statements. C) In the governmental funds statements and in the business-type activities column of the government-wide statements. D) In the proprietary funds statements and in the governmental activities column of the government-wide statements.

Which of the following is not required to convert from the modified accrual basis to the accrual basis in preparing the government-wide statements? A) Record general capital assets B) Change expenditures for debt service principal to reduction of liabilities C) Make adjustments to revenues deferred under the 60 day rule D) Accrue interest on enterprise fund bonds

Which of the following is true regarding the government-wide Statement of Net Assets? 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.

Which of the following items are added to government-wide financial statements through worksheet journal entries? A) General Capital Assets. B) General Long Term Debt. C) Internal Service Funds servicing governmental departments. D) All of the above.

Which of the following would not be an adjustment for long-term debt when preparing government-wide financial statements? A) Changing "proceeds of bonds' to debt liabilities B) Changing expenditures for debt service principal to reduction of liabilities C) Amortizing bond premiums D) Recording the cash received from a debt issue

The tax agency fund of Eden County collected $2,000,000 for the Eden School District, $1,000,000 for the Village of Edenton, $1,200,000 for the Eden Park District, and $700,000 for Eden County. County General Fund employees handle the collections, and a 3 percent collection fee is charged all units except the county. The amount to be remitted to the county General Fund would be: A) $126,000. B) $147,000. C) $747,000. D) $826,000.

D) $826,000.

A budgetary comparison schedule is required for? A) The General Fund. B) Each special revenue fund that has a legally adopted annual budget. C) Enterprise funds. D) (A) and (B) only.

D) (A) and (B) only

68. The Museum of Creative Arts had the following expenses: $5,000 of membership development expense, $3,000 of Fund-raising expense, $2,000 of Instructional Classes expense, and $1,500 of general and administrative expense. What is the program expense ratio (rounded)? A) 70%. B) 43%. C) 39%. D) 17%.

D) 17%.

39. What is the maximum threshold for a tax-exempt organization to file a form 990-EZ? A) A charity with gross receipts of < $25,000. B) A charity with gross receipts of < $50,000. C) A charity with gross receipts of < $500,000. D) A charity with gross receipts of < $500,000 and total assets of < 2.5 $million.

D) A charity with gross receipts of < $500,000 and total assets of < 2.5 $million.

46. Which of the following would not be considered a special-purpose government for financial reporting purposes? A) A public school system. B) An art museum. C) A public hospital. D) A county board of supervisors.

D) A county board of supervisors.

62. Service Efforts and Accomplishments Reporting is best completed by using A) A standard single measure to evaluate or present information. B) A variety of measures which vary from year to year in order to evaluate and present information. C) Only the information that is favorable to the organization. D) A variety of measures which are consistent from year to year.

D) A variety of measures which are consistent from year to year.

What account should be credited in a pension trust fund to record employee contributions? A) Other Financing Sources B) Net Assets C) Pension Benefit Obligation D) Additions

D) Additions

Which of the Fiduciary Funds listed below is used to account for the assets held by a government acting as an agent for one or more other governmental units? A) Private-purpose Trust Fund. B) Permanent Fund. C) Pension Fund. D) Agency Fund.

D) Agency Fund.

21. Which of the following would be an example of an attestation engagement? A) Report on cost under contract B) Report on prospective financial information C) Report on internal controls D) All of the above

D) All of the above

GASB requires which of the following (if applicable) to be included in the Notes to Financial Statements? A) Outstanding encumbrances B) The definition of cash and cash equivalents used in the statement of cash flows for proprietary funds. C) Interfund receivables and payables. D) All of the above.

D) All of the above

Which of the following is included in Required Supplementary Information (RSI)? A)Management's Discussion and Analysis (MD&A). B)Budgetary Comparison Schedule. C)The Schedule of Funding Progress and Schedule of Employer Contributions when the government reports a pension trust fund. D)All of the above.

D) All of the above

Which of the following items would likely appear in the reconciliation between the governmental fund financial statements and the governmental activities column in the government-wide financial statements? A)The inclusion of long-term liabilities in the government-wide financial statements and not in the governmental fund financial statements. B)The inclusion of depreciation of capital assets in the governmental activities column of the government-wide financial statements and not in the governmental fund statements. C)The additional accrual of some revenues and expenses in the government-wide financial statements that were not made in the governmental fund financial statements. D)All of the above.

D) All of the above

31. Which of the following would not be an opinion unit of a general purpose government? A) Governmental activities B) Business-type activities C) Each Major Fund D) All of the above are opinion units

D) All of the above are opinion units

Which of the following is true egarding the government-wide financial statements? A)The government-wide financial statements are not required to present prior-year data. B)The government-wide financial statements include a Statement of Net Assets, Statement of Activities, but not a Statement of Cash Flows. C)The government-wide financial statements include infrastructure, and reflect depreciation, except for infrastructure using the modified approach. D)All of the above are true.

D) All of the above are true

Which of the following is true regarding GASB's definition of the financial reporting entity? A)The financial reporting entity might include a primary government, component units, joint ventures, or a jointly governed organization. B)Primary governments may be general-purpose governments (such as states, cities, and counties) or special-purpose governments that have separately elected governing bodies, are legally separate and are fiscally independent of other state or local governments. C)Blending is used to incorporate component units when those component units are, in substance, part of the primary government. D)All of the above are true.

D) All of the above are true

Which of the following is true regarding the governmental fund financial statements? A) The governmental fund financial statements include the Balance Sheet, and the Statement of Revenues, Expenditures, and Changes in Fund Balances. B) The governmental fund financial statements are prepared on the current financial resources measurement focus and modified accrual basis of accounting. C) The governmental fund Balance Sheet reflects the difference of assets minus liabilities as Fund Balance. D) All of the above are true.

D) All of the above are true

44. Which of the following may be deducted in computing income from unrelated business activities? A) Ordinary and necessary business expenses. B) $1,000 exemption. C) Charitable contributions. D) All of the above.

D) All of the above.

53. 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.

D) All of the above.

48. Which of the following is an area of concern by the IRS with respect to tax-exempt organizations? A) Cost allocations. B) Excess executive compensation. C) Organizations operating out of their tax-exempt purpose. D) All the above

D) All the above

67. A government entered into a capital lease agreement to acquire equipment for the general government on January 1, 2017. Five payments of $9,000 each are to be made, beginning on December 31, 2017. Discounting is at 6%, computed annually. The present value of the five payments is $37,911. Which of the following would be true as of January 1, 2017? A) An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $45,000. B) An entry would be made debiting Equipment and crediting Capital Leases Payable in a governmental fund, both in the amount of $37,911. C) An entry would be made debiting Capital Expenditure and crediting Capital Leases Payable in a governmental fund, both in the amount of $37,911. D) An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $37,911.

D) An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $37,911.

23. Which of the following is not part of a financial audit? A) Forming judgments about internal controls B) Testing compliance with laws and regulations C) Providing an opinion on compliance with GAAP D) Assessing the degree to which program objectives have been met

D) Assessing the degree to which program objectives have been met

68. At the inception of a capital lease agreement for a piece of equipment used in governmental operations, A) A liability is incurred and reported in the governmental fund's balance sheet. B) A liability is incurred and reported in the government-wide financial statements. C) An expenditure is recorded in the governmental fund. D) Both B and C.

D) Both B and C.

66. A government signed a five-year capital lease on January 1, 2017 to obtain some equipment. The lease provided that the government would make a down payment of $20,000 and four $20,000 payments each year after that, beginning January 1, 2016. The government has a fiscal year ending December 31. Upon inception of the lease, the government, in its governmental fund accounting records would: A) Debit expenditures for $20,000 and credit cash for $20,000. B) Debit expenditures for $100,000, credit cash for $20,000, and credit accounts payable for $80,000. C) Debit expenditures for the present value of the payments (including the $20,000 down payment), credit cash for $20,000, and credit accounts payable for the difference between the $20,000 and the present value of the future payments. D) Debit expenditures for the present value of the payments (including the $20,000 down payment), credit cash for $20,000, and credit other financing sources for the difference between the $20,000 and the present value of the future payments.

D) Debit expenditures for the present value of the payments (including the $20,000 down payment), credit cash for $20,000, and credit other financing sources for the difference between the $20,000 and the present value of the future payments.

A pension plan that is required to pay out only the amount that has been accumulated for each employee is a ________? A) Defined Benefit Plan. B) Private-Purpose Plan. C) Defined Withdrawal Plan. D) Defined Contribution Plan.

D) Defined Contribution Plan.

53. Assume a government is a special-purpose government engaged in only one governmental activity. Which financial statements would be required? A) Government-wide statements only. B) Statements combining the governmental funds and government-wide statements. C) Both government-wide and governmental fund basis statements. D) Either B or C above.

D) Either B or C above.

59. In order to compute the interest coverage on revenue bonds, one would look in the CAFR at the: A) Government-wide Statement of Activities. B) Government-wide Statement of Activities. C) Budgetary Comparison Schedule. D) Enterprise funds Statement of Revenues, Expenses, and Changes in Net Assets.

D) Enterprise funds Statement of Revenues, Expenses, and Changes in Net Assets.

10. Government Auditing Standards identify which of the following categories of professional engagements: A) Financial audits. B) Financial audits and performance audits. C) Financial audits, agreed-upon procedures and performance audits. D) Financial audits, attestation engagements, performance audits, and nonaudit services.

D) Financial audits, attestation engagements, performance audits, and nonaudit services.

51. Which of the following is not considered to be a major user group by the GASB? A) Citizen groups. B) Investors and creditors. C) Legislative and oversight officials. D) Government executive branch officials.

D) Government executive branch officials.

77. Which of the following statements regarding employer reporting of pension trust funds is not correct? A) Contributions by the governmental funds are recorded as expenditures in the General Fund. B) The net pension liabilities are reported in the government-wide statements. C) The net pension liabilities of proprietary fund employees are reported in the proprietary fund-basis statements D) Governmental funds report net pension liabilities of governmental fund employees as a fund liability.

D) Governmental funds report net pension liabilities of governmental fund employees as a fund liability.

Which of the following statements regarding employer reporting of pension or other employee benefit trust funds is not correct? A) Contributions by the governmental funds are recorded as expenditures. B) Unfunded amounts are reported in the government-wide statements. C) Proprietary funds record an expense equivalent to the required contribution. D) Governmental funds report unfunded amounts as a fund liability.

D) Governmental funds report unfunded amounts as a fund liability.

GASB Statement 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, does not apply to which of the following investment types? A) External investment pools. B) Open-end mutual funds. C) Debt securities. D) Investments of pension funds.

D) Investments of pension funds.

46. Which of the following is a prohibited activity for a Tax-exempt Organization? A) Make a Profit. B) File a tax return. C) Give money away. D) Make financial contributions to a political candidate.

D) Make financial contributions to a political candidate.

17. Which of the following is true regarding the Single Audit Act and its amendments? A) An auditor is expected to express an opinion on "major programs," which are chosen based on size. B) An auditor is required to select all "Type A" programs as major programs. C) Both A and B above. D) Neither A nor B above.

D) Neither A nor B above.

Which of the following is TRUE regarding the governmental fund statements? A)The governmental fund statements include a Statement of Cash Flows prepared on the direct method. B)The governmental fund statements are prepared using the economical financial resources measurement focus and modified accrual accounting. C)Both of the above. D)Neither of the above.

D) Neither of the above

Which of the following is true regarding fiduciary fund financial statements? A)Fiduciary fund financial statements include the Statement of Fiduciary Net Assets, the Statement of Changes in Fiduciary Net Assets, and the Statement of Cash Flows prepared on the direct method. B)Fiduciary fund financial statements are prepared on the current financial resources measurement focus and modified accrual accounting. C)Both of the above. D)Neither of the above.

D) Neither of the above

Which of the following is true regarding the government-wide Statement of Activities? A)General revenues include items such as charges for services and program fees. B)Fiduciary activities are included. C)Both of the above. D)Neither of the above.

D) Neither of the above

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.

D) None of the Above.

Which of the following is FALSE regarding major fund reporting for governmental funds? A)The General Fund is always a major fund. B)Each fund that is considered major must be reported in a separate column in the governmental funds financial statements. C)A government may designate any fund as major if it feels that reporting that fund in the basic financial statements would be useful. D)None of the above, all are true.

D) None of the above, all are true

49. Special-purpose governments that are engaged in both governmental and business-type activities or in more than one governmental activity are required to include all of the following in its financial statements except? A) Required supplementary Information B) Fund basis financial statements C) Government-wide financial statements D) None of the above, these are all required

D) None of the above, these are all required

43. Which of the following activities give rise to Unrelated Business Income Tax? A) Investment income arising from investment of unrestricted funds. B) Business operated for the convenience of employees and patients. C) Sale of donated merchandise. D) None of the above.

D) None of the above.

58. Where should a government report special assessment debt that the government is not liable for in any way? A) Capital projects fund. B) Debt service fund. C) Government-wide statements (not in a fund). D) None of the above.

D) None of the above.

41. Which of the following are not required disclosures in a Form 990? A) A Statement of Functional Expense. B) A discussion of program effectiveness. C) A Statement of Revenues, Expenses and Changes in Net Assets. D) None of the above. They are all required disclosures.

D) None of the above. They are all required disclosures.

6. Which of the following is not a difference between private sector auditing and governmental auditing? A) The public availability of audit reports. B) Testing of compliance with laws and regulations. C) Governmental audits require auditor knowledge of government accounting and auditing. D) None of the above; these are all differences between private sector auditing and governmental auditing.

D) None of the above; these are all differences between private sector auditing and governmental auditing.

A fund that exists when a government is the trustee for a defined benefit pension plan, or a defined contribution pension plan is a(n): A) Agency fund B) Private-Purpose Trust Fund C) Investment Trust Fund D) Pension Trust Fund

D) Pension Trust Fund

______ funds are created when individuals or organizations contribute resources with the agreement that the income will be used to the citizenry or the government's programs. A) Agency B) Investment trust C) Private-purpose trust D) Permanent

D) Permanent

Which of the following is not a fiduciary fund? A) Private-Purpose Trust Fund. B) Investment Trust Fund. C) Pension Trust Fund. D) Permanent Fund.

D) Permanent Fund.

Jasper City is trustee for the Henry J. Moneybags Endowment Fund, created to provide scholarships for students. This is an example of which type of fund? A) Permanent. B) Pension trust. C) Agency. D) Private-purpose trust.

D) Private-purpose trust.

32. To qualify for tax-exempt status, an organization must do all of the following except: A) Have an Employer's Identification Number. B) Be organized as a corporation, trust, or association. C) Complete IRS form 1023. D) Receive most of its income from contributions rather than by providing goods or services.

D) Receive most of its income from contributions rather than by providing goods or services.

Financial reporting requirements for defined benefit pension plans include all of the following statements and schedules except? A) Schedule of Funding Progress. B) Statement of Changes in Plan Net Assets. C) Statement of Plan Net Assets. D) Schedule of Employee Contributions.

D) Schedule of Employee Contributions.

35. Form 990, Return of Organization Exempt From Income Tax, requires all of the following except: A) Statement of Program Accomplishments B) Governance, Management and Disclosures C) Compensation Schedules D) Statement of Cash Flows

D) Statement of Cash Flows

What is the correct journal entry for a Tax Agency Fund to record tax levies of other governments certified to it? A) Taxes Receivable - Current Revenues Control B) Taxes Receivable - Current Due from Other Governments C) Taxes Receivable Transfer Out D) Taxes Receivable for Other Governments Due to Other Governments

D) Taxes Receivable for Other Governments Due to Other Governments

When preparing financial statements, the internal portion of investment pools would be reported under which fund? A) Investment trust fund. B) Pension fund. C) General Fund. D) The fund(s) providing the resources.

D) The fund(s) providing the resources.

The City of Springfield has three pension plans: a locally administered police plan for which it is trustee, a statewide cost sharing plan, and a statewide agency plan. The City would include in its CAFR pension trust fund financial statements for: A) All three plans. B) The locally administered plan plus the statewide agency plan. C) Both statewide plans. D) The locally administered plan only.

D) The locally administered plan only.

57. To compute the net debt per capita, a user of financial statements would need to look at (in the CAFR): A) the government-wide Statement of Net Assets and the population from the statistical section. . B) the debt and the amount available to pay that debt in the governmental funds Balance Sheet, and the population from the statistical section. C) the debt in the governmental funds Balance Sheet, the amount available in the government-wide Statement of Net Assets, and the population from the statistical section. D) the debt in the government-wide Statement of Net Assets, the amount available to pay that debt in the governmental funds Balance Sheet, and the population from the statistical section.

D) the debt in the government-wide Statement of Net Assets, the amount available to pay that debt in the governmental funds Balance Sheet, and the population from the statistical section.

The Water Utility (an enterprise fund) has just sent out a purchase order to a vendor for some new equipment. Which of the following would be included in the journal entry to record this event? A) A credit to Accounts Payable. B) A debit to Encumbrances. C) A debit to Expenditures. D) None of the above.

D. Learning Objective: 1 Topic: Recording and reporting transactions of enterprise funds Feedback: Enterprise funds use accrual accounting which does not require a journal entry when a purchase order is signed.

GASB requires which of the following to be reported separately after other financing sources and uses in the Statement of Revenues, Expenditures, and Changes in Fund Balance? A) Special items. B) Extraordinary items. C) Interfund transfers. D) A and B

D. Learning Objective: 3 Topic: Financial statement display and preparation Feedback: Extraordinary and special items are reported separately after other financing sources and uses on the Statement of Revenues, Expenditures and Changes in Fund Balance. Extraordinary items are significant transactions or other events that are both unusual and infrequent. Special items are significant transactions or other events that are either unusual or infrequent but within the control of management.

The total fund balances presented in Governmental Funds Statements are different from the total net assets on the government-wide Statement of Net assets. Which of the following is NOT a reason for this difference? A. The two statements have different bases of accounting B. Capital assets used in government operations are not financial resources and therefore are not reported in the funds C. Some liabilities are not due and payable in the current period and are not reported in fund liabilities D. Accrued Wages Payable at year end are reported on the statement of net assets but are not reported in the fund statements

D. Accrued Wages Payable at year end are reported on the statement of net assets but are not reported in the fund statements

In addition to the government-wide statements, governments are required to prepare fund financial statements for which of the following category of funds? A. Proprietary funds B. Governmental type funds C. Fiduciary funds D. All of the above

D. All of the above

Which of the following is considered Required Supplementary Information (RSI)? A)Management's Discussion and Analysis. B)Budgetary Comparison Schedule. C)Schedule of Risk Management Activities. D)All of the above are considered RSI.

D. All of the above are considered RSI

With respect to the preparation of fund basis financial statements, governmental funds other than the MAJOR 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 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.

D. Neither A nor B are correct

Encumbrances increase with a?

Debit

The budgetary account of Appropriations is decreased with a?

Debit

The budgetary account of Budgetary Fund Balance is decreased with a?

Debit

The budgetary account of Estimated Other Financing Sources is increased with a?

Debit

The budgetary account of Estimated Other Financing Uses is decreased with a?

Debit

What is the journal entry to record a budget revision of a decrease in budgetary fund balance, an increase in appropriations, and a decrease of estimated revenues?

Debit: Budgetary Fund Balance Credit: Appropriations Credit: Estimated Revenues

What is the Journal Entry for reversing an encumbrance when goods/services are presented for payment?

Debit: Budgetary Fund Balance- Reserve for Encumbrance Credit: Encumbrances Control

What the journal entry to record the advanced receipt of funding from mandated and voluntary nonexchange revenues under the modified accrual basis?

Debit: Cash Credit: Deferred Revenues-Grants

What is the journal entry to record the receiving of Derived Tax Revenue

Debit: Cash Credit: Revenues Control

What is the entry to record an encumbrance?

Debit: Encumbrances Control Credit: Budgetary Fund Balance- Reserve for Encumbrances

What is the Journal Entry to record the budgetary accounts

Debit: Estimated Revenues Debit: Estimated Other Financing Sources Credit: Appropriation Credit: Estimated Other Financing Uses Credit: Budgetary Fund Balance

What is the journal entry to record a liability when goods/services are presented for payment

Debit: Expenditures, Current Credit: Accounts Payable

What would be the journal entry to record the deferred portion of taxes to be collected in more than 60 days?

Debit: Revenues Control Credit: Deferred Revenues- the specific tax account

What is the journal entry to record additional derived tax revenues that are expected to be received after the time needed to settle current liabilities?

Debit: Taxes Receivable Credit: Revenues Control Credit: Deferred Revenues- Specific Tax

What would be the journal entry to record taxes levies

Debit: Taxes Receivable, the specific tax Credit: Estimated Uncollectable Taxes Credit: Revenues Control

basis of accounting:

Determines when transactions and events are recognized in the accounting records.

Which of the following is true regarding the government-wide Statement of Net Assets?

Discretely presented component units are included in a separate column (or columns)

Under NACUBO guidelines, tuition waivers associated with student work study programs should be reported as?

Expenses

Which of the following is/are correct with respect to the report of expenses for a private not-for-profit?

Expenses are reported by function within two broad categories (program or supporting) in the Statement of Activities or in the notes

Private health care organizations follow _____ standards while governmentally owned health care organizations follow _____ standards. - FASB; GASB. - GASB; FASAB. - GASB; FASB. - FASB; FASAB.

FASB; GASB. Private not-for-profit health care organizations follow FASB standards, including those specifically applicable to not-for-profits. Private for-profit health care organizations follow FASB standards excluding those written specifically for-not-for profits. If a health care organization is owned or controlled by a government, it is typically considered a special-purpose entity engaged only in business-type activities and would use proprietary fund accounting and follow GASB.

1. A donor pledges to support a program for a future year. Public colleges and universities recognize contribution revenue in the year in which the unconditional pledge is made.

False

1. A tuition waiver for a student who works as a graduate assistant is treated as a reduction in revenue.

False

1. General state appropriations are treated as operating revenue of public colleges and universities.

False

1. Pell Grants received by private colleges are classified as non-operating revenue.

False

1. Private colleges and universities are required to present a Statement of Cash Flows using the direct method.

False

1. Private colleges and universities are required to report net assets within the categories of unrestricted, restricted and net investment in capital assets.

False

1. Private colleges and universities use the same accounting and reporting standards as public colleges and universities.

False

1. Public and private colleges account for split-interest agreements in the same way.

False

1. Public higher education institutions typically report as special-purpose entities engaged in governmental and business-type activities or in governmental-type activities only.

False

1. Revenue for reimbursement grants may be recognized before expenditures take place, so long as the grant has been awarded.

False

1. Under NACUBO guidelines, tuition waivers resulting from work-study programs are deducted from revenue.

False

Government owned hospitals follow FASB standards for recognition of contribution revenue

False Health care organizations owned or controlled by a government is typically considered a special purpose entity engaged only in business-type activities. These organizations use proprietary fund accounting which uses the accrual basis and economic resources measurement focus.

Government-owned health care organizations do not report depreciation expense.

Both governmental owned and private health care providers use the modified accrual basis of accounting and the economic resources measurement focus.

False Not-for-profit business-oriented, investor-owned and governmental health care organizations all use accrual accounting.

Contractual adjustments from insurance companies are reported as expenses in the Statement of Operations.

False Patient service revenues are to be reported in the operating statement net of the provision for uncollectible accounts and estimated contractual adjustments with Medicare, Medicaid or insurance companies.

The AICPA Health Care Guide provides accounting and reporting requirements that override GASB and FASB standards, but apply only to health care providers.

False The AICPA Health Care Guide provides certain additional accounting and reporting requirements beyond those required by the FASB and the GASB standards. As both the FASB and the GASB approved the Health Care Guide, its requirements constitute Category B GAAP and must be followed by all health care organizations.

What are Examples of Government Mandated Transactions?

Federal Government requires lower level of expenditures.

Feedback: Private sector colleges recognize the present value of anticipated future receipts as contribution revenue. Public colleges record the present value of anticipated future receipts as a deferred inflow and recognize income as it becomes available each year.

Feedback

Which of the following is true regarding the fiduciary fund financial statements?

Fiduciary fund financial statements include the Statement of Fiduciary Net Assets and Statement of Changes in Fiduciary Net Assets

Which of the following is true regarding fiduciary funds?

Fiduciary funds are reported in the fiduciary fund financial statements but not in the government-wide financial statements

Which organizations has primary standard setting authority over private not-for-profit organizations?

Financial accounting standards board (FASB)

Which of the following sections of the CAFR is audited?

Financial section

What is the Reimbursement Requirement, in regards to eligibility requirements a revenue resulting from nonexchange must meet?

For those grants and gifts that are payable only upon the incurrence of qualifying outlays, revenues would be recognized only when the expenditures have been incurred.

Which of the following is NOT true of a Statement of Cash Flows for a private college or university?

Four categories are used: Operating, Capital Related Financing, Non-capital related financing, and investing

Governmental-type funds label the excess of assets over liabilities on the balance sheet as:

Fund Balance

Principals of the federal government

GAO US Department of Treasury US OMB

Who sets accounting and financial reporting standards for governmentally related not for profit organizations?

GASB

Concepts Statements =

GASB (state and local governmentals)

Not-for-profit health care organizations that are government-owned follow which standards: GASB. FASB, including standards specifically for not-for-profits. FASB, excluding standards specifically for not-for-profits. None of the choices are correct.

GASB. If a health care organization is owned or controlled by a government, it is typically considered a special-purpose entity engaged only in business-type activities and would use proprietary fund accounting and follow GASB.

Every government will have a single __________________ but may have multiple funds in each of the other categories

General Fund

Which of the following funds requires a Budgetary Comparison Schedule?

General Fund

Which of the following fund types is present in every general purpose government?

General fund

Which of the following health care organizations must follow standards established by the Governmental Accounting Standards Board (GASB)? Private not-for-profit hospitals. Government owned hospitals. Both of the choices are correct. Neither of the choices is correct.

Government owned hospitals. Private not-for-profit health care organizations follow FASB standards, including those specifically applicable to not-for-profits. Private for-profit health care organizations follow FASB standards excluding those written specifically for-not-for profits. If a health care organization is owned or controlled by a government, it is typically considered a special-purpose entity engaged only in business-type activities and would use proprietary fund accounting and follow GASB.

Which Statement is presented using the Accrual Basis of Accounting?

Government-Wide Statement of Activities

Which funds use the Modified Basis of Accrual

Governmental Funds Only.

Which of the following is true regarding financial reporting of governmental funds?

Governmental funds include the General Fund, special revenue funds, capital projects funds, debt service funds, and permanent funds

Not-for-profit health care entities are distinguished from voluntary health and welfare organizations in the following manner: - Health care organizations are considered to be primarily business-oriented (revenues are generated by services provided) whereas voluntary health and welfare organizations raise a significant portion of their money from voluntary contributions. - Health care organizations use accrual accounting whereas voluntary health and welfare organizations do not. - Health care organizations are owned by governments while voluntary health and welfare organizations are not. - Health care organizations do not provide services to individuals who are unable to pay.

Health care organizations are considered to be primarily business-oriented (revenues are generated by services provided) whereas voluntary health and welfare organizations raise a significant portion of their money from voluntary contributions.

Not-for-profit health care entities are distinguished from voluntary health and welfare organizations in the following manner?

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

Which of the following is true regarding Management's Discussion and Analysis (MD&A)?

MD&A should present an analysis of significant variations between the original and final budget

Not-for-profit health care entities are distinguished from voluntary health and welfare organizations in the following manner: - Health care organizations do not provide services to individuals who are unable to pay. - Health care organizations use accrual accounting whereas voluntary health and welfare organizations do not. - Health care organizations provide health care services while voluntary health and welfare organizations do not. - 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.

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.

What is the Time Requirement, in regards to eligibility requirements a revenue resulting from nonexchange must meet?

If time requirements (for expenditure) are specified by the resource provider or legislation, those time requirements must be met

Where are significant encumbrances disclosed?

In the notes, along with required disclosures about other commitments.

What are the three major sections of the Comprehensive Annual Financial Report?

Introductory Section, Financial Section, Statistical Section

Technical Bulletins

Issued by the FASB to provide guidance on accounting and reporting problems related to Statements of Standards or Interpretations

Which part of the financial section of the CAFR is considered "Required Supplementary Information?"

Management's Discussion and Analysis

Which of the following is TRUE regarding the financial reporting entity of a state or local government? A. Many component units are discretely presented, rather than blended. B. A school district could never be a primary government. C. Only a primary government may be the nucleus of a financial reporting entity. D. All of the above are true.

Many component units are discretely presented, rather than blended

Which of the following is true regarding the financial reporting entity of a state or local government?

Many component units are discretely presented, rather than blended

How are Expenditures and Encumbrances classified in the activity accounts of the governmental funds?

May be classified by either: 1. Function 2. Program 3. Department 4. Activity 5. Character 6. Object

The equity section of the Statement of Net Assets of a private not-for-profit hospital may contain which of the following descriptions? - Fiduciary, Proprietary, and General. - Nonspendable, Committed, Restricted, and Assigned. - Net Investment in Capital Assets, Restricted, and Unrestricted Net Position. - Net Assets without Donor Restrictions and Net Assets with Donor Restrictions.

Net Assets without Donor Restrictions and Net Assets with Donor Restrictions. The equity section of the Statement of Net Assets of a private not-for-profit is separated into Net Assets without or with Donor Restriction categories. Board designated net assets are categorized as without donor restrictions.

The categories of Net Position for a state university are classified within which of the following categories?

Net Investment in Capital Assets, Restricted Net Position and Unrestricted Net Position

The equity section of the Statement of Net Assets of a government-owned hospital may contain which of the following descriptions?

Net Investment in Capital Assets, Restricted, and Unrestricted Net Position

The equity section of the Statement of Net Position of a government owned hospital may contain which of the following descriptions? - Net Investment in Capital Assets, Restricted, and Unrestricted Net Position. - Net Assets without Donor Restrictions and Net Assets with Donor Restrictions. - Nonspendable, Committed, Restricted, and Assigned. - Fiduciary, Proprietary, and General.

Net Investment in Capital Assets, Restricted, and Unrestricted Net Position. If a health care organization is owned or controlled by a government, it is typically considered a special-purpose entity engaged only in business-type activities and would use proprietary fund accounting. The categories in the equity section (Net Position) are Net Investment in Capital Assets, Restricted Net Position, and Unrestricted Net Position.

A private sector not-for-profit hospital billed patients $2,000,000 in January. Contractual adjustments with insurance providers total $500,000. Of the remaining amount, the hospital expects implicit price concessions to total $300,000. How should these be reported Net patient service revenue 1,500,000 and Bad debt expense 300,000. Net patient service revenue 1,700,000 and Bad debt expense 500,000. Net patient service revenue 2,000,000 and Bad debt expense 800,000. Net patient service revenue 1,200,000 and Bad debt expense 0.

Net patient service revenue 1,200,000 and Bad debt expense 0. Both contractual adjustments and implicit price concessions are treated as reductions in revenue, not bad debt expense.

With respect to public colleges and universities, state appropriations for operating purposes are shown as?

Non-operating revenue

Which of the following is not considered Required Supplementary Information (RSI)?

Notes to the financial statements

An example of an expenditure classification by function would be: A)Current. B)Public safety. C)Police Department. D)Salaries.

Public safety

private organizations:

Organizations and entities that are not owned or controlled by any governments. They include for profit and not for profit organizations

Investor owned health care organizations have the following equity section accounts?

Paid in capital and retained earnings

Which of the following is correct with respect to reporting of patient service revenue for health care organizations?

Patient service revenue must be reported net of estimated adjustments for contractual adjustments and patient service revenue does not include amounts representing charity care.

Which of the following are the net asset classes for private not-for-profit organizations?

Permanently Restricted, Temporarily Restricted, Unrestricted

A statement of Cash Flows is required for which type of Fund?

Proprietary

Which of the following funds require a Statement of Cash Flows?

Proprietary funds

Which of the following is true with respect to hospitals. What amount should be reported in revenues and provision for bad debt for these items? - Private not-for-profit and for-profit hospitals record depreciation expense, but government-owned hospitals do not. - Private not-for-profit and for-profit hospitals report residual equity within the categories of Net Assets with Donor Restrictions or Net Assets without Donor Restrictions, but government-owned hospitals do not. - Private not-for-profit and for-profit hospitals may report cash flows from operating activities on the indirect method, but government-owned hospitals may not. - All of the choices are true.

Private not-for-profit and for-profit hospitals may report cash flows from operating activities on the indirect method, but government-owned hospitals may not. All three forms of hospital record depreciation expense. The residual equity for for-profit organizations are paid-in-capital and retained earnings. The cash flow statements of government-owned hospitals differ from the other two forms of ownership in that they follow GASB standards which require cash flows from operating activities to be presented on the direct method.

The AICPA Audit and Accounting Guide: Health Care Organizations applies to?

Private not-for-profit health care organizations, governmentally owned health care organizations, and investor-owned health care organizations

What financial ratio is most commonly used to evaluate charitable organizations?

Program expenses/total expenses

The institution's governing board decided to create an endowment from contributed funds, this is called a(n)_______ and the funds are classified as?

Quasi-endowment and unrestricted

A donor made a gift of cash to a private college or university in 2014 with an expressed purpose restriction. All of the funds were expended in 2015. The private college or university must?

Record the gift as temporarily restricted revenue in 2014 and in 2015 report the expense as unrestricted and reclassify the funds to unrestricted

A donor made an unconditional pledge in 2014 of $8,000 to a private not-for-profit organization with the intent to pay the cash in June 2015. The organization should?

Record the pledge as temporarily restricted revenue in 2014 and reclassify it to unrestricted in 2015.

What does the government do if the Restricted, Committed, or Assigned Funds have a negative balance.

Reduce any assigned fund balances in that fund by the amount of the negative balance.

Report as "Assigned Fund Balance".

Report as "Committed Fund Balance".

How do you report a fund balance classification if there are assets (inventory or prepaid) not in spendable form or if there is not a requirement by the government to maintain a permanent fund principal?

Report as "Nonspendable Fund Balance"

Report as "Restricted Fund Balance"

How do you report the residual balance in the General Fund

Report as "Unassigned Fund Balance".

The modified approach for infrastructure requires schedules and disclosures to be included in which part of the CAFR?

Required Supplementary Information

What are Unassigned Funds?

Residual classification of the General Fund

What is the Contingencies Requirement, in regards to eligibility requirements a revenue resulting from nonexchange must meet?

Resources pledged that have a contingency attached are not recognized as revenue until the contingency has been met.

What happens when revenue generated from mandated and voluntary exchange transactions are reimbursement grants?

Revenue is recognized only when qualified expenditures have been incurred.

Auditors

Review MD&A material to establish that it is not misleading, but do not include it in the scope of the audit

Codifications are presented in what parts?

Section (identifies a topic) Paragraph (identifies a paragraph within the codification)

In addition to a Statement of Net Assets, what statements are required in the government-wide Financial Statements?

Statement of Activities

With respect to Government-wide financial statements, which of the following is not required by GASB Statement 34?

Statement of Cash Flow

What are the financial statements required for voluntary health and welfare organizations?

Statement of Financial Position, Statement of Activities, Statement of Cash Flows, Statement of Functional Expenses

Which of the following is NOT a required statement of a private not-for-profit hospital?

Statement of Functional Expense

Public colleges and universities that choose to report as special-purpose entities engaged only in business-type activities would have which of the following financial statements?

Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, and Statement of Cash Flows

The statement reflecting revenues, expenses, and other changes in unrestricted net assets for a private sector, not-for-profit hospital is called the?

Statement of operations

GASB standards are set forth in what?

Statements of Financial Accounting Standards

When a private college has a foundation, and that foundation receives an unconditional pledge of support specifically directed for the benefit of the college or university?

The college must recognize its interest in the contribution at the same time as the foundation, when the pledge is received

1. 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.

True

What is the Definition of Imposed Nonexchange Revenues?

Taxes and other assessments that do not result from an underlying transaction.

Private colleges are required to report net assets in the following categories?

Temporarily restricted, permanently restricted, and Unrestricted

Which of the following is true regarding the composition of the Comprehensive Annual Financial Report (CAFR)?

The CAFR is to include both blended and discretely presented component units

What Fund is the only one that can report a positive "unassigned fund balance"?

The General Fund

Which of the following is true with respect to the General Fund

The General Fund is always considered to be a major fund when preparing fund basis financial statements

Which of the following is true regarding the governmental fund financial statements?

The Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances reports columns for major funds, non-major funds (in total), and total

Which of the following is true regarding the government-wide Statement of Activities?

The Statement of Activities includes depreciation expense

What is an Estimated Revenues Budget?

The amount Revenues to be raised, pursuant to law during a budget period

Which of the following is true regarding the Comprehensive Annual Financial Report?

The basic financial statements consist of the government-wide, the governmental fund, the proprietary fund, and the fiduciary fund financial statements (and the notes to the financial statements)

The difference between the financial statements of private not-for-profit hospitals and government owned hospitals is?

The equity accounts have different titles and definitions

How are constraints placed on the resources of Committed Funds?

The formal action of the government's highest level of decision making authority

1. Private colleges and universities record contributed services as revenue if the services create or enhance nonfinancial assets or require specialized skills, are provided by an individual possessing those skills, and would typically be purchased if not provided by donation.

True

Which of the following is true regarding the government-wide Statement of Activities?

The government-wide Statement of Activities reflects taxes as general revenues

Where in the CAFR would one find the long-term liability for revenue bonds (paid from the revenues of an enterprise fund)?

The government-wide Statement of Net Assets and the proprietary funds Statement of Net Assets

Which of the following is true regarding the government-wide Statement of Net Assets?

The government-wide Statement of Net Assets reflects capital assets, net of accumulated depreciation, for both governmental and business-type activities

Which of the following is true regarding the government-wide financial statements?

The government-wide financial statements include the Statement of Net Assets and the Statement of Activities

Which of the following is true regarding the government-wide statements?

The government-wide statements include a Statement of Net Assets and a Statement of Activities

A private not-for-profit entity estimated its Allowance for Contractual Adjustment. During the next year, the hospital found that the actual total of contractual adjustments applied to receivables on hand at the end of the previous year was $4,000 higher than the estimate. How should the difference be reported? - The hospital should reduce current period net patient service revenues for the $4,000. - The hospital should make a prior period adjustment to retained earnings for $4,000. - The hospital should record a "cumulative effect of a change in accounting principle" for the $4,000. - The hospital should record a current period expense for the $4,000.

The hospital should reduce current period net patient service revenues for the $4,000. Like uncollectible accounts, differences between actual contractual adjustments and the amounts estimated are treated as changes in accounting estimate and included in the account period of the change by reducing patient service revenue.

1. Private colleges and universities record depreciation expense and allocate it to functions.

True

What is an Appropriation?

The legal authorization for the government to incur liabilities for purposes specified in the appropriates statue or ordinance.

Which of the following is true about the combining financial statements?

They are used whenever a non-major column is used in one of the fund financial statements

Which of the following is true regarding the proprietary fund financial statements?

The proprietary fund financial statements include the Statement of Net Assets, the Statement of Revenues, Expenses, and Changes in Fund Net Assets, and the Statement of Cash Flows

What are the Required Characteristics of Recipients, in regards to eligibility requirements a revenue resulting from nonexchange must meet?

The recipient must have the characteristic specified by the provider.

A reconciliation from Enterprise funds statements to government-wide statements is not necessary because:

They both use the same measurement focus and basis of accounting (economic resources, accrual)

1. Private colleges and universities use the same accounting and reporting standards as other private not-for-profit organizations.

True

Where are encumbrances reported within the Governmental Funds Balance Sheet?

They should be reported in the restricted, committed, or assigned categories in a manner consistent with the criteria for those classifications.

1. Private, not-for-profit colleges and universities and investor-owned schools follow FASB standards and adhere to the accrual basis of accounting.

True

1. Public colleges and universities use the economic resources measurement focus and the accrual basis of accounting.

True

What is the definition of Derived Tax Revenues?

These are taxes assessed on exchange transaction conducted by businesses or citizens

What is the definition of Voluntary Nonexchange Transactions?

These include donations and grants given to support a program

What do other financing sources include in the activity accounts of the governmental funds?

Transfers in from other funds and the proceeds of long-term borrowing

What are Other Financing Uses defined as in the activity accounts of governmental funds?

Transfers out of a fund to other funds

1. A college receives cash from a donor under a trust agreement that requires the college to invest the assets and receive a specified dollar amount of earnings. Upon the death of the donor the assets revert to the donor's estate. This is an example of a charitable lead trust split-interest agreement.

True

1. A donor pledges to support a program for a future year. Private colleges and universities recognize contribution revenue in the year in which the unconditional pledge is made.

True

1. Academic or athletic scholarships that do not require service to the college or university are considered scholarship allowances and treated as reductions in revenue.

True

1. According to GASB, with respect to public colleges and universities, pledges receivable are recognized as assets and revenues when eligibility requirements are met.

True

1. Auxiliary enterprise activities represent revenues and expenses related to units of the college that provide services to students on a user fee basis.

True

1. Inflows from self-supporting university operations, known as auxiliary enterprises, are unrestricted revenue by private colleges.

True

1. NACUBO guidelines require both revenues and expenses for split summer sessions to be apportioned to the two fiscal years.

True

1. Pell Grants received by public colleges are classified as non-operating revenue.

True

1. Private colleges and universities are required to report net assets within the categories of unrestricted, temporarily restricted and permanently restricted.

True

If a health care organization is owned or controlled by a government, it is typically considered a special-purpose entity engaged only in business-type activities and would use proprietary fund accounting.

True If a health care organization is owned or controlled by a government, it is typically considered a special-purpose entity engaged only in business-type activities and would use proprietary fund accounting.

Not-for-profit business-oriented health care organizations use accrual accounting.

True Not-for-profit business-oriented, investor-owned and governmental health care organizations all use accrual accounting.

Patient service revenue reported by a hospital does not include charges for charity care.

True Patient service revenue does not include charity care.

Private for-profit health care organizations follow FASB standards excluding those written specifically for not-for-profits.

True Private for-profit health care organizations follow FASB standards, excluding those specifically applicable to not-for-profits.

The AICPA Audit and Accounting Guide: Health Care Organizations applies equally to private not-for-profit, investor-owned, and governmentally owned health care organizations.

True Helping to assure comparability across health care organizations with varying ownership structures, the AICPA Audit and Accounting Guide: Health Care Organizations applies equally to private not-for-profit, governmentally owned and investor-owned health care organizations.

enterprise fund

Used when resources are provided primarily through the use of sales and service charges to parties external to the government. - Water and other utilities, airports, swimming pools, and transit systems.

The AICPA Audit and Accounting Guide: Health Care Organizations provides reporting requirements for all of the following organizations except: - The University of Virginia Hospital, a government-owned hospital. - A nursing home operated by the Lutheran Church. - A psychiatrist operating as a limited liability corporation. - Voluntary health and welfare organizations.

Voluntary health and welfare organizations. Helping to assure comparability across health care organizations with varying ownership structures, the AICPA Audit and Accounting Guide: Health Care Organizations applies equally to private not-for-profit, governmentally owned and investor-owned health care organizations. Voluntary health and welfare organizations are not covered by the guide.

When is an Encumbrance recognized?

When a purchase order or contract is issued as authorized by an appropriation

When are expenditures recognized in the activity accounts of governmental funds?

When a liability is incurred that will be settled with current resources in the fund.

When are the resources of the government classified as Assigned Funds

When the government has an expressed intent to use the resources for specific purpose.

What can the fund balance of restricted, committed, and assigned funds not have?

a negative balance

a fund is

a self balance set of accounts separately reports the resources and activities of a part of the government

permanent funds

account for and report resources that are restricted to the extent that only earning, and not principal, may be used for purposes that support the reporting government's programs

fiduciary funds:

account for resources that are maintained by but do not belong to a governmental unit

internal service fund

account for services provided by one department of a government to another, generally on a cost-reimbursement basis

FASB=

accounting and financial reporting standards for profit seeking business and for nongovernmental not for profit organizations

capital projects fund

accounts for and reports financial resources that are restricted, committed, or assigned to expenditure for capital outlays

general fund

accounts for most of the basic services provided by the government accounts for and reports all financial resources not accounted for in any other fund

governmental ___________ are reported in the government wide statements using the accrual basis of accounting

activities

How are current outflows of sources normally classified?

by function

Which of the following financial statements must special-purpose governments include in their financial statements if the special purpose government is engaged in both governmental and business-type activities or in more than one governmental activity? a. Government-wide financial statements b. Fund basis financial statements c. Both A and B d. Neither A nor B

c. Both A and B Government-wide financial statements and fund basis financial statements

Which of the following is NOT an example of a special-purpose government? a. Mosquito abatement district b. Port authority c. County government d. All of the above

c. County Government Because county governments offer more than one basic government service, they are considered General-purpose governments.

Government wide financial statements are prepared using what focus?

common measurement focus accrual basis of accounting

Under GASB rules for the financial reporting entity:

component units are included if the primary government is financially accountable for their operations. B)counties are component units of the State Government

accounting method for governmental funds

current financial and modified accrual

The budgetary account of estimated revenues is increased with a?

debit

Concepts Statement No. 3

defines methods of presenting information in financial reports and develops the following disclosure hierarchy

accounting method for fiduciary funds

economic resources measurement and accrual basis

accounting method for government wide statements

economic resources measurement and accrual basis

accounting method for proprietary funds

economic resources measurement and accrual basis

What are the types of proprietary funds>

enterprise funds internal service funds

activities of governmental funds are said to be ________-

expendable

nonprofits can only be privately owned t/f

false can be publicly or privately owned

private organizations are only profit organizations t/f

false not for profit or profit

FASAB =

federal government financial reporting standards

a pension fund is what type of fund?

fiduciary

How many differences are there between governments and for profit business enterprises

five environmental differences

governmental ________ are reported using the modified accrual basis of accounting

funds

What does the CAFR contain?

introductory material auditor's report Certain RSI Necessary schedules

SFFAC

issued by FASB for the federal government

not for profit organizations:

lack a residual ownership claim and the organization's purpose is something other than to provide goods and services at a profit

governments report far more/less disaggregated information than commercial enterprises

Is the Receiving Government of a Voluntary Nonexchange Transaction required to participate?

no.

SFFAC 1

objectives of federal financial reporting

public organization:

organizations owned or controlled by a government, including government authorities and enterprises

other organizations are governmental organizations if they have one or more of the following characteristics:

popular election of officers controlling majority potential for unilateral dissolution power to enforce a tax levy ability to issue directly a debt that pays interest exempt from federal taxation

examples of internal service fund

print shops motor pools self insurance funds

capitalized fixed assets are reported in which of the following fund basis statements?

proprietary fund

What category of funds is used to account for a government's activities that are business like in nature

proprietary funds

Concepts Statement No. 4

provides key definitions of items appearing in financial statements

measurement focus:

refers to what items are being reported in the financial statements

Concept Statements No 2. and No.5

relate to the reporting of nonfinancial measures

GASB requires the presentation of...

required supplementary information (RSI)

GASB=

state and local government accounting and financial reporting standards

Who issued a CAFR?

state and local governments

What does the government do if a negative fund balance remains for either Restricted, Committed, or Assigned Funds after they have been assigned fund balances of zero.

the remaining negative amount should be reported as unassigned fund balance.

Concepts Statement NO. 1

three primary user groups creditors citizens oversight bodies

under modified accrual basis of accounting, when are revenues recognized?

when they become available and measurable

Where should encumbered resources be reported?

within the restricted, committed, or assigned categories in a manner consistent with those classifications

Is the Receiving Government of a Government Mandated Nonexchange Transaction required to participate?

yes.

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