goverment

Which of the following is a special purpose government?

Multiple Choice

• The State of Arkansas

• Greene Township

• City of Seattle

• Minneapolis Public School District

Minneapolis Public School District

Which of the following statements is true for both government organizations and for-profit organizations?

Multiple Choice

Revenues may be earned through exchange transactions.

• There is an absence of owners.

• There is a lack of profit motive.

• Resources are provided by individuals and entities that may not directly benefit from the use of the resources.

Revenues may be earned through exchange transactions.

Which of the following statements regarding primary sources of accounting and financial reporting standards is false?

Multiple Choice

• The GASB sets standards for all state and local governments.

• The FASB sets standards for all business and not-for-profit entities.

• The FASB and GASB are administered by the Financial Accounting Foundation.

• The FASAB sets standards for the federal government and its agencies and departments.

Explanation

The FASB sets standards for all business and not-for-profit entities.

A tax watchdog group is interested in ensuring that the city does not spend more than the amount of resources it receives in the current fiscal year. The watchdog group is primarily interested in:

Multiple Choice

• fiscal accountability.

• social accountability.

• political accountability.

• operational accountability.

fiscal accountability.

Which of the following best defines the concept of interperiod equity?

Multiple Choice

• Revenues equaled or exceeded expenses for the year.

• Total assets (current and noncurrent) were sufficient to cover total liabilities (current and noncurrent).

• Current-year resources were sufficient to pay for current-year services.

• Future taxpayers can expect to receive the same or a higher level of services as current taxpayers.

Current-year resources were sufficient to pay for current-year services.

What are the components that are included in the minimum requirements for general purpose external financial reporting?

Multiple Choice

• Introductory section, financial section, and statistical section

• MD&A, government-wide financial statements, fund financial statements, notes to the financial statements, and RSI

• Letter from the chief financial officer, government financial statements, notes to the financial statements, and RSI

• MD&A, government-wide financial statements, notes to the financial statements, and RSI

MD&A, government-wide financial statements, fund financial statements, notes to the financial statements, and RSI

Which of the following financial statements is not a basic financial statement under FASAB standards?

Multiple Choice

• Balance sheet

• Statement of changes in net position

• Statement of cash flows

• Statement of social insurance

Statement of cash flows

Which of the following is not a required section of a federal agency or department’s performance and accountability report (PAR)? 

Multiple Choice

• A performance section, which includes an annual performance report (APR)

• An MD&A

• A basic financial statements section

• A statement of nonparticipation in political matters

A statement of nonparticipation in political matters

The basic financial statements of a not-for-profit include all of the following except:

Multiple Choice

• statement of financial position.

• statement of activities.

• statement of changes in functional expenses. 

• statement of cash flows.

statement of changes in functional expenses. 

What is the primary reason that not-for-profit (NFP) organizations should report expenses incurred for program purposes separately from those for supporting services such as management and general and fundraising?

Multiple Choice

• GASB standards require it. 

• Program managers need information about the cost of activities for which they are responsible.

• Top managers need to know how much they are spending for nonprogrammatic management and general support.

• Donors, potential donors, oversight bodies, and others need to know what percentage of total expenses is being incurred for carrying out the NFP’s programs.

Donors, potential donors, oversight bodies, and others need to know what percentage of total expenses is being incurred for carrying out the NFP’s programs.

overnment financial reports should be useful in assessing a government’s accountability. Three objectives of government financial reporting identify how financial reporting can be useful in assessing a government’s accountability. Which of the following is not related to one of the objectives?

Multiple Choice

• Providing information on operating results for the current period

• Providing information on meeting current year service performance goals

• Providing information related to the provision of services in accordance with legally adopted budgets

• Providing information on the ability of the government to meet obligations as they come due

Providing information on meeting current year service performance goals

Which of the following statements is true regarding the basic financial statements of a state or local government?

Multiple Choice

• Separate columns should be provided in the government-wide financial statements for governmental activities and business-type activities.

• Governmental fund and proprietary fund financial statements should provide a separate column for each major fund.

• Aggregate information about all nonmajor governmental funds should be reported in a single column of the governmental fund financial statements and all nonmajor enterprise funds should be reported in a single column of proprietary fund financial statements.

• All these answer choices are correct.

All these answer choices are correct.

A member of the city council does not understand why governments need to use funds. He believes it makes reporting too complex and that funds should be eliminated. What explanation would you use to help explain why funds are needed?

Multiple Choice

• Funds are necessary to allow the government to provide information about governmental activities separate from business-type activities.

• Funds are necessary to allow the city council to have increased budgetary control over the amounts spent by the government.

• Funds are necessary to help increase transparency by showing that legal constraints on spending certain revenues for the specific purpose for which the revenues were intended are being met.

• The city council person is correct. There is no required reason for fund accounting, it increases difficulty in understanding financial reports, and the city should consider eliminating funds.

Funds are necessary to help increase transparency by showing that legal constraints on spending certain revenues for the specific purpose for which the revenues were intended are being met.

The measurement focus and basis of accounting that should be used for the government-wide financial statements are

	Measurement Focus	Basis of Accounting
a.	Current financial resources	Modified accrual
b.	Current financial resources	Accrual
c.	Economic resources	Modified accrual
d.	Economic resources	Accrual

Option D

Which of the following amounts identified at the end of the fiscal year would be classified as an assigned fund balance?

Multiple Choice

• Resources the city manager has set aside for a major street repair

• A federal grant that is to be used only for playground equipment

• Significant amounts of inventory

• Endowment resources that the city must maintain in perpetuity

Resources the city manager has set aside for a major street repair

Which of the following statements about major funds is true?

Multiple Choice

• Major funds are determined based on the size of the fund or management discretion.

• Major funds are reported only in governmental fund financial statements.

• Major funds are reported on the fund and government-wide financial statements.

• A fund that is at least 10 percent of the total revenues of all governmental and proprietary funds would be considered a major fund.

Major funds are determined based on the size of the fund or management discretion.

Assets and liabilities of activities for which the government is acting in either a custodial or trustee capacity for individuals, organizations, or other governments should be reported in:

Multiple Choice

• the fiduciary column of the government-wide financial statements

• the fiduciary fund financial statements

• both government-wide and fiduciary fund statements

• neither government-wide nor fiduciary fund statements

the fiduciary fund financial statements

nder the modified accrual basis of accounting:

Multiple Choice

• Revenues are recognized at the time an exchange transaction occurs.

• Expenditures are recognized as the cost of an asset expires or is used up in providing government services.

• Revenues are recognized when current financial resources become measurable and available to pay current-period obligations.

• Expenses are recognized when an obligation occurs for costs incurred in providing services.

• 
  

  Revenues are recognized when current financial resources become measurable and available to pay current-period obligations.

  Correct

Financial information about an internal service fund should be reported in the proprietary fund financial statements and the:

Multiple Choice

• Governmental Activities column of the government-wide financial statements.

• Business-type Activities column of the government-wide financial statements.

• Either Governmental Activities or Business-type Activities column, depending on whether the internal service fund predominantly serves governmental activities or business-type activities.

• Either the Governmental Activities or Business-type Activities column at management's discretion.

Either Governmental Activities or Business-type Activities column, depending on whether the internal service fund predominantly serves governmental activities or business-type activities.

A certain city reports the following year-end total assets:

General Fund	$ 18,400,000
Library Fund (a special revenue fund)	2,900,000
Debt Service Fund	2,600,000
Total governmental funds	26,300,000
Total governmental and enterprise funds combined	51,250,000

Based on this information, which funds should be reported as major funds?

Multiple Choice

• General Fund only

• General Fund and Library Fund

• General Fund and Debt Service Fund

• General, Library, and Debt Service funds should be reported as major funds.

General Fund and Library Fund

On the government-wide statement of net position, which of the following statements is false?

Multiple Choice

• Governmental funds are reported under the Governmental Activities column.

• Enterprise funds are reported under the Business-type Activities column.

• Some types of component units are reported as a separate column.

• Fiduciary funds are reported as a separate column.

Fiduciary funds are reported as a separate column.

Under modified accrual accounting, revenues are recognized when management defines them as available for paying current-period obligations. Management considers its definition of the term available to be essential to the financial statement users’ understanding of revenues recognized on the statement. How would management communicate to users its definition of available?

Multiple Choice

• As a note to the financial statements

• As required supplementary information

• As other supplementary information

  • As a disclosure on the face of the financial statement

As a note to the financial statements

Where should a deferred inflow of resources be reported on the financial statements?

Multiple Choice

• The liabilities section on the statement of net position

• After the liabilities section on the statement of net position

• After the general revenues on the statement of activities

• Because it is deferred it is not reported on the financial statements, but is a note disclosure to the financial statements.

After the liabilities section on the statement of net position

Which of the following fund(s) will generally be the only fund(s) that can report a positive unassigned fund balance?

Multiple Choice

• General Fund

• General Fund and special revenue funds

• General Fund and capital projects funds

• All governmental funds

General Fund

Which of the following best describes the recommended format for the government-wide statement of activities?

Multiple Choice

• Revenues minus expenses equals change in net position.

• Revenues minus expenditures plus (minus) other financing sources (uses) equals change in net position.

• Expenses minus program revenues equals net (expense) revenue. Net (expense) revenue plus general revenues equals change in net position.

• Expenses minus program revenues minus general revenues plus (minus) unusual or infrequent items equals changes in net position.

Expenses minus program revenues equals net (expense) revenue. Net (expense) revenue plus general revenues equals change in net position.

Which of the following is an acceptable method of reporting depreciation expense for depreciable assets used by governmental activities?

Multiple Choice

• Report as a general expense in the bottom section of the statement of activities.

• Report as a direct expense of the function or program with which the related depreciable assets are identified.

• Report as an indirect expense on a separate line if the depreciable assets benefit all functions or programs.

• Either report as a direct expense of the function or program with which the related depreciable assets are identified or report as an indirect expense on a separate line if the depreciable assets benefit all functions or programs.

Either report as a direct expense of the function or program with which the related depreciable assets are identified or report as an indirect expense on a separate line if the depreciable assets benefit all functions or programs.

Which of the following accounts neither increases nor decreases the fund balances reported on the governmental funds balance sheet for the fiscal year?

Multiple Choice

• Expenditures

• Revenues

• Encumbrances

• Other financing sources

Encumbrances

When determining taxable property for the purpose of the property tax levy, which of the following would likely be excluded from the calculation?

Multiple Choice

• Property owned by governments

• Property exempted from taxation by the government

• Property used by religious or charitable organizations

• All these answer options are correct.

All these answer options are correct.

Which of the following statements is true for other financing sources but is not true for revenues?

Multiple Choice

• Arise from the sale of capital assets

• Increase fund balances when they are closed at year-end

• Temporary accounts closed at fiscal year-end

• Have normal credit balances

Arise from the sale of capital assets

An internal allocation of funds on a periodic basis, which is often used to regulate the use of appropriations over a budgetary period, is called:

Multiple Choice

• an encumbrance.

• a budgetary levy.

• an ad valorem assessment.

• an allotment.

an allotment.

Which of the following is an example of classification by object of expense?

Multiple Choice

• Personnel unit

• Economic development

• Debt service

• Parking enforcement

Debt service

Under GASB requirements for external financial reporting, the budgetary comparison schedule would be found as a part of:

Multiple Choice

• required supplementary information.

• basic financial statements.

• note disclosures.

• other supplementary information.

required supplementary information.

Before placing a purchase order, a department should check that available appropriations are sufficient to cover the cost of the item being ordered. This type of budgetary control is achieved by reviewing:

Multiple Choice

• appropriations minus expenditures.

• appropriations plus expenditures minus outstanding encumbrances.

• appropriations minus the sum of expenditures and outstanding encumbrances.

• appropriations minus estimated revenues.

appropriations minus the sum of expenditures and outstanding encumbrances.

Spruce City’s finance department recorded the recently adopted General Fund budget at the beginning of the current fiscal year. The budget approved estimated revenues of $1,100,000 and appropriations of $1,000,000. Which of the following is the correct journal entry to record the budget?

Event	General Journal	Debit	Credit
a.	Estimated Revenues	1,100,000
a.	Budgetary Fund Balance		100,000
a.	Appropriations		1,000,000
b.	Appropriations	1,000,000
b.	Budgetary Fund Balance	100,000
b.	Estimated Revenues		1,100,000
c.	Revenues Receivable	1,000,000
c.	Budgetary Deficit	100,000
c.	Appropriations		1,100,000
d.	Memorandum entry only.

Option A

Which of the following is correct concerning the presentation of the budgetary comparison schedule?

Multiple Choice

• A Final Budget column is optional.

• The Actual column is presented using the government’s budgetary basis of accounting.

  Correct

• The Variance columns are optional.

• The budgetary comparison schedule is prepared for all governmental funds.

The Actual column is presented using the government’s budgetary basis of accounting.

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[The following information applies to the questions displayed below.]

Choose the best answer.

If the city projects a $428,000 decrease in the sales tax revenues originally budgeted, how would the change in the projection be recorded?

Event	General Journal	Debit	Credit
a.	Not recorded because it is a projection and not yet known.
b.	Estimated Revenue	428,000
b.	Budgetary Fund Balance		428,000
c.	Budgetary Fund Balance	428,000
c.	Estimated Revenue		428,000
d.	Revenue	428,000
d.	Fund Balance		428,000

Option C

If it is in accordance with the government’s policies, which of the following budgetary accounts can remain open at the fiscal year-end?

Multiple Choice

• Appropriations

• Encumbrances

• Fund Balance

• Estimated Other Financing Sources

Encumbrances

Which of the following best identifies when an encumbrance is recorded?

Multiple Choice

• When goods or services are received

• When an obligation is incurred that will be paid from current financial resources

• When legislative authority has been granted to spend resources

• When goods or services are ordered

When goods or services are ordered

Supplies ordered by the Public Works function of the General Fund were received at an actual price that was less than the estimated price listed on the purchase order. What effect will this have on Public Work’s appropriations available balance?

Multiple Choice

• Increase

• Decrease

• No effect

  • Insufficient information to determine the effect

Increase

The City of Medford purchased a fire truck for the fire department. If the operations of the fire department are financed by general revenues, an asset would be recorded in which journal(s)?

	General Fund	Governmental Activities
a.	Yes	No
b.	No	No
c.	No	Yes
d.	Yes	Yes

Option C

Which of the following would not be reported on the governmental funds balance sheet?

Multiple Choice

• Encumbrances

• Inventories

• Deferred Inflows of Resources—Unavailable Revenues

• Tax Anticipation Notes Payable

Encumbrances

Goods for which a purchase order had been placed at an estimated cost of $1,600 were received at an actual cost of $1,550. The journal entry in the General Fund to record the receipt of the goods will include a:

Multiple Choice

• Debit to Encumbrances Outstanding for $1,600.

• Credit to Vouchers Payable for $1,550.

• Debit to Expenditures for $1,550.

• All of the choices provided are correct.

All of the choices provided are correct.

Which of the following properly represents the format of the government-wide statement of net position?

Multiple Choice

• Assets minus liabilities equal fund balance

• Assets and deferred inflows of resources minus liabilities and deferred outflows of resources equal fund balance

• Assets and deferred outflows of resources minus liabilities and deferred inflows of resources equal net position

• Assets and deferred inflows of resources minus liabilities and deferred outflows of resources equal net position

Assets and deferred outflows of resources minus liabilities and deferred inflows of resources equal net position

Garden City has calculated that General Fund property tax revenues of $4,608,000 are required for the current fiscal year. Over the past several years, the city has collected 96 percent of all property taxes levied. The city levied property taxes in the amount that will generate the required $4,608,000. Which of the following general journal entries would correctly record the property tax levy?

Option	General Journal	Debit	Credit
a.	Taxes Receivable—Current	4,608,000
a.	Allowance for Uncollectible Current Taxes		184,320
a.	Revenues		4,423,680
b.	Taxes Receivable—Current	4,800,000
b.	Allowance for Uncollectible Current Taxes		192,000
b.	Revenues		4,608,000
c.	Taxes Receivable—Current	4,608,000
c.	Deferred Inflows of Resources—Property Taxes		184,320
c.	Revenues		4,423,680
d.	Taxes Receivable—Current	4,800,000
d.	Deferred Inflows of Resources—Property Taxes		192,000
d.	Revenues		4,608,000

Option B

The Town of Freeport collected $3,000 of prior-year property taxes six months after year-end. Which of the following would not be part of the entry to record collection of delinquent taxes in the General Fund?

Multiple Choice

• A debit to Cash for $3,000

• A debit to Deferred Inflows of Resources—Unavailable Revenues for $3,000

• A credit to Revenues for $3,000

• A debit to Taxes Receivable—Delinquent for $3,000

A debit to Taxes Receivable—Delinquent for $3,000

The Village of Frederick borrowed $1,000,000 from a local bank by issuing 4 percent tax anticipation notes. If the village repaid the tax anticipation notes six months later after collecting its next installment of property taxes, the General Fund journal entry to record the repayment will include:

Multiple Choice

• a debit to Tax Anticipation Notes Payable for $1,000,000.

• a debit to Expenditures for $20,000.

• a debit to Expenditures for $1,020,000.

• a debit to Tax Anticipation Notes Payable for $1,000,000 and a debit to Expenditures for $20,000.

a debit to Tax Anticipation Notes Payable for $1,000,000 and a debit to Expenditures for $20,000.

Which of the following transactions is reported on the government-wide financial statements?

Multiple Choice

• The City Airport Fund, an enterprise fund, transfers a portion of boarding fees charged to passengers to the General Fund

• An interfund loan from the General Fund to a special revenue fund

• An interfund transfer is made between the General Fund and the Debt Service Fund

• Equipment used by the General Fund is transferred to an internal service fund that predominantly serves departments that are engaged in governmental activities

• The City Airport Fund, an enterprise fund, transfers a portion of boarding fees charged to passengers to the General Fund

• An interfund transfer is made between the General Fund and the Debt Service Fund

The City Airport Fund, an enterprise fund, transfers a portion of boarding fees charged to passengers to the General Fund

Carroll City levies $200,000 of property taxes for its current fiscal year. One percent of the tax levy is expected to be uncollectible. The city collects $170,000 of its taxes during the year and another $25,000 during the first two months of the following year. In addition, the city collected $3,000 of prior-year taxes during the first two months of the current fiscal year and another $2,000 during the remainder of the current fiscal year. What amount of property tax revenues should the city report in the government-wide financial statements for the current fiscal year?

Multiple Choice

• $200,000

• $198,000

• $197,000

• $195,000

$198,000

Which of the following financial statements are prepared for governmental funds?

Multiple Choice

• Statement of Net Assets and Operating Statement

• Balance Sheet and Income Statement

• Statement of Net Position and Statement of Activities

• Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances

Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances

Property tax revenues recognized in the governmental fund operating statements often differ from the amount recognized in the government-wide statement of activities, because:

Multiple Choice

• property tax revenues are not recorded in the government-wide statements.

• availability to finance current expenditures is not a revenue recognition criterion under the accrual basis used at the government-wide level.

• bad debt expense is recognized at the government-wide level.

• GASB standards preclude full recognition of property tax revenues in governmental funds

availability to finance current expenditures is not a revenue recognition criterion under the accrual basis used at the government-wide level.

Which of the following is an example of an imposed nonexchange transaction?

Multiple Choice

• Sales taxes

• Personal income taxes

• Corporate income taxes

• Property taxes

Property taxes

The budgetary comparison data schedule includes all of the following, except:

Multiple Choice

• prior year final budget.

• original budget.

• final Budget.

• variance column comparing the original and final budget figures.

prior year final budget.

Internal balances:

Multiple Choice

• represent activity between the governmental funds and enterprise funds.

• are reported on the government-wide statement of net position.

• may have a debit or a credit balance.

• All of the choices provided are true.

All of the choices provided are true.

Which of the following items may appear on the governmental fund operating statement?

Multiple Choice

• Expenditures

• Encumbrances

• Appropriations

• Net position

Expenditures

The Appropriations account of a government is debited when:

Multiple Choice

• the budget is recorded at the beginning of the year.

• expenditures are recorded.

• the account is closed to budgetary fund balance at the end of the year.

• payment is made for an appropriated amount.

the account is closed to budgetary fund balance at the end of the year.

An economic downturn suggests that a town's General Fund sales tax revenue projections will be $10,000 lower than originally budgeted. At the same time, General Fund appropriations are legally amended to reflect a $5,000 decrease in the appropriation for Public Works and a $10,000 increase in the appropriation for Culture and Recreation. Which of the following general journal entries would correctly record the budget amendments?

Event	General Journal	Debit	Credit
a.	Appropriations	5,000
a.	Estimated Revenues	10,000
a.	Budgetary Fund Balance		15,000
b.	Budgetary Fund Balance	15,000
b.	Estimated Revenues		10,000
b.	Appropriations		5,000
c.	Estimated Revenues	10,000
c.	Appropriations		5,000
c.	Budgetary Fund Balance		5,000
d.	No entry required for budget amendments.

Option B

The earnings on the assets of a permanent fund are to be used to maintain the city’s park benches (special revenue fund). How would the earnings be recorded?

Multiple Choice

• Revenues by the permanent fund

• Revenues by the park bench special revenue fund

• Revenues by both the permanent fund and the park bench special revenue

• Other financing sources by the permanent fund

Revenues by the permanent fund

Which of the following would be recorded in the same fashion in the General Fund and governmental activities general journals?

Multiple Choice

• The purchase of a copier

• The issuance of a bond

• The collection of unavailable property taxes deferred from a prior year

• Borrowing through a tax anticipation note

Borrowing through a tax anticipation note

Supplies recorded in the General Fund under the consumption method will initially include a:

Multiple Choice

• Debit to Inventory of Supplies.

• Credit to Fund Balance—Restricted—Inventory of Supplies.

• Debit to Expenditures.

• Debit to Fund Balance—Restricted—Inventory of Supplies.

Debit to Inventory of Supplies.