69 test bank for essentials of accounting for governmental and not for profit organizations 12th

69 Test Bank for Essentials of Accounting for
Governmental and Not for Profit Organizations 12th
Edition by Copley
Multiple Choice Questions
The Financial Accounting Standards Board (FASB) is the
standard setting organization for which of the following reporting
organizations?
1.

A) Private not-for-profits

2.

B) Public not-for-profits

3.

C) Investor owned businesses

4.

D) A and C are both correct.

The ___________ is the government’s official annual report
prepared and published as a matter of public record.
1.

A) comprehensive annual financial report

2.

B) governmental annual financial report

3.

C) independent auditor’s report

4.

D) complete audited financial report

The Governmental Accounting Standards Board has been given
authority to establish accounting and financial reporting standards
for:
1.

A) all governmental units and agencies.

2.

B) federal, state, and local governments and governmentally related
utilities, authorities, hospitals, and colleges and universities..

3.

C) state and local governmental entities, and governmentally related
utilities, authorities, hospitals, and colleges and universities.

4.

D) all governmental units and all not-for-profit organizations.

What are Enterprise funds used for?
1.

A) To account for pension and employee benefit funds for which the
governmental unit is the trustee.

2.

B) To account for most of the basic services provided by the governmental
units.

3.

C) To account for resources provided primarily through the use of sales and
service charges to parties external to the government.

4.

D) To report resources that are legally restricted so only earnings, not
principal, may be expended, and for purposes to benefit the government and
its citizenry

The GASB is under the oversight of:
1.

A) GAO.

2.

B) FASAB.

3.

C) FAF.

4.

D) FASB.

State and local governmental funds are organized into three
categories including:
1.

A) governmental, proprietary, and restricted

2.

B) proprietary, fiduciary, and restricted

3.

C) governmental, fiduciary, and restricted

4.

D) governmental, proprietary, and fiduciary

A government may have __________________ General

Fund(s).
1.

A) Only one.

2.

B) As many as needed to fulfill legal obligations.

3.

C) A varying number, depending on the annual needs of the government.

4.

D) None of the above.


The ______ Funds are used to account for situations in which the
government is acting as a collecting/disbursing agent.
1.

A) Agency

2.

B) Enterprise

3.

C) General

4.

D) Special revenue

Under GASB Statement 34, capital assets:
1.

A) must be reported in government-wide statements but are not reported in
any of the fund financial statements.

2.

B) must be reported in government-wide statements and in proprietary fund
financial statements.

3.

C) are not to be reported in either government-wide or fund financial
statements.

4.

D) are to be reported but not depreciated in government-wide and fund
financial statements.

The FASB has the authority to establish accounting and financial
reporting standards for:
1.

A) Federal government

2.

B) Private not-for-profits

3.

C) Public not-for-profits

4.

D) State and local governments

Which of the following is not a fiduciary fund type?
1.

A) Agency.

2.

B) Expendable trust.

3.

C) Private-purpose trust.

4.

D) Investment trust.


What type of fund is used when resources are provided mainly
through business-like transactions to parties external to the
government?
1.

A) Internal Service Funds

2.

B) Capital Projects Funds

3.

C) Agency Funds

4.

D) Enterprise Funds

Which fund category must change from modified accrual to
accrual basis when preparing government-wide financial
statements?
1.

A) Governmental

2.

B) Proprietary

3.

C) Fiduciary

4.

D) A & B only

Governmental funds include:
1.

A) Special revenue funds

2.

B) Internal service funds

3.

C) Debt service funds

4.

D) A and C

The ______ Fund accounts for all resources other than those
required to be accounted for in other funds.

1.

A) Agency

2.

B) Enterprise

3.

C) General

4.

D) Special revenue


Which of the following funds is used to account for the payment of
principal and interest of general long term debt of a government?
1.

A) Capital Projects Fund

2.

B) Internal Service Fund

3.

C) Agency Fund

4.

D) None of the above

Which of the following fund types uses modified accrual
accounting?
1.

A) Enterprise

2.

B) Internal Service

3.

C) Investment Trust

4.

D) Special Revenue

Notre Dame University, a private institution, has level “A” GAAP
established by the:
1.

A) American Institute of Certified Public Accountants.

2.

B) Governmental Accounting Standards Board.

3.

C) National Association of College and University Business Officers.

4.

D) Financial Accounting Standards Board.

Which of the following is a proprietary fund?
1.

A) Investment trust

2.

B) Permanent

3.

C) Special revenue

4.

D) Internal service

What basis of accounting would the Enterprise Fund use?
1.

A) Accrual


2.

B) Modified Accrual

3.

C) Cash

4.

D) Expended Accrual

Which of the following funds is not a Fiduciary Fund?
1.

A) Investment Trust Fund

2.

B) Private Purpose Trust Fund

3.

C) Permanent Fund

4.

D) Pension Fund

Which of the following is not a fiduciary fund?
1.

A) Agency

2.

B) Permanent

3.

C) Pension trust

4.

D) Private-purpose trust

The “Hierarchy of GAAP” is established by the:
1.

A) Financial Accounting Standards Board.

2.

B) Federal Accounting Standards Advisory Board

3.

C) Governmental Accounting Standards Board

4.

D) All of the above have established a hierarchy

Which of the following statement(s) are not included in the
proprietary funds for a government entity:
1.

A) Statement of Revenues, Expenditures, and Changes in Fund Balances

2.

B) Statement of Cash Flows

3.

C) Statement of Net Position

4.

D) All of the above are included


Financial reports for state and local governments are well suited
for all the following EXCEPT?
1.

A) Assessing financial condition and results of operations.

2.

B) Comparing actual results with the legally adopted budget.

3.

C) Measuring the effectiveness of government services such as police and
fire protection.

4.

D) Assisting in determining compliance with finance-related laws and
regulations.

Long-term debt to be paid from proprietary funds is reported as a
liability in
1.

A) the proprietary fund Statement of Net assets (or Net Position).

2.

B) the government-wide Statement of Net assets (or Net Position).

3.

C) both A and B.

4.

D) neither A nor B.

Which of the following best describes how many funds a
government should use?
1.

A) One for each revenue source

2.

B) Two at a minimum; the General Fund and one enterprise fund

3.

4.

C) As many as necessary to fulfill legal requirements and sound financial
administration
D) None of the above

The _______ sets the accounting and financial reporting
standards for both state and local governments and public not-forprofits.
1.

A) FASAB

2.

B) FASB

3.

C) GASB


4.

D) AICPA

Government-wide statements use the:
1.

A) current financial resources measurement focus and accrual basis of
accounting.

2.

B) economic resources measurement focus and modified accrual basis of
accounting.

3.

C) economic resources measurement focus and accrual basis of
accounting.

4.

D) none of the above.

Which of the following would not be included in FASB Statement
of Financial Accounting Concepts #4, which identifies the
information needs of the users of non-business financial
statements?
1.

A) Assessing services provided by a non-business organization and its
ability to continue to provide those services

2.

B) Format and content of financial statements

3.

C) Assessing managements’ stewardship and performance

4.

D) Evaluation of an organization’s resources, obligations and effects of
changes in net resources

Which of the following is an environmental difference between
governments and for-profit business enterprises?
1.

A) Relationship with stakeholders

2.

B) Donor restricted assets

3.

C) Fiduciary responsibilities

4.

D) Both B and C

Governmental funds use the:
1.

A) economic resources measurement focus and accrual basis of
accounting.


2.

B) current financial resources measurement focus and accrual basis of
accounting.

3.

C) economic resources measurement focus and modified accrual basis of
accounting.

4.

D) current financial resources measurement focus and modified accrual
basis of accounting

Level “A” GAAP for The University of Virginia, a public institution,
would be established by the:
1.

A) Financial Accounting Standards Board.

2.

B) Governmental Accounting Standards Board.

3.

C) American Institute of Certified Public Accountants.

4.

D) National Association of College and University Business Officers.

A city government makes its semiannual payment of interest on
revenue bonds issued to pay for the construction of additional
public transit stations. Which fund would account for the
payment?
1.

A) Debt service fund

2.

B) Capital projects fund

3.

C) Enterprise fund

4.

D) Internal service fund

Governmental funds do not include:
1.

A) Special revenue funds

2.

B) Agency funds

3.

C) Debt service funds

4.

D) The General fund

Which of the following is most correct with regard to
Management's Discussion and Analysis (MD&A)?

1.

A) State and local governments are required to provide an MD&A.

2.

B) Federal agency financial reports are required to provide an MD&A.

3.

C) Both state and local governments and federal agencies are encouraged,
but not required to provide an MD&A.

4.

D) Both state and local governments and federal agencies are required to
provide an MD&A.

Under GASB Statement 34, modified accrual accounting would
be found in the:
1.

A) government-wide financial statements only.

2.

B) governmental fund financial statements only.

3.

C) governmental and fiduciary fund financial statements only.

4.

D) governmental, proprietary, and fiduciary fund financial statements but
not in the government-wide financial statements

Long-term debt of a governmental unit would be reported in the:
1.

2.
3.

4.

A) government-wide financial statements and proprietary fund financial
statements.
B) government-wide financial statements only.
C) debt service funds of governmental fund financial statements and
government-wide financial statements.
D) notes to the financial statements only.

Which of the following funds is considered a Fiduciary Fund?
1.

A) Debt Service Fund

2.

B) Enterprise Fund

3.

C) Internal Service Fund

4.

D) Pension Trust Fund

Under GASB Statement 34, accrual accounting is used for:


1.

A) government-wide financial statements only.

2.

B) government-wide financial statements and proprietary fund financial
statements only.

3.

C) government-wide, proprietary fund, and fiduciary fund financial
statements only.

4.

D) government-wide and all fund financial statements

Under the modified accrual basis of accounting, expenditures
should be recognized when:
1.

A) they are authorized by the budget ordinance.

2.

B) they are paid.

3.

4.

C) they are measurable and can be financed by the revenues of the current
period.
D) the fund liability is incurred.

Which of the following organizations has authority to establish
accounting and financial reporting standards for the federal
government?
1.

A) Federal Accounting Standards Advisory Board.

2.

B) Office of Management and Budget.

3.

C) Governmental Accounting Standards Board.

4.

D) None of the above; no one has been granted authority to set standards
for the federal government

A permanent fund classified under governmental funds…
1.

2.
3.

A) Accounts for most of the basic services provided by the governmental
unit.
B) Accounts for financial resources intended for major capital projects
C) Accounts for services provided by one department of a government to
another


4.

D) Accounts for resources that are legally restricted so only earnings, not
principal, may be expended, and for purposes to benefit the government and
its citizenry.

Which of the following fund types is present in every generalpurpose government?

1.

A) Permanent

2.

B) Special revenue

3.

C) General

4.

D) Capital projects

Which of the following fund types does not use modified accrual
accounting?
1.

A) Debt Service

2.

B) Special Revenue

3.

C) Investment Trust

4.

D) Permanent

The GASB sets accounting standards for all of the following
except:
1.

A) State and local governments

2.

B) Component units owned or controlled by governments

3.

C) Governmentally related not-for-profit universities

4.

D) Nongovernmental not-for-profit hospital

In order for a fund to exist, there must be:
1.

A) A fiscal entity; assets set aside for a specific purpose

2.

B) A double-entry accounting entity

3.

C) A & B are optional and not required

4.

D) Both A & B are required


The ______ Funds are used when resources are provided
primarily through the use of sales and service charges to parties
external to the government and it is the intent of the government
to measure revenues, expenses and changes in net position.
1.

A) Agency

2.

B) Enterprise

3.

C) General

4.

D) Special revenue

Which of the following is a governmental fund?
1.

A) Agency

2.

B) Enterprise

3.

C) Special revenue

4.

D) Internal service

A city government collects local option sales taxes legally
restricted to pay for the construction of a new courthouse. Which
fund should account for the receipt of the sales taxes?
1.

A) Special revenue fund

2.

B) Capital projects fund

3.

C) Private-purpose trust fund

4.

D) General fund

Fiduciary funds are to use the:
1.

A) economic resources measurement focus and modified accrual basis of
accounting.

2.

B) current financial resources measurement focus and accrual basis of
accounting.

3.

C) economic resources measurement focus and accrual basis of
accounting.


4.

D) none of the above, the fiduciary funds have no revenues.

Which of the following use current financial resources
measurement focus?
1.

A) Fiduciary fund statements

2.

B) Governmental fund statements

3.

C) Proprietary fund statements

4.

D) Internal Service fund statements

The GASB has the authority to establish accounting and financial
reporting standards for:
1.

A) State governments

2.

B) Private not-for-profits

3.

C) Federal government

4.

D) None of the above

Which of the following is not one of the objectives of Federal
Financial Reporting, as outlined in SFFAC 1, which was issued by
the FASAB?
1.

A) Financial reporting should enable evaluation of the success rate of
programs.

2.

B) Financial reporting should enable evaluation of the service efforts, costs
and accomplishments of the reporting entity.

3.

C) Financial reporting should reveal whether financial systems and controls
are adequate.

4.

D) Financial reporting should demonstrate accountability with regard to
raising and expending money.

The fund basis statements for governmental funds are presented
using the
1.

A) Economic Resources Measurement focus and the Accrual Basis of
Accounting.


2.

B) Current Financial Resources Measurement focus and the Modified
Accrual Basis of Accounting.

3.

C) Current Financial Resources Measurement focus and the Accrual Basis
of Accounting.

4.

D) Economic Resources Measurement focus and the Modified Accrual
Basis of Accounting.

Capitalized fixed assets are reported in which of the following
fund-basis statements?
1.

A) Agency fund

2.

B) Proprietary fund

3.

C) Governmental fund

4.

D) All of the above

A city government sells police cars no longer in use. No
restrictions have been placed on the proceeds. Which fund
should account for the receipt?
1.

A) General fund

2.

B) Capital projects fund

3.

C) Enterprise fund

4.

D) Debt service fund

The ______ Fund accounts for and reports the proceeds of
specific revenue sources that are restricted or committed to
expenditure for specified purpose other than debt service or
capital projects.

1.

A) Agency

2.

B) Enterprise

3.

C) General

4.

D) Special revenue


Level "A" GAAP for Cook County Hospital, a public hospital,
would be established by the:
1.

A) Governmental Accounting Standards Board.

2.

B) Financial Accounting Standards Board.

3.

C) Hospital Financial Management Association.

4.

D) American Institute of Certified Public Accountants.

Which of the following characteristics would not define an
organization as governmental?
1.

A) The power to enact and enforce a tax levy.

2.

B) The potential for unilateral dissolution by a government with the net
resources reverting to a government.

3.

C) The receipt of grant money from a state or local government for the
purpose of providing services to the public.

4.

D) All of the above.

Which of the following is not an objective of federal financial
reporting?
1.

A) Budgetary Integrity

2.

B) Increase Taxpayer Awareness

3.

C) Stewardship

4.

D) Operating Performance

The FASAB has the authority to establish accounting and
financial reporting standards for:
1.

A) State and local governments

2.

B) Investor owned business

3.

C) Federal government

4.

D) Public not-for-profits

The term “fiduciary funds” applies to:
1.

A) enterprise and internal service funds.

2.

B) pension, investment trust and enterprise funds

3.

C) enterprise, internal service, and private-purpose trust funds.

4.

D) none of the above answers are correct.

Proprietary funds use the:
1.

A) current financial resources measurement focus and modified accrual
basis of accounting

2.

B) economic resources measurement focus and accrual basis of
accounting.

3.

C) economic resources measurement focus and modified accrual basis of
accounting.

4.

D) current financial resources measurement focus and accrual basis of
accounting.

A city government collects local option sales taxes legally
restricted to pay for the hiring of teachers for hearing impaired
school children. Which fund should account for the receipt of the
sales taxes?
1.

A) Special revenue fund

2.

B) Capital projects fund

3.

C) Private-purpose trust fund

4.

D) General fund

GASB Concepts Statement No. 3, Communication Methods in
General Purpose External Financial Reports that Contain Basic
Financial Statements, states that
1.

A) notes to the financial statements may not include management’s
objective explanations.


2.

B) required supplementary information should be objective but may also
include predictions or subjective assessments if management deems it
necessary for understanding of the financial statements.

3.

C) disclosure in the notes is not an adequate substitute for recognition in
the financial statements.

4.

D) All of the above are correct.

The term “proprietary funds” applies to:
1.

A) all funds that use accrual accounting.

2.

B) enterprise and internal service funds only.

3.

C) enterprise, internal service, and private-purpose trust funds.

4.

D) none of the above answers are correct.

Which of the following is true regarding fund classifications?
1.

A) Governmental funds include the General, special revenue, debt service,
capital projects, and permanent.

2.

B) Proprietary funds include enterprise, internal service, and privatepurpose.

3.

C) Both of the above.

4.

D) None of the above.

Which of the following are the governmental funds?

1.

A) General, special revenue, debt service, capital projects, private purpose.

2.

B) General, special revenue, debt service, capital projects, permanent.

3.

C) General, special revenue, debt service, capital projects, internal service.

4.

D) None of the above.