79 test bank for essentials of accounting for governmental and not for profit organizations 10th

79 Test Bank for Essentials of Accounting for
Governmental and Not for Profit Organizations 10th
Edition by Copley
Multiple Choice Questions
GASB standards contain all of the following in its three-part
budgetary principle except:
1.

A) An annual budget should be adopted by every governmental unit.

2.

B) The accounting system should provide the basis for appropriate
budgetary control.

3.

C) Budgetary comparisons should be included in the appropriate financial
statement and schedules for governmental funds for which an annual budget
has been adopted.

4.

D) None of the above; all would be included

A government may have multiple funds for each of the following
fund types except:
1.

A) Permanent

2.

B) General

3.

C) Special revenue

4.

D) Capital projects

Which of the following characteristics would 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
assets 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) Both A and B


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

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

2.

B) Financial reporting should enable evaluation of the success rate of
programs

3.

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

4.

D) Financial reporting should demonstrate accountability regarding raising
and expending money according to budgetary process and laws and
regulations

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

The term “proprietary 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.

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.

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

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.

3.

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

4.

D) state and local governmental entities, and governmentally-owned
utilities, authorities, hospitals, and colleges and universities.

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) Both A & B are required

4.

D) A & B are optional and not required

The term “proprietary funds” applies to:
1.

A) enterprise funds only.


2.

B) all funds that use accrual accounting.

3.

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

4.

D) none of the above answers are correct.

Governmental funds do not include:
1.

A) Special revenue funds

2.

B) Internal service funds

3.

C) Debt service funds

4.

D) The 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 include management’s objective
explanations.

2.

B) required supplementary information must be objective and may not
include predictions or subjective assessments.

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 “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 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) B & C only

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

A) Agency

2.

B) Pension trust

3.

C) Enterprise

4.

D) Private-purpose trust

What is the minimum number of funds to be used by a
governmental unit?
1.

A) One; the General Fund

2.

B) Two; the General Fund and one permanent fund

3.

4.

C) As many as necessary to fulfill legal requirements and sound financial
administration
D) A & C

Fiduciary funds are to 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) none of the above, the fiduciary funds have no revenues.

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

A) government-wide financial statements and proprietary fund financial
statements.


2.
3.

4.

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.

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

A) Federal government

2.

B) Investor owned business

3.

C) State and local governments

4.

D) Public not-for-profits

Which of the following is a fiduciary fund?
1.

A) Internal service

2.

B) Permanent

3.

C) Enterprise

4.

D) Investment trust

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) Enterprise fund statements

The GASB has the authority to establish accounting and financial

reporting standards for:
1.

A) Federal government

2.

B) Private not-for-profits


3.

C) State and local governments

4.

D) None of the above

Which of the following is not true regarding GASB Concepts
Statement No. 2, Service Efforts and Accomplishments
Reporting:
1.

2.
3.

4.

A) It encourages governments to experiment with reporting more complete
information about an entity's performance than can be displayed in the

traditional financial statements.
B) It outlines categories of information that might be reported.
C) It prescribes detailed standards governing the reporting of service efforts
and accomplishments reporting.
D) None of the above, all are true.

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.

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

A) State and local governments

2.

B) Libraries owned or controlled by governments

3.

C) Governmentally related not-for-profit universities

4.

D) Nongovernmental not-for-profit hospital

Governmental funds are to 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

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

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.
2.

3.
4.

A) Format and content of financial statements
B) Assessing services provided by a non-business organization and its
ability to continue to provide those services
C) Assessing managements’ stewardship and performance
D) Evaluation of an organization’s resources, obligations and effects of
changes in net resources

Which of the following is a governmental fund?
1.

A) Special revenue

2.

B) Enterprise

3.

C) Agency


4.

D) Internal service

Proprietary funds use the:

1.

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

2.

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

3.

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

4.

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

A city government makes its semiannual payment of interest on
revenue bonds issued to pay for the construction of additional
subway 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 include:
1.

A) Special revenue funds

2.

B) Internal service funds

3.

C) Debt service funds

4.

D) A and C

Government-wide statements use the:
1.

A) current financial resources measurement focus and accrual basis of

accounting.

2.

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


3.

4.

C) economic resources measurement focus and modified accrual basis of
accounting.
D) none of the above, the fiduciary funds have no revenues.

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

Under the modified accrual basis of accounting, revenues should
be recognized when they are:
1.

A) authorized by the budget ordinance.

2.

B) earned and measurable.

3.

C) measurable and available to finance expenditures of the current period.

4.

D) realized through collection.

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

A) assets set aside for specific purposes.

2.

B) a separate revenue stream.

3.

C) a double-entry accounting entity.

4.

D) A and C are correct.

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.

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
assets 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.

79 Free Test Bank for Essentials of Accounting for
Governmental and Not for Profit Organizations 10th
Edition by Copley Multiple Choice Questions - Page 2
A permanent fund classified under governmental funds…
1.

2.

A) Accounts for most of the basic services provided by the governmental
unit.
B) Accounts for financial resources intended for major capital projects

3.

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.

A government may have __________________ General Fund(s)
in a given year?
1.

A) As many as needed

2.

B) Only one.

3.

C) The number will vary depending on the needs of the government.

4.

D) None of the above.

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

A) Debt Service

2.

B) Internal Service

3.

C) Investment Trust

4.

D) Enterprise

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.

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

A) the proprietary fund Statement of Net Assets.

2.

B) the government-wide Statement of Net Assets.

3.

C) both A and B.

4.

D) neither A nor B.

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


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

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) Special revenue

2.

B) General

3.

C) Enterprise

4.

D) Agency

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

A) Debt Service

2.

B) Special Revenue

3.

C) Agency

4.

D) Permanent

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


3.

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

4.

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

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

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) Debt service fund

2.

B) Capital projects fund

3.

C) Enterprise fund

4.

D) General fund

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


Why did governmental accounting practices develop with a focus
on the sources and uses of expendable funds rather than on net
income?
1.

A) The government wants to keep the earnings discrete

2.

B) Net income is solely for private organizations

3.

C) Tax and other non exchange revenues are not equivalent to sales

4.

D) Net income is solely for public organizations

Capitalized fixed assets are reported in which financial
statement?
1.

A) Agency fund

2.

B) Proprietary fund

3.

C) Governmental fund

4.

D) All of the above

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

A) Private Purpose Trust Fund

2.

B) Special Revenue Fund

3.

C) Pension Fund

4.

D) Investment Trust Fund

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 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.

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

Which of the following is an objective of federal financial
reporting?
1.

A) Budgetary Integrity

2.

B) Operating Performance

3.

C) Stewardship

4.

D) All of the above

The GASB is under the oversight of:
1.

A) GAO.

2.

B) FASAB.

3.

C) FAF.

4.

D) FASB.

The fund 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

Which of the following is not an environmental difference between
governments and for-profit business enterprises?
1.

A) Organizational purposes.

2.

B) Sources of revenue.

3.

C) Role of the budget.

4.

D) Donor restrictions

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) Agency Fund

The ______ Fund accounts for all resources other than those
required to be accounted for in other funds.
1.

A) Special revenue

2.

B) General

3.

C) Enterprise

4.

D) Agency

Financial reports for state and local governments are used for all
the following EXCEPT?


1.
2.

3.
4.

A) Assess financial condition and results of operations
B) Measuring the effectiveness of government services such as police and
fire protection
C) Compare actual results with the legally adopted budget
D) Assist in determining compliance with finance-related laws and

regulations

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.

Which of the following are the governmental funds?
1.

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

2.

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

3.

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

4.

D) None of the above.

What is the significance of a budget to a government?
1.

A) Used primarily as a planning resource

2.

B) Budgets are not used by governments

3.

C) Budgets carry the full authority of the law

4.

D) None of the above

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) General Fund

2.

B) Debt Service Fund

3.

C) Agency Fund

4.

D) Capital Projects Fund

Which of the following is not one of the information needs of users
of non-business financial statements according to FASB’s
Statement of Financial Accounting Concepts No. 4?
1.

A) Providing information that is useful to present and potential resource
providers in making decisions about the allocation of resources.

2.

B) Providing information that is useful to present and potential resource
providers in assessing the services that a non-business organization
provides and its ability to continue to provide those services.

3.

C) Providing information that is useful to present and potential resource
providers in assessing management’s stewardship and performance.

4.

D) Providing information that is useful to present and potential resource
providers in evaluating an organization’s service efforts and
accomplishments.

Which of the following are included in the GASB standards
budgetary principle:
1.

2.
3.

4.

A) Accounting systems should provide the basis for appropriate budgetary
control.
B) Annual budgets should be adopted by every governmental unit.
C) Budgetary comparisons should be included in the appropriate financial
statements.
D) All of the above

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

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

A) Special revenue

2.

B) General

3.

C) Enterprise

4.

D) Agency

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) Private inurement of residual earnings

The ______ Funds are used when resources are provided
primarily through the use of sales and service charges to parties
external to the government.
1.

A) Special revenue

2.

B) General

3.

C) Enterprise

4.

D) Agency

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) Financial Accounting Standards Board.


4.

D) National Association of College and University Business Officers

Which of the following is not of the information needs of users of
non-business financial statements according to FASB’s

Statement of Financial Accounting Concepts No. 4?
1.

A) Providing information that is useful to recipients of services provided by
the non-business organizations.

2.

B) Providing information that is useful to present and potential resource
providers in assessing the services that a non-business organization
provides and its ability to continue to provide those services.

3.

C) Providing information that is useful to present and potential resource
providers in assessing management’s stewardship and performance

4.

D) Providing information that is useful to present and potential resource
providers in evaluating an organization’s economic resource, obligations and
effects of changes in net resources

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 statement(s) are not included in the
proprietary funds:
1.

A) Statement of Revenues, Expenses, and Changes in Net Assets

2.

B) Statement of Cash Flows

3.

C) Balance Sheet

4.

D) All of the above are included