192 test bank essentials of accounting for governmental and not for profit organizations 11th edition by copley

192 Test Bank Essentials of Accounting for
Governmental and Not for Profit Organizations 11th
Edition by Copley

Multiple Choice Questions Part 2
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 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 Accrual Basis of
Accounting

3.

C) Current Financial Resources Measurement focus and the Modified Accrual Basis of
accounting

4.

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

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

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

A) FASAB

2.

B) FASB

3.

C) GASB

4.

D) AICPA

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

A) Private Purpose Trust Fund

2.

B) Permanent Fund

3.

C) Pension Fund

4.

D) Investment Trust Fund

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

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

A permanent fund classified under governmental funds…
1.

A) Accounts for most of the basic services provided by the governmental unit.

2.

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.

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 considered a Fiduciary Fund?
1.

A) Debt Service Fund

2.

B) Enterprise Fund

3.

C) Internal Service Fund

4.

D) Pension Trust Fund

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

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) Statement of Net Assets

4.

D) All of the above are included

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

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.

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 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.

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

3.

C) Comparing actual results with the legally adopted budget

4.

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


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 GASB is under the oversight of:
1.

A) GAO.

2.

B) FASAB.

3.

C) FAF.

4.

D) FASB.

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

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

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 net profit or loss.
1.

A) Special revenue


2.

B) General

3.

C) Enterprise

4.

D) Agency

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

A) Special Revenue

2.

B) Internal Service

3.

C) Investment Trust

4.

D) Enterprise

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

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.

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 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

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.

Which of the following is a fiduciary fund?
1.

A) Investment trust

2.

B) Permanent

3.

C) Enterprise

4.

D) Internal service

Proprietary funds use the:
1.

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

2.

B)current financial resources measurement focus and modified 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.

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.

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

4.

D)None of the above


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 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-owned utilities, authorities,
hospitals, and colleges and universities..

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.

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

A)State and local governments

2.

B)Nongovernmental not-for-profit hospital

3.

C)Component units owned or controlled by governments

4.

D)Governmentally related not-for-profit 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 “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

Governmental funds include:
1.

A)Special revenue funds

2.

B)Internal service funds

3.

C)Debt service funds

4.

D)A and C

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

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?
1.

A) Agency

2.

B) Permanent

3.

C) Pension trust

4.

D) Private-purpose trust

Which of the following fund types is present in every generalpurpose government?
1.

A) Permanent

2.

B) General


3.

C) Special revenue

4.

D) Capital projects

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 nonbusiness financial statements?
1.

A) Format and content of financial statements

2.

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

3.

C)Assessing managements’ stewardship and performance

4.

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

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

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.

Which of the following is a governmental fund?
1.

A) Agency

2.

B) Enterprise

3.

C)Special revenue

4.

D)Internal service


The term “proprietary funds” applies to:
1.

A)enterprise and internal service 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.

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

A)authorized by the budget ordinance.

2.

B)realizable and earned.

3.

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

4.

D)realized through collection.

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 governments

4.

D)None of the above

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.

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

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.

70 Free Test Bank Essentials of Accounting for

Governmental and Not for Profit Organizations 11th
Edition by Copley Multiple Choice Questions Part 1 Page 2
Long-term debt of a governmental unit would be reported in
the:
1.

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

2.

B)government-wide financial statements only.

3.

C)debt service funds of governmental fund financial statements and government-wide
financial statements.

4.

D)notes to the financial statements only.

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

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.

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

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.

2.

B)It outlines categories of information that might be reported.

3.

C)It prescribes detailed standards governing the reporting of service efforts and
accomplishments reporting.

4.

D)None of the above, all are true.

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.

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

4.

D)none of the above.

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 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.

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 private-purpose.

3.

C)Both of the above.

4.

D)None 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)Debt service fund

2.

B)Capital projects fund

3.

C)Enterprise fund

4.

D)General fund

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.

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.

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

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.

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.


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

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 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

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



True-False Questions - Page 1
The Governmental Accounting Standards Board sets financial
reporting standards for all units of government: federal,
state, and local.
1.

True

2.

False

The GASB requires supplementary information to be reported
with its financial statements if it is essential to establish
appropriate context for the financial statements and
notes.
1.

True

2.

False

The Financial Accounting Standards Board sets financial
reporting standards for private not-for-profits and
investor-owned businesses.
1.

True

2.

False

The GASB Concept Statement on Service Efforts and
Accomplishments Reporting requires state and local
governments to include inputs of nonmonetary resources
in their financial reporting.
1.

True

2.

False

FASAB, GASB and FASB standards are set forth primarily in
documents called statements.
1.

True

2.

False


Governments must have as many funds as necessary to fulfill
legal requirements and sound financial administration but
must have at a minimum a General Fund.
1.

True

2.

False

Although certain supplementary information may not be
required, if presented, it must follow GASB guidance
regarding its format and content.
1.

True

2.

False

The FASAB was established to recommend accounting and
financial reporting standards for governmental and
nonprofit enterprises.
1.

True

2.

False

Governmental activities fund statements may use modified
accrual basis when preparing government-wide financial
statements.
1.

True

2.

False

The Financial Accounting Standards Board and the
Governmental Accounting Standards Board are parallel
bodies under the oversight of the Financial Accounting
Foundation.
1.

True

2.

False

The format and content of supplementary information which is
not required by GASB is up to the discretion of the
reporting entity
1.

True


2.

False

A Management's Discussion and Analysis is required for state
and local governmental units, but not the federal
government.
1.

True

2.

False

The economic resource measurement focus and accrual basis
of measurement is an important feature of governmentwide financial statements.
1.

True

2.

False

State and local governments may use eleven different fund
types.
1.

True

2.

False

The FASAB requires more financial statements than are
typically required of state and local governments.
1.

True

2.

False

Fund-basis statements are presented for three categories of
government activities: governmental, proprietary, and
fiduciary.
1.

True

2.

False

The Federal Accounting Standards Advisory Board requires
less extensive reports than does the FASB or GASB.
1.

True

2.

False


FASAB, GASB and FASB standards are set forth primarily in
documents called concept statements.
1.

True

2.

False

The Governmental Accounting Standards Board considers the
financial reporting entity to include the primary
government and its component units.
1.

True

2.

False

An organization is presumed to be governmental if it has the
ability to issue directly debt that is exempt from federal
taxes.
1.

True

2.

False

FASAB, GASB and FASB standards are set forth primarily in
documents called interpretations.
1.

True

2.

False

Business activities fund statements must be changed to the
accrual basis from the modified accrual basis when
preparing government-wide financial statements.
1.

True

2.

False

Fund accounting exists primarily to provide assurance that
resources are used according to legal or donor
restrictions.

1.

True

2.

False


One objective of the Governmental Accounting Standards
Board is to help users determine compliance with financerelated laws, rules, and regulations.
1.

True

2.

False

The GASB Concept Statement on Service Efforts and
Accomplishments Reporting encourages state and local
governments to include inputs of nonmonetary resources
in their financial reporting.
1.

True

2.

False

Fiduciary funds of a governmental unit use the current financial
resources measurement focus and modified accrual basis
of accounting
1.

True

2.

False

GASB and FASB Concept Statements establish accounting
standards that must be complied with to receive an
unqualified audit opinion.
1.

True

2.

False

The Financial Accounting Standards Board sets financial
reporting standards for private sector organizations,
except nongovernmental, not-for-profit organizations.
1.

True

2.

False

52 Free Test Bank Essentials of Accounting for
Governmental and Not for Profit Organizations 11th
Edition by Copley True-False Questions - Page 2


Comparison of the legally approved budget with actual results
of the General Fund is not part of required supplementary
information in the CAFR.
1.

True

2.

False

According to GASB standards relating to Budgetary
Accounting, the accounting system should provide the
basis for appropriate budgetary control.
1.

True

2.

False

Long-term debt that is to be paid with tax revenues is reported
both in the government-wide statements and in the
governmental fund statements
1.

True

2.

False

A fund represents part of the activities of an organization which
is separated from other activities in the accounting
records to more easily demonstrate compliance with legal
restrictions or limitations.
1.

True

2.

False

Depreciation on capital assets is included as an expense in the
Statement of Activities in the government-wide financial
statements
1.

True

2.

False

Permanent funds can be either a governmental fund or a
fiduciary fund where only income on donated assets may
be spent.
1.

True


2.

False

According to GASB standards relating to Budgetary
Accounting, an annual budget should be adopted by
every governmental unit.
1.

True

2.

False

The government-wide statements and the fund statements for
proprietary funds and fiduciary funds use the economic

resources measurement focus and the accrual basis of
accounting.
1.

True

2.

False

Depreciation on capital assets is included as an expense in the
Statement of Revenues, Expenses, and Changes in Fund
Net Assets in the proprietary fund financial statements
1.

True

2.

False

General fixed assets of the government are reported both in the
government-wide financial statements and the
governmental fund financial statements.
1.

True

2.

False

Internal Service funds are treated as governmental activities in
the government-wide statements if the principal
customers are other departments within the General
Fund.
1.

True

2.

False


Infrastructure is not capitalized by state and local governmental
units.
1.

True

2.

False

According to GASB standards relating to Budgetary
Accounting, budgetary comparisons are not required for
proprietary funds.
1.

True

2.

False

The Financial Accounting Standards Board has authority to
establish accounting and financial reporting standards for
both private and state universities.
1.

True

2.

False

For most state and local governments, the budget, when
adopted according to procedures specified by state laws,
is binding upon the administrators of a governmental
unit.
1.

True

2.

False

Fiduciary funds include agency, pension trust, investment trust,

and permanent funds.
1.

True

2.

False

Measurement focus refers to those items, such as current and
long-term assets, that are being reported on the financial
statements.
1.

True

2.

False