Test bank for essentials of accounting for governmental and not for profit organizations 11th edition

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

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.
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.
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.
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.
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
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


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 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
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 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 is not a fiduciary fund type?

1. A)Agency.
2. B)Expendable trust.
3. C)Private-purpose trust.
4. D)Investment trust.
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 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.
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
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 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.


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 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 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
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
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
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
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.


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
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
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
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 ______ 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
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 ______ 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


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
What basis of accounting would the Enterprise Fund use?

1. A) Accrual
2. B) Modified Accrual
3. C) Cash
4. D) Expended Accrual
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 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
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.
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 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
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
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
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 GASB is under the oversight of:

1. A) GAO.
2. B) FASAB.
3. C) FAF.
4. D) FASB.

The Governmental Accounting Standards Board sets financial reporting
standards for all units of government: federal, state, and local.

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

1. True

2. False


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

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

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

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

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

1. True
2. False
One objective of the Governmental Accounting Standards Board is to help
users determine compliance with finance-related laws, rules, and
regulations.

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

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

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

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

1. True


2. False
State and local governments may use eleven different fund types.

1. True
2. False
The economic resource measurement focus and accrual basis of measurement
is an important feature of government-wide financial statements.

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

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


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
Under the accrual basis of accounting, revenues are recognized when
measurable and available to finance expenditures of the current period.

1. True
2. False
General fixed assets of the government are reported both in the governmentwide financial statements and the governmental fund financial
statements.

1. True
2. False
Comparison of the legally approved budget with actual results of the General
Fund is included as part of required supplementary information in the
CAFR.

1. True
2. False
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
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

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
Infrastructure is not capitalized by state and local governmental units.

1. True
2. False
Fiduciary funds include agency, pension trust, investment trust, and
permanent 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


FASB sets the reporting standards for private and public not-for-for
profits

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
The Governmental Accounting Standards Board sets financial reporting
standards for all units of government: federal, state, and local.

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

1. True
2. False


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

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

1. True

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

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 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
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

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

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

1. True
2. False
One objective of the Governmental Accounting Standards Board is to help
users determine compliance with finance-related laws, rules, and
regulations.

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

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 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
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