Questions and Answers of Accounting For Governmental And Nonprofit Entities

Legally adopted budgets of governmental funds area. fixed-dollar budgets, which establish expenditure limits that are not to be exceeded,b. fixed budgets that cannot be modified during the budget
Which of the following statements is false? A funda. is an entity for which financial statements can be prepared.b. has a self-encompassing, self-balancing accounting equation.c. is used to account
Which of the following pronouncements provides the most authoritative guidance applicable to financial reporting for state and local governments?a. FASB Accounting Standards Codification.b.
One unique characteristic of most government and nonprofit organizations is thata. a primary source of financing is sales of services and goods to customers.b. their constituency automatically
Organizations that are considered to be nonprofit include such organizations asa. churches.b. the Boy Scouts and Girl Scouts.c. church-supported hospitals.d. state CPA societies.e. all of the above.
Which of the following statements is true?a. Governmental and nonprofit organizations never operate with a profit motive.b. Businesses have scarce resources that must be allocated to different uses;
Hatcher Township prepares its annual General Fund budget on the cash basis and maintains its accounting records on the cash basis during the year. At the end of Hatcher Township’s 20X9 calendar
Mark O. Sleuth, a recent accounting graduate, has been assigned to research several local governmental accounting and financial reporting issues. For each issue, rank the sources of guidance
What measurement focus and basis of accounting is used to prepare government-wide financial statements?
Which of the following is characteristic of governmental fund accounting and financial reporting?a. The inclusion of only financial assets and related liabilities.b. The inclusion of all financial
Financial assets includea. capital assets that can be sold.b. cash, investments, and receivables.c. only cash and other governmental fund assets that have been converted to cash during the current
All of the following are considered governmental funds excepta. a Special Revenue Fund.b. a Capital Projects Fund.c. a Permanent Fund.d. an Internal Service Fund.e. all of the above are governmental
Each of the following is a fiduciary fund excepta. a Permanent Fund.b. an Investment Trust Fund.c. an Agency Fund.d. a Private-Purpose Trust Fund.e. all of the above are fiduciary funds.
Which of the following definitions best describes the term related liabilities?a. Related liabilities are any fund liabilities that are either current or long-term in nature.b. Related liabilities
Which of the following transactions would typically not be reported in a county's General Fund?a. The purchase of 10 new public safety vehicles.b. The annual lease payment for the copiers in the
The transactions associated with a Community Development Block Grant that must be used to finance rehabilitation of privately owned housing in an economically depressed neighborhood of the city
The city of Hannah has established a trust to provide resources to offset the costs of maintenance of the city-owned cemetery. The majority of the resources of this trust will be cemetery plot sales
A transaction in which a municipal electric utility paid $150,000 out of its earnings for new equipment requires accounting recognition ina. an Enterprise Fund.b. the General Fund.c. the General Fund
The activities of a municipal employee retirement plan that is financed by equal employer and employee contributions should be accounted for ina. an Agency Fund.b. an Internal Service Fund.c. a
The operations of a municipal government's public library receiving the majority of its sup- port from property taxes levied for that purpose should be accounted for in a. the General Fund. b. a
The proceeds of a federal grant made to assist in financing the future construction of an adult training center should be recorded in a. the General Fund. b. a Special Revenue Fund. c. a Capital
The receipts from a special tax levy to retire and pay interest on general obligation bonds issued to finance the construction of a new city hall should be recorded in aa. Debt Service Fund. b.
The operations of a municipal swimming pool with debt secured solely by charges to users should be accounted for ina. a Special Revenue Fund. b. the General Fund. c. an Internal Service Fund.d. an
The monthly remittance to an insurance company of the lump sum of hospital-surgical insurance premiums collected as payroll deductions from employees should be recorded ina. the General Fund.b. an
A municipality's issuance of general obligation serial bonds to finance the construction of a fire station requires accounting recognition in thea. General Fund.b. Capital Projects and General
The activities of a central motor pool that provides and services vehicles for the official use of municipal employees from several city departments should be accounted for ina. an Agency Fund.b. the
A city collects property taxes on behalf of the local sanitary, park, and school districts and periodically remits collections to these units. This activity should be accounted for ina. an Agency
A transaction in which a municipal electric utility issues bonds (to be repaid from its own operations) requires accounting recognition ina. the General Fund.b. a Debt Service Fund.c. enterprise and
(Proprietary Fund Balance Sheet) Prepare a skeleton balance sheet for a proprietary fund using the headings in Illustration 2-12 (i.c., Current Assets, Capital Assets, Current Liabilities) that shows
a. Analyze the effects of each of the following transactions on each of the funds and/or the nonfund accounts of the city of Nancy. Identify the fund that typically would be used to record the
(1) Analyze the effects of each of the following transactions on each of the funds and nonfund accounts of the city of Timbuktu. (2) Indicate how each transac- tion would be reported in the operating
(Modified Accrual Basis vs. Accrual Basis) On February 1, 20X3, Mobiline County acquired the following assets of Mobiline Transit, Inc., a privately owned bus line in financial difficulty, with the
(Entries Using Different Bases of Accounting)a. Record each of the following transactions on (1) the cash basis, (2) the modified accrual basis, and (3) the accrual basis.b. Explain the similarities
Which of the following is a characteristic of a Special Revenue Fund that differentiates it from a General Fund?a. A Special Revenue Fund is required to be budgeted on a multi-year basis.b. A Special
The net revenue approach can be best described asa. being consistent with the reporting of revenues in the private sector.b. evidenced by the recognition of bad debt expense for revenues earned but
Assume that Nathan County has levied its current year taxes and all revenue recognition criteria for property taxes have been met. The amount levied was $775,000, of which 2% is deemed to be
The GAAP-based statements that are required to be presented for the General Fund are:a. Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances.b. Balance Sheet; Statement
A state borrowed $10,000,000 on a nine-month, 9% note payable to provide temporary financing for the General Fund. At year end, the note has been outstanding for six months.The state should report
If the Warren County General Fund has a long-term receivable from another county fund(and the use of the proceeds when collected is not restricted, committed, or assigned), the receivable will be
In the Statement of Revenues, Expenditures, and Changes in Fund Balances, transfers must be reporteda. in a separate section immediately following revenues.b. in a section immediately following the
The minimum expenditure classifications required in the basic financial statements for governmental funds area. fund and function or program.b. fund, character, and function or program.c. fund,
General budgets are most common for which of the following funds?a. General Fund.b. Capital Projects Fund.c. Permanent Fund.d. Internal Service Fund.
Special budgets are best defined as budgetsa. that include special items.b. prepared for any fund other than the General, Special Revenue, and Debt Service Funds.c. that are always multiyear in
Which of the following statements about capital budgets is true?a. Most capital program budgets cover only General Fund capital outlay for the next year.b. The current segment of a capital program is
Which of the following statements is false?a. Generally Accepted Accounting Principles (GAAP) dictate the basis of budgeting for all governmental funds.b. Budgets of different governments may have
Which of the following statements is true?a. Encumbrances are equivalent to expenditures, and encumbrances outstanding at the end of a year should be reported as liabilities.b. No expenditure can be
Appropriation requests for the General Fund are commonly approved, controlled, accounted for, and reported in each of the following expenditure categories except:a. Function or program.b.
Which of the following statements would be true concerning budgetary integration?a. The integration of budgetary accounts into the general ledger does not affect the asset and liability accounts.b.
The budgetary basis of accounting isa. determined by a governmental entity’s governing body or by law or regulation.b. dictated by GAAP.c. the same for all governmental entities.d. always the cash
Which of the following GAAP requirements for budgetary reporting is true?a. Original and final budget amounts are required for the General Fund only.b. Original and final budget amounts are required
The following GAAP requirements for budgetary reporting are true excepta. budgetary comparisons for the General Fund and major Special Revenue Funds must include expenditure data that is at least as
Which of the following transactions requires entries recording encumbrances in an Expenditures Subsidiary Ledger?a. Legal adoption of the General Fund budget.b. Purchase of equipment on account.c.
Which of the following items does a government with a modified accrual and encumbrances basis budget report differently in its budgetary basis statement of revenues, expenditures, and changes in fund
The budget data presented in a school district General Fund statement of revenues, expenditures, and changes in fund balances—budget and actual—are to bea. the original, legally adopted budget.b.
Allotments are best defined asa. legislative appropriations subdivided into more detailed expenditure categories by the executive branch.b. legislative appropriations subdivided by time periods.c.
Which of the following is not a common type of governmental fund expenditure?a. Capital outlay.b. Debt service.c. Salaries and wages.d. Depreciation.
A state pays salaries and wages of $118 million to General Fund employees during a year.Unpaid, accrued salaries were $3 million at the beginning of the year and $6 million at year end. General Fund
Which of the following events could require a restatement of the beginning fund balance of a governmental fund?a. Management changes the method of accounting for inventory to FIFO.b. A claim that was
As a general rule, debt service expenditures in a Debt Service Fund are recognizeda. when the debt service payment is due.b. when resources to be used for the repayment are made available to a Debt
Which of the following financial statements are required for a Debt Service Fund?a. Balance Sheet only.b. Statement of Revenues, Expenditures, and Changes in Fund Balance only.c. Balance Sheet and
Which of the following statements about Special Assessment Debt Service Funds is false?a. Most of the receivables in a typical Special Assessment Debt Service Fund are noncurrent.b. Revenue
Which of the following statements concerning debt refundings is false?a. Advance refundings do not result in immediate, direct retirement of existing long-term debt.b. Often, resources of an
Nondefeasance, in a refunding transaction, would result ina. both the old debt and the new debt being recorded as liabilities by the issuing government, even if resources to service the old debt have
In the year that any advance refunding occurs, which of the following disclosures is not required by GAAP?a. Difference in debt service requirements of the old defeased issue and new issue, adjusted
What financial statements must a government present for an Internal Service Fund?
Government hospitals are reported similar toa. enterprise activities.b. governmental funds.c. governmental not-for-profits.d. special revenue funds.
A gift to a government hospital that is restricted by the donor to use for a specific program should be credited directly toa. restricted net position.b. deferred revenue.c. revenue.d. unrestricted
Donated medicines that normally would be purchased by a government hospital should be recorded at fair market value and should be credited directly toa. other operating revenue.b. nonoperating
Which of the following events would not potentially result in a gain that would be reported in a government hospital’s financial statements?a. Third-party reimbursements that exceed initial
In 20X5, the U.S. Weather Service purchased a parcel of land near Verlene, California, with$850,000 of appropriated funds, with the intention of constructing a facility there. The effect of this
An appropriation that has expireda. is reported by a federal agency as unapportioned authority.b. is reported by a federal agency as unexpended appropriations.c. is reported by a federal agency as
With regard to filing requirements for 501(c)(3) organizations: List the three types of Form 990 and indicate the size of the tax-exempt organization to use for each.
Use the Internet to locate your state’s site for reporting school district “School Report Cards.” Select a school district or individual school and answer the following:a. What measures of
With regard to accounting for private not-for-profit health care entities, do the following:a. Outline the accounting required, under FASB guidance, for a(n):(1) Endowment gift received in cash.(2)
For each of the following items, indicate where it would appear in the Statement of Operations for a private not-for-profit hospital:1. The premium from a capitation agreement, whereby a hospital
Distinguish between the accounting treatment of time-restricted pledges by private and public sector colleges and universities.
What is the role of the National Association of College and University Business Officers in providing guidance in the reporting of colleges and universities?
Obtain the annual reports for a private not-for-profit and public college or university and answer the following questions:a. Examine the two activity statements (revenues and expenses). What are the
For the following transactions and events, indicate what effect each will have on the three classes of net assets using this format. Put an X in the appropriate column. If the net assets are
Assume a government leases equipment to be used in governmental activities under a noncancelable lease, meeting the requirements for classification as a capital lease. Where would the capital lease
Under the reporting model required by GASB Statement 34, fund statements are required for governmental, proprietary, and fiduciary funds. Government-wide statements include the Statement of Net
Under the reporting model required by GASB Statement 34, fund statements are required for governmental, proprietary, and fiduciary funds. Government-wide statements include the Statement of Net
Under the reporting model required by GASB Statement 34, fund statements are required for governmental, proprietary, and fiduciary funds. Government-wide statements include the Statement of Net
What are the major sources of funds for capital project and debt service funds, and how are the sources classified in the Statement of Revenues, Expenditures, and Changes in Fund Balance?
Following are transactions and events of the General Fund of the City of Springfield for the fiscal year ended December 31, 2017.1. Estimated revenues (legally budgeted)2. Appropriations3. Revenues
a. Distinguish between (1) exchange and (2) nonexchange transactions.b. Identify and describe the four eligibility requirements for a government to recognize revenue in a nonexchange transaction.c.
How should rainy day funds be reported?
Describe the net position classification appearing on the government-wide Statement of Net Position.
Chapters 2 through 9 deal with specific knowledge needed to understand accounting and financial reporting by state and local governments. A continuous problem is available in additional resources
Describe the “hierarchy of GAAP” for state and local governments.
What contingent liabilities arise from a health care organization's relations with third-party payors?
Obtain a copy of a recent operating budget document of a government.* Familiarize yourself with the organization of the operating budget document; read the letter of transmittal or any narrative that
Using the CAFR you obtained for Exercise 1-1, answer the following questions: a. Auditors. Was this CAFR audited by external certified public accountants (CPAs) or by state or local
The government-wide financial statements for the City of Arborland for a three-year period are presented on the following pages.Additional information follows: Population: Year 2011:
Utilizing the CAFR obtained for Exercise 1-1 and your answers to the questions asked in Chapters 1 through 9, assess the financial condition of the government. For purposes of this project, financial
Utilizing the CAFR obtained for Exercise 1-1 and your answers to the questions asked in Exercise 1–1 and the corresponding exercises in Chapters 2 through 8, comment on the following: a.
Multiple Choice. Choose the best answer.1. Which of the following is not a fiduciary fund? a. Permanent fund. b. Agency fund. c. Investment trust fund. d. Pension trust
Utilizing the annual report obtained for Exercise 1-1, follow these instructions: a. Agency Funds.Are employees' and employers FICA tax contributions and con tributions to other
Utilizing the comprehensive annual financial report (CAFR) obtained for Exercise 1-1, follow these instructions: a. Internal Service Funds. (1) Use of Funds. What
Utilizing the comprehensive annual financial report (CAFR) obtained for Exercise 1-1, follow the instructions below. a. General Long-term Liabilities. (1)

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