39 multiple choice questions governmental and non profit accounting

1) Under GASB rules for the financial reporting entity: A. component units must be reported in columns (discrete presentation) separate from the funds of a primary government B. bounties are component units of the state government C. component units are included if the primary government is financially accountable for their operations D. blended and discretely presented component units are to be reported in government-wide financial statements but not in fund financial statements 2) Which of the following choices regarding the government-wide Statement of Net Assets is TRUE? A. A reporting entity (primary government plus component units) total column is required B. The government-wide Statement of Net Assets must be prepared in a classified format; that is, both assets and liabilities must be separated between current and long-term categories C. The government-wide Statement of Net Assets reflects capital assets, net of accumulated depreciation, for both governmental and business-type activities D. The government-wide Statement of Net Assets includes all resources entrusted to the government; including governmental, proprietary and fiduciary 3) Which of the following choices regarding the government-wide Statement of Activities is TRUE? A. The government-wide Statement of Activities reflects all taxes as general revenues B. The government-wide Statement of Activities is prepared using the modified accrual basis of accounting for governmental activities and using the accrual basis of accounting for business-type activities C. The government-wide Statement of Activities may reflect expenses either by function (general government, public safety, and so forth)-or by object or natural classification-(salaries, supplies, and so forth). 4) A local government was awarded a federal grant in the amount of $600,000 to provide for a summer employment program for young people. The grant was a reimbursement grant and was awarded on April 30, 2009. The local government expended the resources as follows: June, 2009, $220,000; July 2009, $200,000; August, 2009, $180,000. The federal government provided the funds the following months. The local government would recognize revenues for the fiscal year ended June 30, 2009 in which amount? A. $600,000 B. $220,000 C. $-0- D. $420,000 5) The City of Greenville had a balance in the Reserve for Encumbrances account at the end of 2008 in the amount of $30,000. During 2009, all purchase orders related to the $30,000 were filled and the invoice amount was $30,500. Which of the following would be TRUE regarding the Statement of Revenues, Expenditures and Changes in fund balances for 2009? (assume encumbrances do not lapse) A. The amount shown for expenditures would not include items related to orders placed in 2008 B. The amount shown for expenditures would include only the $30,000 C. The amount shown for expenditures would include only the $500 D. The amount shown for expenditures would include the $30,500 6) The General Fund of the City of Richmond approved a tax levy for the calendar year 2009 in the amount of $1,600,000. Of that amount, $30,000 is expected to be uncollectible. During 2009, $1,400,000 was collected. During 2010, $100,000 was collected during the first 30 days, $40,000 was collected during the next 30 days and $30,000 was collected during the next 30 days. During the postaudit, you discovered that the city showed $1,570,000 in revenues. What adjusting entry would you need to make, assuming you decided to allow the maximum amount of revenues for 2009, using modified accrual accounting? A. No entry is necessary B. Debit Revenues and Credit Deferred Revenues in the amount of $70,000 C. Debit Revenues and Credit Deferred Revenues in the amount of $30,000 D. Debit Revenues and Credit Deferred Revenues in the amount of $200,000 7) Which of the following accounts of a governmental unit is credited to close it at the end of the fiscal year? A. Reserve for Encumbrances B. Encumbrances Control C. Appropriations Control D. Other Financing Sources-Transfers In 8) The City of Lonesome Pines levied property taxes for the fiscal year ended June 30, 2009 in the amount of $8,000,000. It is estimated that 2% will not be collected. During the year ended June 30, 2009, $7,200,000 in property taxes were collected. It is estimated that $400,000 will be collected during the next 60 days, $240,000 will be collected after 60 days and $160,000 will not be collected. What is the maximum amount Lonesome Pines can recognize as property tax revenue for the fiscal year ended June 30, 2009 in its Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances, assuming there were no unpaid property taxes at the end of the previous year? A. $7,840,000 B. $7,600,000 C. $7,200,000 D. $8,000,000 9) What is the effect on the General Funds' unreserved fund balance when capital assets are purchased during a year from General Fund revenues? A. There is no effect, since one asset (cash) is replaced by another (capital asset) B. Unreserved fund balance is decreased C. Unreserved fund balance is increased D. None of the above, capital assets must be purchased through a capital projects fund 10) When payrolls and other liabilities are incurred and must be paid before substantial amounts of cash will be collected, what type of short-term note is desirable and secured by a government's power to tax? A. Tax Anticipation Note Payable B. Tax Budget Note Payable C. Tax Relief Note Payable D. Tax Encumbrances Note Payable 11) Each of the following is one of the four classes into which nonexchange transactions apply in accordance with GASB Statement No. 33 EXCEPT: A. derived tax revenues B. imposed nonexchange revenues C. voluntary nonexchange transactions D. mandatory exchange transactions 12) What is a Special Revenue Fund? A. A fund used to account for revenues from general taxes or other revenue sources that by law are designated to finance general activities of the government B. A fund used to account for all revenue transactions of a governmental unit that are not accounted for in another fund C. A fund created to account for all resources and revenues to be used for the construction or acquisition of capital assets D. A fund used to account for revenues from specific taxes or other revenue sources that by law are designated to finance particular activities of the government other than capital projects 13) Governmental units use which fund type to account for services provided to the general public on a user-charge basis? A. Permanent fund B. Enterprise fund C. General fund D. Internal service fund 14) Funds that are used to account for activities similar to those often engaged in by profit-seeking businesses are: A. proprietary funds B. capital project funds C. agency funds D. special revenue funds 15) Proprietary funds utilize what basis of accounting? A. Modified accrual B. Cash C. D. Budgetary Accrual 16) GASB Statement 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, applies to all of the following investment types EXCEPT: A. external investment pools B. debt securities C. investments of pension funds D. open-end mutual funds 17) The tax agency fund of Fulton County collected $6,000,000 for a school district, $3,000,000 for the county general fund and $4,000,000 for a municipality. County general fund employees handle the collections and a 3% collection fee is charged all units except the county. The total amount of revenue recognized by the county general fund would be: A. $2,910,000 B. $3,090,000 C. $3,300,000 D. $3,000,000 18) Ford County levies for its General Fund $1,000,000 in property taxes. In addition, the county is responsible for collecting $2,000,000 in property taxes for the consolidated school district and $500,000 in property taxes for a town within the county. 2% of all taxes levied are expected to be uncollectible. When recording the levies in an agency fund, what amount would Ford County record as Taxes Receivable for Other Governments - Current and Due to Other Governments? A. $2,500,000 B. $3,500,000 C. $3,430,000 D. $2,450,000 19) Which two governmental funds are commonly used to acquire capital assets? A. General Fund & Capital Projects Fund B. Permanent Fund & Capital Projects Fund C. Capital Projects Fund & Debt Service Fund D. General Fund & Debt Service Fund 20) In which fund type is interest on long term debt typically not accrued, yet is recognized as an expenditure in the year in which interest is legally due? A. Debt service fund B. Enterprise fund C. Pension fund D. Internal service fund 21) When a purchase order is issued under a Capital Projects Fund, how should the transaction be recorded? A. Debit Expenditures and credit Vouchers Payable B. Debit Encumbrances Control and credit Reserve for Encumbrances C. Debit Encumbrances Control and credit Vouchers Payable D. Debit Expenditures and credit Reserve for Encumbrances 22) A government had the following transfers reported in its governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances: (1) a transfer from the General Fund to a debt service fund in the amount of $l,000,000; (2) a transfer from the General Fund to an enterprise fund in the amount of $1,200,000; and (3) a transfer from the General Fund to an internal service fund in the amount of $400,000. The amount that would be shown as a transfer out in the governmental activities column in the Statement of Activities would be: A. $1,200,000 B. $1,400,000 C. $2,600,000 D. $ 800,000 23) The City of Charlotte levied property taxes in 2009 in the amount of $10 million. It is estimated that 2% will be uncollectible. During 2009, $9,000,000 was collected and it is anticipated that $400,000 will be collected during the next 60 days. When moving from the changes in fund balances in the Statement of Revenues, Expenditures and Changes in Fund Balances to the changes in net assets in the Statement of Activities, what will be the adjustment? A. An increase of $200,000 B. An increase of $400,000 C. An increase of $800,000 D. Zero 24) A government reported an other financing source in the amount of $800,000, related to the sale of land in its governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances. The land had a cost of $350,000. The adjustment in the reconciliation when moving from the governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the change in net assets for governmental activities in the Statement of Activities would: A. Increase of $350,000 B. Decrease of $450,000 C. Increase of $450,000 D. Decrease of $350,000 25) Under GASB rules for the financial reporting entity: A. blended and discretely presented component units are to be reported in government-wide financial statements but not in fund financial statements B. counties are component units of the State Government C. component units are included if the primary government is financially accountable for their operations D. component units must be reported in columns (discrete presentation) separate from the funds of a primary government 26) Which part of the financial section of the CAFR is considered "Required Supplementary Information?" A. Government-wide Financial Statements B. Management's Discussion and Analysis C. Auditor's Report D. Find Financial Statements 27) In governmental fund statements revenues are reported by ________ and expenditures are reported by _______ and by _________. A. Function, character, source B. Source, source, character C. Source, character, function D. Function, function, source 28) In 2008 a faculty member at a private college received a grant from the National Science Foundation to conduct basic research on tree frogs in the amount of $350,000. Expenses associated with the grant totaled $225,000 in 2009. In the Statement of Activities for 2009, the college should show: A. revenues of $350,000 and expenses of $225,000 in Temporarily Restricted Net Assets B. expenses of $ 225,000 in Unrestricted Net Assets and a decrease in Temporarily Restricted Net Assets of $ 225,000 C. revenues of $225,000 and expenses of $225,000 in Unrestricted Net Assets D. revenues of $225,000 and expenses of $225,000 in Temporarily Restricted Net Assets 29) A private university received $18,000,000 in tuition and fees during an academic year. Graduate assistantships, for which services were required, were awarded in the amount of $1,200,000. Scholarships, for which no services were required, were awarded in the amount of $1,400,000. The net tuition and fees that would be reported in the Statement of Activities would be: A. $18,000,000 B. $15,400,000 C. $16,600,000 D. $16,800,000 30) According to NACUBO guidelines, what is the correct treatment for recognizing summer school revenues and expenses when a college's fiscal year ends on June 30? A. Recognize the entire amount of revenues and expenses in the year in which the term is predominantly conducted B. Apportion the revenues and expenses to the two fiscal years, following accrual accounting practices similar to those employed by commercial enterprises C. Recognize expenses in the year in which they were billed and the expenses in the year in which they were incurred D. Recognize the entire amount of revenues and expenses in the year in which the term began 31) A public college had tuition and fees of $20,000,000. Scholarships, for which no services were required, amounted to $2,000,000. Graduate assistantships, for which services were required, amounted to $1,000,000. The amount to be reported by the public college as net tuition and fees would be: A. $20,000,000 B. $17,000,000 C. $18,000,000 D. $19,000,000 32) Assume a government is determined to be a special-purpose government engaged in business-type activities only. Which of the following financial statements would be required? A. Statement of Net Assets and Statement of Activities B. Balance Sheet, Statement of Revenues, Expenditures and Changes in end Balances C. Statement of Net Assets, Statement of Activities, Statement of Cash Flows D. Statement of Net Assets, Statement of Revenues, Expenses and Changes in Net Assets, Statement of Cash Flows 33) Assume a government is a special-purpose government engaged in only one governmental activity. Which financial statements would be required? A. Government-wide statements only B. Either government-wide or governmental funds statements, issued separately C. Statements combining the governmental funds and government-wide statements D. Governmental fund statements only 34) The term "opinion unit" refers to which of the following? A. A state or local government together with its component units B. One of the four statements required in the second paragraph of an unqualified audit opinion C. A division of a CPA firm D. A level of reporting of a government that requires a separate materiality level 35) All of the following are considered to be a major user group by the GASB EXCEPT: A. legislative and oversight officials B. government executive branch officials C. citizen groups D. investors and creditors 36) In order to compute the operating ratio-enterprise funds, one would look in the CAFR in which of the following sections? A. Net Assets B. C. D. In the proprietary funds Statement of Revenues, Expenses and Changes in In the proprietary funds Statement of Cash Flows In the government-wide Statement of Net Assets In the proprietary funds Statement of Net Assets 37) What type of fund is used when resources are provided mainly through business like transactions to parties external to the government? A. Agency Funds B. Enterprise Funds C. Internal Service Funds D. Capital Projects Funds 38) Why did governmental accounting practices develop with a focus on the sources and uses of expendable funds rather than on net income? A. Tax and other non exchange revenues are not equivalent to sales B. Net income is solely for public organizations C. The government wants to keep the earnings discrete D. Net income is solely for private organizations 39) The GASB is under the oversight of: A. FAF B. FASB C. GAO D. FASAB