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1) Which of the following statements is true regarding proprietary funds? A) Accruals and deferrals common to business accounting are recorded in proprietary funds. B) GASB standards require budget-actual reporting for proprietary funds. C) The purchase of a capital asset is recorded as an expenditure in proprietary funds. D) Proprietary funds use the modified accrual basis of accounting. 2) Internal service funds account for: A) Activities that produce goods or services to be provided to other governmental units on a cost-reimbursement basis. B) Activities that produce goods or services to be provided to outside consumers units on a cost-reimbursement basis. C) Both of the choices are correct. D) Neither of the choices is correct. 3) An example of an activity that would not normally be accounted for in an enterprise fund would be: A) Lottery. B) Swimming pool. C) Centralized government motor pool. D) Airport. 4) Which of the following is corroct with respect so internal Sernice funds? Version 1 1 A) Internal service funds use modified accrual accoanting and the current financial resources measurement focur. B) Net position is to be reported in two categoties assignd and unasseged. C) Intemal service funds account for long-term debt but not capital assets. D) All of the choices are false statements. 5) Restricted Net Position for a proprictary find is: A) net resources whose use is restricted by users of the services. B) reported net of depreciation. C) reported net of accumulated depreciation and any eutsandiag debt aned to acquire the axset. D) net resources whose use is restricted by croditon, gration. laws ex regulations of other govenuments. 6) GASB requires eaterpeise fands to be used under which of the following circumatases? A) When the legal requirenent exists that the cost of prowidirg services for a activivy. including capital costs, be rocovered through foes of charges. B) When debe is backed solely by fees and charge. C) Wben a govemment has a policy to establish fees and charges to cover the cose of froviding services for an activity. D) All of the chosces are correct. 7) When govemments operate landfills as enteryerise funds, which of the following is correct? A) GASB requires that certain post-closure costs be estimated and accrued during the period the landfills receive solid waste. B) GASB requires that a portion of fotute ectimuted costs be charged as an eypense and liability of the landfill asing units-of-productioe method as waste is accoptod. C) The purpose of tecording post elosure expenses and liabilities is so math the cstimated costs with the revenues during the period of time the waste is accepted. D) All of the choices are correct. 8) Pollution remediation costs: A) are to be accrued as a liability in the financial statements. B) are recorded as expenses if they will be paid from current resources. C) are not an issue as the state or local government merely used (but did not operate) the polluted site. D) All of the choices are correct. 9) Activities that produce goods or services to be provided to other departments or other governmental units would be reported in which fund? A) Internal service fund. B) Advance fund. C) Enterprise fund. D) Custodial fund. 10) GASB requires the method to report cash flows from operating activities in the Statement of Cash Flows. A) indirect. B) direct. C) modified accrual. D) full accrual. 11) Montgomery County operates a landfill as an enterprise fund. The closure and postclosure care costs are estimated to be $40 million. It is estimated that the capacity of the landfill is 16 million tons of waste and that waste will be accepted for 6 years. During 2020,4 million tons of waste was accepted. The charge for closure and post-closure care costs for 2020 would be: A) $2.5 million. B) $8 million. C) $6.67 million. D) $10 million. 12) An internal service fund provided services to a General Fund department. At the time of billing, the credit entry in the internal service fund would be: A) Operating Revenues-Charges for Sales and Services. B) Other Financing Sources-Charges for Services. C) Due from General Fund. D) Other Financing Sources-Transfers In. 13) Which of the following is true regarding internal service funds? A) Internal service funds provide services primarily to external users on a user-charge basis. B) Internal service funds normally record the annual budget in the accounts. C) Internal service funds' capital assets are not accounted for in the accounts. D) Internal service funds use accrual accounting and the economic resources measurement focus. 14) If a government decides to account for its risk management activities in a single fund, it must use: A) a Proprictary Fund. B) a Fiduciary Fund. C) a Special Revenue Fund. D) Either the General Fund or an Internal Service fund. 15) Capital assets of internal service funds should be reported: A) in the internal service funds only. B) in the government-wide statements only. C) in both the internal service funds and the government-wide statements. D) None of the choices are correct, they are not reported. 16) Revenue bonds sold by a water utility fund, upon sale, would be reconded: Version 1 4 A) in an enterprise fund as "Other Financing Source". B) in the general long-term debt accounts as a liability. C) in an enterprise fund as a liability. D) in an enterprise fund as an addition to Net Position. 17) Which of the following is not true regarding enterprise funds? A) Similar to commercial businesses, enterprise funds equity accounts include both contributed capital and retained earnings. B) A Statement of Revenues, Expenses, and Changes in Fund Net Position would be the primary operating statement for enterprise funds. C) Enterprise funds' Cash Flow Statements could have up to four categories. D) None of the choices; all are true. 18) Which of the following is not true regarding enterprise funds? A) Enterprise funds record long-term debt directly in the fund accounts. B) Enterprise funds record capital assets directly in the fund accounts. C) Enterprise funds report a Statement of Cash Flows. D) The difference between assets and liabilities of enterprise funds is termed "Fund Balance". 19) Which of the following is an example of an Internal Service Fund? A) State Risk Management Fund. B) County Water and Sewer Utilities. C) State Lotteries. D) Municipal Golf Courses. 20) Which fund accounts for activities that produce goods of services to be provided to other departments or other goverumental units? Version 1 5 A) Enterprise fund. B) Internal Service fund. C) Special Revenue fund. D) Debs Service fund. 21) Revenue bonds: A) earry less risk than general obligation bonds. B) are intended to be paid from the revenues of an enterprise. C) are no longer in existence. D) are backed by the full faith and credit of the govemment in addition to enterprise revenues. 22) The Water Utility (an enterprise fund) has just sent out a purchase order to a vendor for some new equipment. Which of the following would be included in the joumal entry to record this event? A) A credit to Accounts Payable. B) A debit to Encumbrances. C) A debit to Expenditures. D) None of the choices are correct. 23) The city is using an internal service fund to self-insure its risk financing activities, Claims accrued or paid by this fund are recorded as: A) Transfers out. B) Special ltems. C) Onerating Expenses. D) Nonoperating Expenses. 24) Which of the following is not correct regarding the GASB Cash Flow Statement? Version 1 6 A) The reconciliation of income and cash flows from operations starts with operating income. B) Fixed Assets acquisitions are reported in the Capital and Related Financing Section. C) Cash received from Interest and Dividend Income is recorded in the Operating Section. D) All of the choices are correct. 25) The operation of internal service funds has important implications for other funds. Which of the following statements is incorrect? A) Charges for services of the internal service fund are recorded as expenditures in the governmental fund purchasing the services. B) GASB standards require the use of internal service funds to facilitate comparisons between governments. C) If the expenditures for the purchasing entity is recorded in the General Fund, a positive operating income in the internal service fund would mean that the expenditures reported in the General Fund exceed the true cost of operating the government. D) The problems created by internal service funds are resolved when the governmentwide statements are prepared
