Non-For Profit Accounting

1. Which of the following is not true about fund accounting?

a. Unlike enterprise accounting, governmental accounting use the concept of 'fund',

because the government is the decision making body that should divide the resource

distribution method in accordance with nature of the resources.

b. For example, government have the businesses that should operate based on

exchange based transactions (ex. subway, electronic, water service) and non-exchange

based transactions. (ex. public peace, fire-fighting) It is improper that these activities

is recorded in a single journal, therefore, fund accounting that have each

independent accounting entity is used.

c. Government accounting have three funds, : Governmental fund, Proprietary fund,

fiduciary fund. Therefore, governmental accounting's fund financial statements are

three kinds.

d. Finally, these separate fund financial statements are integrated one financial

statements, called 'government-wide financial statements.'

2. Which of the following is not true about modified accrual accounting?

a. The reason of using the modified accounting in the governmental accounting is to

control the expenditure.

b. The economic meaning of the term 'fund balance' that is used the governmental

accounting area is : working capital.

c. Modified accrual accounting is based on revenue based approach. Meanwhile, accrual

accounting is based on cost based approach.

d. In enterprise accounting, Bond journal entry is : Cash XXX | Bond payable XXX. On

the contrary, Governmental accounting is : Cash XXX | Other finance sources XXX.

3. Which of the following is true about government lease accounting?

a. In GASB, transfer of ownership lease : amortization, and general lease : depreciation.

b. In GASB lease accounting, consideration of finance lease criteria has no real benefit.

c. Lease accounting of GASB is similar to US GAAP than IFRS. in addition, GASB lease

accounting has additional rule. It is a transfer of ownership clause.

d. All of the above passages are incorrect.

4. The Following is explanations to compare fund financial statement and Government

wide financial statements. which of the following is not true?

a. Statement of activity is part of the government-wide financial statements. In point of

view of the enterprise accounting, statement of activity function as Income

Statements, but does not function as Statement of Changes in Equity.

b. Intergovernmental transfer does not effect on the ending fund balance of the

statement of revenue, expenditures and changes in fund balance.

c. Among the fund financial statements, the fund that has statement of cash flows is

only proprietary fund.

d. Fiduciary fund has no element that function as income statements.

5. Alpha, Beta, and Gamma are independent operation division of AIFA City. The

following information pertains to total cost and user charge amount by Alpha, Beta,

and Gamma division for the year ended December 31 :

Alpha Beta Gamma

Total cost $5,000 $5,000 $5,000

User charge $6,000 $3,500 $1,000

Fund ( ) ( ) ( )

Which of the following is not true?

a. Alpha : general fund

b. Beta : general fund

c. Gamma : Enterprise fund

d. No answer

6. Which of the following is not true about balance sheet of governmental fund?

a. 'Deferred outflow and deferred inflow' is the place that record the transactions that

cash inflow and outflow existed, but didn't had eligibility of the 'available

requirement'.

b. 'Unassigned' category is only related to the general fund. The others are not.

c. 'Restricted' is the place that record the transaction that is externally restricted, for

example, laws and regulation.

d. 'Assigned' is the place that record the transaction that is neither restricted nor

committed.

7. Read and select combination of 2 correct choices & 2 wrong choices.

General fund, special revenue fund, Internal service funds don't depreciation

accounting.

Statement of Revenue, Expenditures & Changes in Fund Balance is one of the

financial statements of the governmental fund.

Enterprise fund is relate to : Accrual basis, Economic resources, Program.

Private purpose trust fund's nature is 'donation'. that fund's equity name is 'net

position', that is not subject to government-wide F/S

Statement of revenue, expenditures & changes in fund balance is one of the

financial statement of Proprietary fund.

So-called 'Statement of changes in net position' exist in the governmental fund

financial statements.

One of the example of the nature of expense is : general administration

When Governmental organization prepare government-wide financial statements,

governmental fund category should report the five funds.

When governmental accounting aggregate major fund, fiduciary fund is not

included.

a. , , ,

b. , , ,

c. , , ,

d. , , ,

8. Which of the following is not true about budgetary accounting? (each sentences are

independent)

a. IF AIFA city prepare budgetary plan as follows : estimated revenue $1,000,000,

estimated OFS $200,000, Appropriation $500,000, Estimated OFU $100,000, budgetary

fund balance is recognized at $600,000 to credit account.

b. Amount available for use = Appropriation - Total expended and encumbered

appropriations

c. If budgetary fund balance amount exceed to encumbrance amount, this imply that

sum of estimated revenue and estimated OFS exceed to sum of appropriation and

estimated OFU, in consequence, budgetary fund balance account be located in the

credit position.

d. New York city issued purchase order $40,000 about police car in 20X1, and police

car will actually arrive in 20X2. Meanwhile, at the beginning of 20X2, New York city

anticipated budgetary amount as follows : estimated revenue $220,000, Appropriation

$200,000. At this time, If New York city journalized budgetary accounting as below, :

Estimated Revenue 220,000 Appropriation 240,000

Budgetary Fund Balance 20,000

they must have chosen their journalizing method as appropriation lapse.

9. Which of the following is not true about major fund?

a. When government entity prepare the fund financial statements, they can choice

balance sheet presentation method by classification for each fund type, or

classification for amounts. at this time, If they want to prepare balance sheet in

accordance with classification for amount, they have to select the major fund.

b. General fund is always classified by major fund. in other words, It doesn't matter

what classification method is used. General fund is always presented in the balance

sheet.

c. When government entity select major fund, Internal service fund is excluded.

d. Because deferred outflow is not asset, and deferred inflow is not liability, deferred

outflow and inflow are not considered when government entity select major fund.

10. Which of the following is not true about GASB 33?

a. Income tax, Motor fuel tax and Property tax recognize revenue from 'levy' to 'next

year, 60 day'. On the contrary, government-wide financial statements recognize these

transactions as revenue when they exchange transaction in basic premise on 'derived

tax'

b. In fund financial statements, Fine revenue is recognized when cash is collected. On

the other hand, In government-wide financial statements, fine revenue(net allowance)

is recognized when government entity levy fine.

c. GASB 33 is standard to make government-wide financial statements.

d. In fund financial statements, donation revenue is recognized when donation is

received. On the other hand, In Government-wide financial statements, this revenue is

recognized when fulfill eligible requirement.

11. Which of the following is not true about bond of governmental accounting?

a. AIFA City issued General Obligation Bond(GOB) $50,000 at 110, and additional cash

payment occurred as follow : Underwriter fee $500, Debt issue cost $1,000. Then,

Underwriter fee $500 is expended, and debt issue cost $1,000 is deducted from

GOB. Therefore, AIFA City will report this GOB to OFS category, at $54,000.

b. On 1/2/20X1, New York state issued $100 municipal bond, and 1/2/20X2, repaid

interest $10 and part of the principal $50. Journal entry are as follows :

Date Debit Credit

Jan 2, 20X1 Cash $100 OFS $100

Dec 31, 20X1 - No entry -

c. In modified accrual, bond amortization cost is recognized as expenditure in full.

d. Bond anticipation note is reported in other finance sources, because of accurate

measurement of working capital.

12. Which of the following is true about classification of expense?

a. Expenditure is reported by : Governmental fund is 'Character', Proprietary fund is

'Object', Government-wide financial statement is 'Nature'

b. Fiduciary fund does not consider expenditure classification.

c. 'Capital outlay' category is information for 'acquisition of capital asset' and 'past'.

d. 'Debt service' category is information for 'current'.

13. Read the passage as below, and choice a correct answer.

Seoul Metro that operate subway business is public enterprise. Seoul city have a

authority to appoint management and to decide major decision of Seoul Metro.

The head of a Seocho-gu Office is elected by inhabitants of a Seocho-gu.

a. Seoul Metro's accounting process is governed by Seoul City.

b. Subway business that Seoul Metro operate is included by Enterprise fund of Seoul

City.

c. Seocho-gu Office is independent primary government.

d. According to above passages, Seoul city is financially accountable in relation to Seoul

Metro. Therefore, Seoul City include Seoul Metro as a component unit. However,

because Seoul metro is subgroup of Seoul city, Seoul city should report this

component as part of Fund financial statements.

14. Which of the following is not true about the budgetary comparison schedule?

a. The budgetary comparison schedule should present both the original and the final

appropriated budgets for the reporting period as well as actual inflows, outflows, and

balances, stated on the government's budgetary basis.

b. Even if AIFA City adopt cash-basis accounting in order to obey instruction of the

laws and regulation, AIFA should prepare budgetary comparison schedule based on

modified accrual basis.

c. It is possible that actual amount of budgetary comparison schedule differ from

expenditure amount of statement of revenue, expenditures & changes in fund

balance.

d. A separate column to report the variance between the final budget and actual

amounts is encouraged, but not required.

15. Which of the following is not true?

a. The major difference between an exchange transaction and a non-exchange

transaction for governmental units is the relationship between the amount of value

given and received.

b. The debt service transactions of a special assessment bond issue for which the

government is not obligated in any manner should be reported in the: Custodial

fund.

c. Deferred compensation plans, for other than proprietary fund employees, adopted

under IRC Section 457 should be reported in a(an): Pension trust fund.

d. If AIFA City receive financial resources $2,000,000 to create a non-expendable trust,

this transaction is recorded in the permanent fund.

16. A city government reported a $9,000 increase in net position in the motor pool

internal service fund, a $12,000 increase in net position in the water enterprise

fund, and a $7,000 increase in the employee pension fund. The motor pool internal

service fund provides service primarily to the police department. What amount

should the city report as the change in net position for business-type activities in

its statement of activities?

A. $9,000

B. $12,000

C. $21,000

D. $28,000

[17~20] Read and select correct answer.

The City of Sharp had the interfund transactions noted below. Check in the associated

choice alternatives to select the transaction type and the method of presentation that

best describes the situation. Choose the best answer.

17. The Tourist Development fund transfers money to the Road and Bridge Debt Service

Fund in a budgeted transaction, Indicate the accounting in the fund financial

statements.

Transaction type Method of presentation

A. Non-reciprocal Revenue

B. Reciprocal Transfer

C. Non-reciprocal Transfer

D. Reciprocal Eliminated

18. The Tourist Development Fund transfers money to the Road and Bridge Debt

Service Fund in a budgeted transaction. Indicate the accounting in the

government-wide financial statements.

Transaction type Method of presentation

A. Reciprocal Eliminated

B. Non-reciprocal Transfer

C. Reciprocal Revenue

D. Non-reciprocal Eliminated

19. The vehicle maintenance internal service fund receives payments from the general

fund for repairs done to police cars. Indicate the accounting in the internal service

fund's fund financial statements.

Transaction type Method of presentation

A. Reciprocal Revenue

B. Non-reciprocal Transfer

C. Reciprocal Eliminated

D. Non-reciprocal Eliminated

20. The general fund pays bond issuance costs in advance of receipt of bond proceeds

to expedite closing. The capital projects fund later repays the costs previously

defrayed by the general fund.

Transaction type Method of presentation

A. Reciprocal Revenue

B. Non-reciprocal Transfer

C. Reciprocal Eliminated

D. Non-reciprocal Eliminated