See attached document.

This test is drawn from \"Accounting for Governmental & Nonprofit Entities by Jacqueline L. Reck et el\" Sixteenth Edition MULTIPLE CHOICE QUESTIONS 1. Which of the following distinguishes governments from nongovernmental not-for-profit organizations? A. Absence of profit motive. B. The power to enact and enforce a tax levy. C. Resource providers do not expect benefits proportional to the resources provided. D. Absence of a defined ownership interest that can be sold, transferred, or redeemed. 2. Which of the following statements is prepared by all not-for-profit organizations? A. Statement of financial position. B. Statement of functional expenses. C. Statement of revenues, expenses, and changes in net position. D. Both A and B. 3. In accounting for state and local governments the modified accrual basis is required for A. Proprietary and fiduciary funds. B. Governmental funds only. C. Proprietary funds only. D. All funds. 4. A major governmental fund is one that has one or more elements (e.g., assets, liabilities, revenues, or expenditures) that is at least: A. Five percent of the corresponding element(s) of total governmental funds and 10 percent of the corresponding element(s) of total governmental and enterprise funds combined. B. Ten percent of the corresponding element(s) of total governmental funds and 10 percent of the corresponding element(s) of total governmental and enterprise funds combined. C. Five percent of the corresponding element(s) of total governmental funds and five percent of the corresponding element(s) of total governmental and enterprise funds combined. D. Ten percent of the corresponding element(s) of total governmental funds and 5 percent of the corresponding element(s) of total governmental and enterprise funds combined. 5. The Expenditures control account of a government is debited when A. The budget is recorded. B. Supplies are ordered. C. Supplies previously encumbered are received. D. The invoice is paid. 6. The expenditure classification "City Attorney" is an example of which of the following types of classification? A. Function. B. Organization unit. C. Character. D. Program. 7. The General Fund has transferred cash to the appropriate fund for eventual retirement of term bonds maturing in 10 years. Which funds would record this transaction? General Fund A) B) C) D) A. B. C. D. Capital Projects Fund Debt Service Fund Yes No Yes Yes No No No Yes Yes Yes No Yes Choice A. Choice B. Choice C. Choice D. 8. The City of Grand Marais uses encumbrance accounting. On May 6, a purchase order was approved and issued for supplies in the amount of $6,000. Grand Marais received these supplies on June 2, and the $6,000 invoice was approved for payment. What General Fund journal entry or entries should Grand Marais make on June 2, upon receipt of the supplies and approval of the invoice? Debits A) Encumbrances Outstanding Encumbrances Expenditures 6,000 6,000 Vouchers Payable B) Encumbrances 6,000 6,000 Appropriations Fund BalanceUnassigned 6,000 6,000 Vouchers Payable C) Supplies D) Appropriations 6,000 6,000 Vouchers Payable 6,000 6,000 Encumbrances Supplies Vouchers Payable A. B. C. D. Choice A. Choice B. Choice C. Choice D. Credits 6,000 6,000 6,000 6,000 9. Equipment in general governmental service that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the governmental activities journal will include all of the following except A. A debit to Cash for $15,000. B. A debit to Accumulated Depreciation for $30,000. C. A credit to Equipment for $40,000. D. A credit to Other Financing Sources for $5,000. 10. In late June, the Buildit Construction Co. submitted a $600,000 progress billing on a construction contract. On July 2, the bill was approved for payment, subject to a five percent retention, as provided by the contract. The amount that should be debited to Construction Expenditures is A. $0. B. $30,000. C. $570,000. D. $600,000. 11. Immediately after making its annual $20,000 lease payment on June 30, 2014, the last day of its fiscal year, Capitol City had an unpaid capital lease obligation of $95,000. The interest rate applicable to the lease is 10 percent. When the $20,000 lease payment due on June 30, 2015 is made, the journal entry for the governmental activities accounts will include A. A debit to Capital Lease Obligation Payable in the amount of $10,500. B. A debit to Capital Lease Obligation Payable in the amount of $20,000. C. A debit to Cash in the amount of $20,000. D. A debit to Capital Lease Obligation Payable in the amount of $12,500. 12. The city of New Haven issued $20 million of tax-supported bonds at 102 to finance a new prison. Upon issuance, how will the premium be recorded? A. A $400,000 revenue to the capital projects fund and a $400,000 revenue in governmental activities. B. A $400,000 revenue to the debt service fund and a $400,000 premium on bonds payable in governmental activities. C. A $400,000 expenditure in the debt service fund and a $400,000 expense in governmental activities. D. A $400,000 other financing source to the debt service fund and a $400,000 premium on bonds payable in governmental activities. 13. What amount of the following items should be accounted for in an internal service fund? A. $2,100,000. B. $1,760,000. C. $1,640,000. D. $350,000. 14. Under utility regulatory accounting principles (RAP), the account "Utility Plant Acquisition Adjustment" reflects A. The difference between the amount paid for utility plant and the amount originally paid by the utility that first placed the plant into public service, less accumulated depreciation. B. The difference between the fair market value of the utility plant and the amount paid for it, less accumulated depreciation. C. The difference between the amount paid for the utility plant less its current replacement cost. D. The difference between the amount paid for the utility plant less the fair market value of its tangible plant assets. 15. Which of the following activities would most appropriately be recorded by an agency fund? A. Assets held for college scholarships to be awarded to the children of police officers. B. Deposits held for customers of a city-owned electric utility. C. Assets held for special assessment debt repayment. D. Assets held for investment, the earnings from which are used for maintenance of the City Cemetery. 16. A statement of cash flows should be prepared for which of the following fiduciary fund types? A. Fiduciary funds do not provide a statement of cash flows. B. Agency. C. Pension trust. D. Private-purpose trust. 17. Which of the following would increase the governmental activities balance in Net Position Net Investment in Capital Assets? A. Acquisition of a building to be used by the police department. B. Issuance of long-term debt to be used to acquire equipment for the police department. C. A gift of land to the city restricted by the donor to be used by the city airport, which is accounted for as an enterprise fund. D. Recording annual depreciation on capital assets. 18. The government-wide financial statements required by GASB standards are a A. Statement of net position and statement of cash flows. B. Statement of net position, statement of activities, and statement of cash flows. C. Statement of net position and statement of activities. D. Statement of activities and statement of cash flows. 19. A donor provides a large cash contribution that is to be used for acquisition of a new building. Under FASB standards, how would this contribution be reported by a not-for-profit organization on its statement of cash flows? A. Operating activity. B. Investing activity. C. Financing activity. D. Capital and related financing activity. 20. Which of the following statements is correct regarding reporting of special events and related direct costs under current FASB standards? A. Special events and related direct costs must be reported separately at their gross amounts if they relate to the ongoing major operations of an NFP. B. Special events revenues are to be reported at gross amounts, even if direct costs are of a peripheral or incidental nature. C. With few exceptions special events revenues are reported net of related direct costs. D. Expenses of promoting and conducting special events should be netted directly against special events revenue. 21. A voluntary health and welfare organization would report the account Provision for Uncollectible Pledges as which of the following? A. Expense. B. Contra revenue. C. Contra asset. D. FASB allows management to determine its policy for reporting the Provision for Uncollectible Pledges. 22. Tax-exempt organizations must complete a Form 990 and send it to the Internal Revenue Service A. Only if they have unrelated business income. B. If they are nongovernmental and not a church. C. Whether they are governmental or nongovernmental. D. Only if they are a private foundation, not a public charity. 23. A good measure of whether a not-for-profit organization is operating its programs efficiently is A. Fund-raising expenses as a percentage of public support. B. The ratio of program expenses to number of clients served. C. Total revenues divided by total expenses. D. Percentage of total expenses spent on the program function as opposed to support function. 24. A good measure of whether a not-for-profit organization is spending too much on overhead, such as general and administrative expenses, is A. Percentage of unrestricted net assets to operating expenses. B. Current ratio. C. Total revenues divided by total expenses. D. Percentage of total expenses spent on the program function as opposed to supporting the programs. 25. Which of the following is a condition that must be met for contributed services to a not-forprofit organization (NFP) to be recorded as both a contribution and as an expense? A. The service creates or enhances nonfinancial assets, such as a carpenter renovating a building. B. The service requires a specialized skill and is provided by someone who possesses the specialized skill, such as a lawyer preparing contracts. C. The service supplements the management function, such as an auditor preparing a program audit, which is not normally done. D. All of the above must be met for contributed services to be recognized as a contribution and an expense. PROBLEMS TO BE WORKED OUT Problem 1 Selected accounts of the Weinstein Musical Society, a nongovernment, not-for-profit organization for the year ended December 31, 20X5 is presented below in alphabetical order (all amounts are in thousands of dollars and all accounts have a normal balance): Administrative salaries..................................................................................................... Cash contributions restricted for Classical Music Appreciation Program....................... Collections of unrestricted pledges from prior year........................................................ DepreciationOffice Equipment.................................................................................... DepreciationEquipmentClassical Music Appreciation Program............................. DepreciationMaestro Program..................................................................................... Fundraising expenses....................................................................................................... Investment Income........................................................................................................... Materials and supplies usedMaestro Program............................................................. Payment of interest on note.............................................................................................. Payment to retire long-term note that matured during the year....................................... Pledges during year (and outstanding at year end) to support Maestro Program............ RentPerformance HallsProfessional Program.......................................................... SalariesProfessional Program...................................................................................... Teacher salariesClassical Music Appreciation Program.............................................. Teacher salariesMaestro Program................................................................................ Temporarily restricted net assets, January 1, 20X5......................................................... Ticket salesPerformances of Musicians in the Professional Program......................... Unrestricted cash contributions........................................................................................ Unrestricted net assets, January 1, 20X5......................................................................... Unrestricted pledges during year (and outstanding at year end)...................................... Unrestricted earnings on investments of temporarily restricted investments.................. $45 250 300 2 12 5 75 100 330 22 250 1,200 500 379 23 77 1,100 150 800 320 540 58 All expenses of the Maestro and the Classical Music Appreciation Programs are payable from donor restricted resources. Requirement: Prepare the Statement of Activity for the Society Problem 2 Listed below are various statements, schedules, notes, and other elements that appear in a Comprehensive Annual Financial Report (CAFR). A. B. C. D. E. F. G. H. I. J. K. L. M. N. O. P. Q. R. S. T. Demographic and Economic Information Organization Chart Table of Contents Statement of Net Position Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget-to-Actual Proprietary Fund Statement of Cash Flows Summary of Significant Accounting Policies Letter of Transmittal Governmental Funds Balance Sheet Capital Asset note disclosure Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Management's Discussion and Analysis Statement of Net Position - Component Units GFOA Certificate of Achievement for Excellence in Financial Reporting Schedule of Employer Contributions Statement of Fiduciary Net Position Parks and Recreation Special Revenue Fund Balance Sheet Changes in Net Position, Last 10 Years Statement of Activities Auditor's Report Requirement - Recommend that you choose one of the following requirements, 1. Identify the major section of the CAFR in which each element is found. a. Introductory b. Financial c. Statistical 2. Identify the major subsection of the CAFR in which each element is found. a. Introductory b. Required Supplementary Information c. Basic Financial Statements d. Notes to the Financial Statements e. Other Required Supplementary Information f. Supplementary (or Other) Information g. Statistical Section 3. List each element in the proper order that they are found in the CAFR. Problem 3 Below is information on total assets for various funds of the City of Dublin (all amounts are in thousands of dollars). Fund General Federal Grants Special Revenue State Grants Special Revenue City Hall Capital Projects Debt Service Water and Sewer Enterprise Swimming Pool Enterprise Fleet Management Internal Service Employee Pension Fund Assets $1,300 500 200 900 700 8,000 1,000 10,800 6,500 Requirement: Prepare a schedule computing the threshold for asset amounts that should be used to determine which funds must be reported as major. Identify which funds are major funds