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Trang 1140 Test Bank for Essentials of Accounting for
Governmental and Not for Profit Organizations 10th
Edition
True False Questions Free Text Questions
-Multiple Choice Questions - Page 1
GASB standards contain all of the following in its three-part
budgetary principle except:
1 A) An annual budget should be adopted by every governmental unit.
2 B) The accounting system should provide the basis for appropriate budgetary control.
3 C) Budgetary comparisons should be included in the appropriate financial statement and schedules for governmental funds for which an annual budget has been adopted.
4 D) None of the above; all would be included
The GASB sets accounting standards for all of the following
except:
1 A) State and local governments
2 B) Libraries owned or controlled by governments
3 C) Governmentally related not-for-profit universities
4 D) Nongovernmental not-for-profit hospital
Long-term debt of a governmental unit would be reported in
the:
1 A) government-wide financial statements and proprietary fund financial statements.
2 B) government-wide financial statements only.
3 C) debt service funds of governmental fund financial statements and government-wide financial statements.
4 D) notes to the financial statements only.
Trang 2Under the modified accrual basis of accounting, revenues
should be recognized when they are:
1 A) authorized by the budget ordinance.
2 B) earned and measurable.
3 C) measurable and available to finance expenditures of the current period.
4 D) realized through collection.
The term “proprietary funds” applies to:
1 A) enterprise funds only.
2 B) all funds that use accrual accounting.
3 C) enterprise, internal service, and private-purpose trust funds.
4 D) none of the above answers are correct.
Which of the following organizations has authority to establish
accounting and financial reporting standards for the
federal government?
1 A) Federal Accounting Standards Advisory Board.
2 B) Office of Management and Budget.
3 C) Governmental Accounting Standards Board.
4 D) None of the above; no one has been granted authority to set standards for the federal government
The FASB has the authority to establish accounting and
financial reporting standards for:
1 A) Federal government
2 B) Private not-for-profits
3 C) Public not-for-profits
4 D) State and local governments
Which of the following characteristics would define an
organization as governmental?
1 A) The power to enact and enforce a tax levy.
2 B) The potential for unilateral dissolution by a government with the net assets reverting
to a government.
Trang 33 C) The receipt of grant money from a state or local government for the purpose of providing services to the public.
4 D) Both A and B
A government may have multiple funds for each of the following
fund types except:
1 A) Permanent
2 B) General
3 C) Special revenue
4 D) Capital projects
Which of the following is most correct with regard to
Management's Discussion and Analysis (MD&A)?
1 A) State and local governments are required to provide an MD&A.
2 B) Federal agency financial reports are required to provide an MD&A.
3 C) Both state and local governments and federal agencies are encouraged, but not required to provide an MD&A.
4 D) Both state and local governments and federal agencies are required to provide an MD&A.
Which of the following is a fiduciary fund?
1 A) Internal service
2 B) Permanent
3 C) Enterprise
4 D) Investment trust
A city government collects local option sales taxes legally
restricted to pay for the construction of a new
courthouse Which fund should account for the receipt of the sales taxes?
1 A) Special revenue fund
2 B) Capital projects fund
3 C) Private-purpose trust fund
4 D) General fund
Trang 4Level “A” GAAP for The University of Virginia, a public
institution, would be established by the:
1 A) Financial Accounting Standards Board.
2 B) Governmental Accounting Standards Board.
3 C) American Institute of Certified Public Accountants.
4 D) National Association of College and University Business Officers.
Governmental funds do not include:
1 A) Special revenue funds
2 B) Internal service funds
3 C) Debt service funds
4 D) The General fund
Which of the following would not be included in FASB
Statement of Financial Accounting Concepts #4, which identifies the information needs of the users of non-
business financial statements?
1 A) Format and content of financial statements
2 B) Assessing services provided by a non-business organization and its ability to continue to provide those services
3 C) Assessing managements’ stewardship and performance
4 D) Evaluation of an organization’s resources, obligations and effects of changes in net resources
The GASB has the authority to establish accounting and
financial reporting standards for:
1 A) Federal government
2 B) Private not-for-profits
3 C) State and local governments
4 D) None of the above
Trang 5GASB Concepts Statement No 3, Communication Methods in
General Purpose External Financial Reports that Contain Basic Financial Statements, states that
1 A) notes to the financial statements may include management’s objective explanations.
2 B) required supplementary information must be objective and may not include
predictions or subjective assessments.
3 C) disclosure in the notes is not an adequate substitute for recognition in the financial statements.
4 D) All of the above are correct.
The FASAB has the authority to establish accounting and
financial reporting standards for:
1 A) Federal government
2 B) Investor owned business
3 C) State and local governments
4 D) Public not-for-profits
The term “proprietary funds” applies to:
1 A) enterprise and internal service funds.
2 B) pension, investment trust and enterprise funds
3 C) enterprise, internal service, and private-purpose trust funds.
4 D) none of the above answers are correct.
Governmental funds include:
1 A) Special revenue funds
2 B) Internal service funds
3 C) Debt service funds
4 D) A and C
A city government collects local option sales taxes legally
restricted to pay for the hiring of teachers for hearing impaired school children Which fund should account for the receipt of the sales taxes?
1 A) Special revenue fund
Trang 62 B) Capital projects fund
3 C) Private-purpose trust fund
4 D) General fund
In order for a fund to exist, there must be:
1 A) A fiscal entity; assets set aside for a specific purpose
2 B) A double-entry accounting entity
3 C) Both A & B are required
4 D) A & B are optional and not required
Fiduciary funds are to use the:
1 A) economic resources measurement focus and accrual basis of accounting.
2 B) current financial resources measurement focus and accrual basis of accounting.
3 C) economic resources measurement focus and modified accrual basis of accounting.
4 D) none of the above, the fiduciary funds have no revenues.
What is the minimum number of funds to be used by a
governmental unit?
1 A) One; the General Fund
2 B) Two; the General Fund and one permanent fund
3 C) As many as necessary to fulfill legal requirements and sound financial
administration
4 D) A & C
In order for a fund to exist, there must be
1 A) assets set aside for specific purposes.
2 B) a separate revenue stream.
3 C) a double-entry accounting entity.
4 D) A and C are correct.
Proprietary funds use the:
1 A) economic resources measurement focus and modified accrual basis of accounting.
2 B) current financial resources measurement focus and modified accrual basis of accounting
Trang 73 C) economic resources measurement focus and accrual basis of accounting.
4 D) current financial resources measurement focus and accrual basis of accounting.
Government-wide statements use the:
1 A) current financial resources measurement focus and accrual basis of accounting.
2 B) economic resources measurement focus and accrual basis of accounting.
3 C) economic resources measurement focus and modified accrual basis of accounting.
4 D) none of the above, the fiduciary funds have no revenues.
Which of the following is not a fiduciary fund?
1 A) Agency
2 B) Pension trust
3 C) Enterprise
4 D) Private-purpose trust
Which fund category must change from modified accrual to
accrual basis when preparing government-wide financial statements?
1 A) Governmental
2 B) Proprietary
3 C) Fiduciary
4 D) B & C only
The “Hierarchy of GAAP” is established by the:
1 A) Financial Accounting Standards Board.
2 B) Federal Accounting Standards Advisory Board
3 C) Governmental Accounting Standards Board
4 D) All of the above have established a hierarchy
The Governmental Accounting Standards Board has been given
authority to establish accounting and financial reporting standards for:
1 A) all governmental units and agencies.
2 B) federal, state, and local governments.
Trang 83 C) all governmental units and all not-for-profit organizations.
4 D) state and local governmental entities, and governmentally-owned utilities,
authorities, hospitals, and colleges and universities.
Which of the following is not one of the objectives of Federal
Financial Reporting, as outlined in SAFAC 1, which was issued by the FASAB?
1 A) Financial reporting should enable evaluation of the service efforts, costs and
accomplishments of the reporting entity.
2 B) Financial reporting should enable evaluation of the success rate of programs
3 C) Financial reporting should reveal whether financial systems and controls are
adequate
4 D) Financial reporting should demonstrate accountability regarding raising and
expending money according to budgetary process and laws and regulations
Governmental funds are to use the:
1 A) economic resources measurement focus and accrual basis of accounting.
2 B) current financial resources measurement focus and accrual basis of accounting.
3 C) economic resources measurement focus and modified accrual basis of accounting.
4 D) current financial resources measurement focus and modified accrual basis of accounting
Which of the following is a governmental fund?
1 A) Special revenue
2 B) Enterprise
3 C) Agency
4 D) Internal service
Which of the following is not true regarding GASB Concepts
Statement No 2, Service Efforts and Accomplishments Reporting:
1 A) It encourages governments to experiment with reporting more complete information about an entity's performance than can be displayed in the traditional financial
statements.
Trang 92 B) It outlines categories of information that might be reported.
3 C) It prescribes detailed standards governing the reporting of service efforts and
accomplishments reporting.
4 D) None of the above, all are true.
Which of the following characteristics would not define an
organization as governmental?
1 A) The power to enact and enforce a tax levy.
2 B) The potential for unilateral dissolution by a government with the net assets reverting
to a government.
3 C) The receipt of grant money from a state or local government for the purpose of providing services to the public.
4 D) All of the above.
Under GASB Statement 34, capital assets:
1 A) must be reported in government-wide statements but are not reported in any of the fund financial statements.
2 B) must be reported in government-wide statements and in proprietary fund financial statements.
3 C) are not to be reported in either government-wide or fund financial statements.
4 D) are to be reported but not depreciated in government-wide and fund financial
statements.
A city government makes its semiannual payment of interest on
revenue bonds issued to pay for the construction of
additional subway stations Which fund would account for the payment?
1 A) Debt service fund
2 B) Capital projects fund
3 C) Enterprise fund
4 D) Internal service fund
Trang 10Which of the following use current financial resources
measurement focus?
1 A) Fiduciary fund statements
2 B) Governmental fund statements
3 C) Proprietary fund statements
4 D) Enterprise fund statements
79 Free Test Bank for Essentials of Accounting for
Governmental and Not for Profit Organizations 10th Edition by Copley Multiple Choice Questions - Page 2
What is the significance of a budget to a government?
1 A) Used primarily as a planning resource
2 B) Budgets are not used by governments
3 C) Budgets carry the full authority of the law
4 D) None of the above
Which of the following fund types does not use modified
3 C) The number will vary depending on the needs of the government.
4 D) None of the above.
Which of the following are the governmental funds?
1 A) General, special revenue, debt service, capital projects, permanent.
Trang 112 B) General, special revenue, debt service, capital projects, private purpose.
3 C) General, special revenue, debt service, capital projects, internal service.
4 D) None of the above.
Which of the following funds is used to account for the payment
of principal and interest of general long term debt of a government?
1 A) General Fund
2 B) Debt Service Fund
3 C) Agency Fund
4 D) Capital Projects Fund
Which of the following is not of the information needs of users
of non-business financial statements according to FASB’s Statement of Financial Accounting Concepts No 4?
1 A) Providing information that is useful to recipients of services provided by the business organizations.
non-2 B) Providing information that is useful to present and potential resource providers in assessing the services that a non-business organization provides and its ability to
continue to provide those services.
3 C) Providing information that is useful to present and potential resource providers in assessing management’s stewardship and performance
4 D) Providing information that is useful to present and potential resource providers in evaluating an organization’s economic resource, obligations and effects of changes in net resources
The Funds are used to account for situations in which
the government is acting as a collecting/disbursing
Trang 12Financial reports for state and local governments are used for
all the following EXCEPT?
1 A) Assess financial condition and results of operations
2 B) Measuring the effectiveness of government services such as police and fire
protection
3 C) Compare actual results with the legally adopted budget
4 D) Assist in determining compliance with finance-related laws and regulations
The fund statements for governmental funds are presented
using the
1 A) Economic Resources Measurement focus and the Accrual Basis of Accounting
2 B) Current Financial Resources Measurement focus and the Modified Accrual Basis of Accounting
3 C) Current Financial Resources Measurement focus and the Accrual Basis of
4 D) All of the above
Which of the following is an environmental difference between
governments and for-profit business enterprises?
1 A) Relationship with stakeholders
2 B) Donor restricted assets
3 C) Fiduciary responsibilities
4 D) Private inurement of residual earnings
Trang 13Which of the following is true regarding fund classifications?
1 A) Governmental funds include the General, special revenue, debt service, capital projects, and permanent.
2 B) Proprietary funds include enterprise, internal service, and private-purpose.
3 C) Both of the above.
4 D) None of the above.
State and local governmental funds are organized into three
categories including:
1 A) governmental, proprietary, and restricted
2 B) proprietary, fiduciary, and restricted
3 C) governmental, fiduciary, and restricted
4 D) governmental, proprietary, and fiduciary
Which of the following funds is considered a Fiduciary Fund?
1 A) Debt Service Fund
2 B) Enterprise Fund
3 C) Internal Service Fund
4 D) Agency Fund
The Financial Accounting Standards Board (FASB) is the
standard setting organization for which of the following reporting organizations?
1 A) Private not-for-profits
2 B) Public not-for-profits
3 C) Investor owned businesses
4 D) A and C are both correct.
Which of the following funds is not a Fiduciary Fund?
1 A) Private Purpose Trust Fund
2 B) Special Revenue Fund
3 C) Pension Fund
4 D) Investment Trust Fund
Trang 14Under GASB Statement 34, modified accrual accounting would
be found in the:
1 A) government-wide financial statements only.
2 B) governmental fund financial statements only.
3 C) governmental and fiduciary fund financial statements only.
4 D) governmental, proprietary, and fiduciary fund financial statements but not in the government-wide financial statements
Which of the following are included in the GASB standards
budgetary principle:
1 A) Accounting systems should provide the basis for appropriate budgetary control.
2 B) Annual budgets should be adopted by every governmental unit.
3 C) Budgetary comparisons should be included in the appropriate financial statements.
4 D) All of the above
Which of the following statement(s) are not included in the
proprietary funds:
1 A) Statement of Revenues, Expenses, and Changes in Net Assets
2 B) Statement of Cash Flows
3 C) Balance Sheet
4 D) All of the above are included
Level "A" GAAP for Cook County Hospital, a public hospital,
would be established by the:
1 A) Governmental Accounting Standards Board.
2 B) Financial Accounting Standards Board.
3 C) Hospital Financial Management Association.
4 D) American Institute of Certified Public Accountants.
Which of the following is not a fiduciary fund type?
1 A) Agency.
2 B) Expendable trust.
3 C) Private-purpose trust.
Trang 154 D) Investment trust.
The Fund accounts for all resources other than those
required to be accounted for in other funds
What are Enterprise funds used for?
1 A) To account for pension and employee benefit funds for which the governmental unit
is the trustee.
2 B) To report resources that are legally restricted so only earnings, not principal, may be expended, and for purposes to benefit the government and its citizenry.
3 C) To account for most of the basic services provided by the governmental units.
4 D) To account for resources provided primarily through the use of sales and service charges to parties external to the government.
A permanent fund classified under governmental funds…
1 A) Accounts for most of the basic services provided by the governmental unit.
2 B) Accounts for financial resources intended for major capital projects
3 C) Accounts for services provided by one department of a government to another
4 D) Accounts for resources that are legally restricted so only earnings, not principal, may be expended, and for purposes to benefit the government and its citizenry.
Trang 16The _ sets the accounting and financial reporting
standards for both state and local governments and
A city government sells police cars no longer in use No
restrictions have been placed on the proceeds Which fund should account for the receipt?
1 A) Debt service fund
2 B) Capital projects fund
3 C) Enterprise fund
4 D) General fund
Under GASB Statement 34, accrual accounting is used for:
1 A) government-wide financial statements only.
2 B) government-wide financial statements and proprietary fund financial statements only.
3 C) government-wide, proprietary fund, and fiduciary fund financial statements only.
4 D) government-wide and all fund financial statements
Notre Dame University, a private institution, has level “A” GAAP
established by the:
1 A) American Institute of Certified Public Accountants.
2 B) Governmental Accounting Standards Board.
3 C) Financial Accounting Standards Board.
4 D) National Association of College and University Business Officers
Which of the following fund types uses modified accrual
accounting?
1 A) Debt Service
2 B) Internal Service