D250-Governmental and Nonprofit Accounting
Which characteristics distinguishes a government or nonprofit entity from a business?
A. There is always a direct link between revenues generated and expenditures/expenses indurred.
B. Capital assets are used to produce revenues and save costs.
C. Revenues are always indicative of demand for goods and services.
D. The mission of the entity may include goals other than maximizing profit. - answer-D
What is one objective of the financial reporting by nongovernmental nonprofit entities, as established by
the FASB?
A. To assess the types of services provided and the need for those services
B. To assess the services provided and the entity's ability to earn a profit.
C. To make rational decisions about the allocation of resources to those organizations.
D. To determine how managers have managed personnel. - answer-C
What is common to both governments and nonprofit entities but distinguishes these entities from for-
profit entities?
A. The budget is a legal, financial document.
B. Revenues are usually indicative of demand for goods or services.
C. There is direct matching of revenues and expenses.
D. There are no defined ownership interests. - answer-D
For which entity is the GASB the primary standard-setting body?
A. All governments
B. All state and local governments
C. All governments and all nonprofit entities
D. All state and local governments and all nonprofit entities. - answer-B
What is the purpose of external financial reporting by governments?
A. To assess financial condition.
B. To provide information to stockholders.
C. To assess the ability of elected officials to effectively manage people.
D. To track cash flow. - answer-A
Why should users of government financial statements be interested in information about compliance
with laws and regulations?
A. To determine whether the government has complied with bond covenenats.
B. To determine whether the government has complied with taxing limitations.
C. To determine whether the government has complied with donor restrictions on the use of funds.
D. To determine all of the above. - answer-D
Why do governmental entities use fund accounting?
A. Fund accounting is required by law
B. Fund accounting is required by generally accepted accounting principles (GAAP).
C. Fund accounting promotes control and accountability over restricted resources.
D. Fund accounting promotes better control over operating activities. - answer-C
,What is a fund in governmental accounting?
I. A separate legal entity.
II. A separate fiscal and accounting entity.
A. I only
B. II only
C. Both I and II
D. Neither I nor II - answer-B
What is a deferred inflow of resources?
A. Money that will be collected five years from now.
B. Money that is in a fiduciary fund until donor restrictions lapse.
C. Money collected in the current period that are applicable to the future periods.
D. Present obligations that the government has little or no discretion to avoid. - answer-C
Which type of fund is an investment trust fund?
A. General fund
B. Proprietary fund
C. Fiduciary fund
D. Internal Service fund - answer-C
Which fund is a governmental fund?
A. Enterprise fund
B. Debt service fund
C. Internal service fund
D. Custodial fund - answer-B
In which fund should the Central Print Shop be accounted?
A. Internal service fund
B. Enterprise fund
C. General fund
D. Special revenue fund - answer-A
Which section is required in the annual comprehensive financial report (ACFR) of a city?
A. Historical section
B. Forecasting section
C. Statistical section
D. Detailed investment portfolio section - answer-C
For which entity is fund accounting mandated for financial reporting?
A. American Hospital Association
B. City of New York
C. Grace Lutheran Church
D. United Way - answer-B
What is the focus of the government-wide statement of activities in the city of West Hills?
A. Determining the total expenses by natural classification
B. Determining the total expenses by function
,C. Determining the total revenues by function
D. Determining the net cost of functions. - answer-D
What is required under the Governmental Accounting Standards Board (GASB) Statement No. 34
reporting model?
A. Only one set of financial statements, prepared on the full accrual basis of accounting
B. Only one set of financial statements, prepared on the modified basis of accounting
C. Two sets of financial statements, the general and proprietary fund statements prepared on the full
accrual method and the government-wide on cash basis
D. Two sets of financial statements, the governmental fund statements on modified accrual, the
proprietary fund, and the government-wide statements on full accrual - answer-D
In which budget should property taxes levied on the citizens of Hill County most appropriately be
budgeted?
A. Operating budget
B. Capital budget
C. Flexible budget
D. All of the above - answer-A
Which base of accounting has been established by Governmental Accounting standards Board (GASB)
for use in the preparation of the general fund budget?
A. Cash basis
B. Modified accrual basis
C. Accrual basis
D. None of the above - answer-D
On which basis of accounting does Governmental Accounting Standards Board (GASB) require that
government entities present their budget-to-actual comparison data?
A. Budgetary basis
B. Cash basis
C. Modified accrual basis
D. Accrual basis - answer-A
A university that formally integrates the budget in the accounting system and uses encumbrance
accounting orders some new computers that will cost approximately $20,000.
Which entry, if any, should the university make to recognize this event?
A. Debit Expenditures $20,000; Credit Encumbrances $20,000
B. Debit Encumbrances $20,000; Credit Reserve for encumbrances $20,000
C. Debit Encumbrances $20,000; Credit Accounts payable $20,000
D. No entry required when the order is placed. - answer-B
Carolina City places an order for a specific item of equipment and encumbers $6,000 for that item. The
equipment arrives with an invoice for $5,700.
Which entries should the city make upon receipt of the equipment?
A. A debit to expenditures for $5,700, a debit to accounts payable for $300, and a Credit to
encumbrances for $6,000
, B. A debit to expenditures for $5,700, a debit to reserve for encumbrances for $6,000, a Credit to
accounts payable for $5,700, and a Credit to encumbrances for $6,000
C. A debit to expenditures for $5,700, a debit to reserve for encumbrances for $300, and a Credit to
accounts payable for $6,000
D. A debit to expenditures for $300, a debit to reserve for encumbrances for $5,700, and a Credit to
encumbrances for $6,000 - answer-B
What did the Chief Financial Officers Act of 1990 require?
A. that all federal agencies prepare annual financial statements and make them subject to audits
B. That all federal agencies receive an unmodified audit opinion
C. The creation of CFO positions in each of the federal agencies
D. That all federal agencies use a private industry CPA firm to conduct the audit of their financial
statements - answer-C
What is one of the two main GASB objectives?
A. Social responsibility
B. Interperiod equity
C. Diversity, equity, and inclusion
D. Profit - answer-B
How do governments and nonprofits compare with businesses?
A. Governments are governed by the marketplace.
B. The revenues of a government are determined by competition.
C. The expenditures of a government are determined by a competitive market.
D. Governments are governed by budgets. - answer-D
Which fund is a governmental-type fund?
A. Private-purpose trust fund
B. Internal service fund
C. Enterprise fund
D. Permanent fund - answer-D
Where should fund balance disclosures be reported?
A. In the notes to the financial statements
B. In the management discussion and analysis (MD&A)
C. In the body of the financial statements
D. In the required supplementary information (RSI) - answer-A
What is committed fund balance?
A. Amounts that are neither restricted nor committed but which the government intends to use for
specific purposes
B. Amounts that can be used only for specific purposes pursuant to constraints imposed by the
government
C. Amounts that have not been assigned to other funds and have not been restricted, committed, or
assigned to specific purposes
D. Amounts constrained to specific purposes by their providers, through constitutional provisions, or by
enabling legislation - answer-B
