Deck 2: Fund Accounting

Question 1

The Financial Accounting Standards Board requires all nongovernmental not-for-profit entities to use fund accounting.

Answer 1

False

Question 2

Which of the following accounts would you least expect to see in a debt service fund?

A)Principal payments.
B)Interest charges.
C)Interest earned.
D)Outstanding balance of the debt being serviced.

Answer 2

D

Question 3

General funds are established to account for resources legally restricted for specified purposes.

Answer 3

False

Question 4

Which of the following funds is a fiduciary fund?

A)Permanent fund.
B)Agency fund.
C)Capital projects fund.
D)Debt service fund.

Question 5

What is the primary reason that governmental entities use fund accounting?

A)Fund accounting is required by law.
B)Fund accounting is required by GAAP.
C)Fund accounting promotes control and accountability over restricted resources.
D)Fund accounting promotes better control over operating activities.

Question 6

A city receives a donation from a citizen who specifies that the principal must be invested and the earnings must be used to support operations of a city-owned recreational facility.The principal of this gift should be accounted for in which of the following funds?

A)Trust fund.
B)Special revenue fund.
C)Permanent fund.
D)Internal service fund.

Question 7

A government may report some of its funds on a full accrual basis.

Question 8

The basis of accounting determines when transactions and events are recognized.

Question 9

Funds divide a government into functional departments.

Question 10

Fiduciary activities should be reported in fund statements, but should be excluded from the government-wide statements.

Question 11

A fund is

A)A separate legal entity.
B)A separate fiscal and accounting entity.
C)A separate self-balancing set of accounts for inventory purposes.
D)None of the above.

Question 12

Fund accounting promotes control and accountability over restricted resources.

Question 13

Basis of accounting determines which of the following?

A)When transactions and events are recognized.
B)What transactions and events will be reported.
C)Where transactions and events will be reported.
D)Why transactions and events will be reported.

Question 14

In addition to preparing fund financial statements, governments should also prepare consolidated financial statements to provide information on the financial position and operating results of the government as a single economic entity.

Question 15

At first glance, the government-wide statement of activities bears little resemblance to the income statement of a business.

Question 16

In accounting for costs incurred on a major construction project in a capital projects fund, the construction outlays are reported as expenditures, not capital assets.

Question 17

Which of the following is NOT a governmental fund?

A)City hall debt service fund.
B)City utilities enterprise fund.
C)Gasoline tax special revenue fund.
D)City hall capital projects fund.

Question 18

If an entity adopts a full accrual basis of accounting, its measurement focus will automatically be on all economic resources.

Question 19

When a governmental entity adopts a basis of accounting other than full accrual and a measurement focus that excludes long-lived assets and liabilities in its governmental fund types:

A)It is in violation of the law.
B)It is in violation of GAAP.
C)It has reported in accordance with GAAP for governmental fund financial statements.
D)It has the ability to better measure the results of operations.

Question 20

Fiduciary activities only benefit parties other than the government itself.

Question 21

Which of the following funds is accounted for on the modified accrual basis of accounting?

A)General fund.
B)Internal service fund.
C)Proprietary fund.
D)Pension trust fund.

Question 22

The City of San Jose built a new city hall and financed construction by issuing bonds due in installments over the next 30 years.The bond principal and interest will be paid by a special tax levied on property in the city.The revenue received from this special tax should be accounted for in which of the following funds?

A)General fund.
B)Internal service fund.
C)Capital projects fund.
D)Debt service fund.

Question 23

The basic financial statements of a city do NOT include which of the following?

A)Government-wide statement of net position.
B)Government-wide statement of activities.
C)Government-wide statement of cash flows.
D)Separate balance sheets for governmental and proprietary funds.

Question 24

Riverside Golf Course is a city-owned golf course that collects greens fees in amounts sufficient to cover its expenses.Riverside Golf Course should be accounted for in which of the following funds?

A)Internal service fund.
B)Enterprise fund.
C)General fund.
D)Special revenue fund.

Question 25

Which of the following assets would NOT be found in the general fund balance sheet of the City of Harrison?

A)Cash.
B)Capital assets.
C)Due from special revenue fund.
D)Due from state government.

Question 26

For which of the following entities is fund accounting mandated for financial reporting?

A)American Hospital Association.
B)City of New York.
C)Grace Lutheran Church.
D)United Way.

Question 27

Under the GASB Statement No.34 reporting model, the focus of the government-wide statement of activities is on which of the following?

A)Program revenues and general revenues.
B)Program revenues and expenses.
C)Net income.
D)The net cost of each of the government's main functions and programs.

Question 28

Which of the following statements is NOT required in the financial reports of a not-for-profit entity?

A)Statement of net position.
B)Statement of restricted funds.
C)Statement of activities.
D)Statement of cash flows.

Question 29

Which of the following liabilities would NOT be found in the general fund balance sheet of the City of Marmaduke?

A)Accounts payable.
B)Due to special revenue fund.
C)Deferred revenue.
D)Bonds payable, due in 5 years.

Question 30

The primary focus of the statement of activities of a not-for-profit organization is on determining the net increase/decrease in which of the following?

A)Unrestricted net assets.
B)Temporarily restricted net assets.
C)Permanent net assets.
D)Net assets of the entity taken as a whole.

Question 31

Which of the following funds is a governmental fund?

A)Enterprise fund.
B)Debt service fund.
C)Internal service fund.
D)Agency fund.

Question 32

Under the GASB Statement No.34 reporting model (as amended by GASB Statement No.63), the government-wide statement of net position will display which of the following?

A)Assets, liabilities, and net position.
B)Assets, liabilities, and fund balances.
C)Assets, liabilities, and fund equity.
D)Assets, liabilities, and owners' equity.

Question 33

The focus of the government-wide statement of activities of the City of West Hills is on which of the following?

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.

Question 34

Which of the following activities conducted by a city-owned junior college should be accounted for in an agency fund?

A)Receipt of tuition payments.
B)Receipt of revenues belonging to the student accounting club.
C)Receipt of state monies appropriated for general operations.
D)Receipt of donations in support of the university's athletic program.

Question 35

Which of the following funds is a proprietary fund?

A)Internal service fund.
B)Special revenue fund.
C)Capital projects fund.
D)Permanent fund.

Question 36

Under the GASB Statement No.34 reporting model, which of the following is required?

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 accrual basis of accounting.
C)Two sets of financial statements.One set views the government as a collection of separate funds and uses the current financial resources measurement focus and modified accrual basis of accounting for governmental funds.The other set views the government as a whole by combining all governmental activities in one column and all business-type activities in another column and uses the full accrual basis of accounting for both columns.
D)Two sets of financial statements.One set views the government as a whole and uses the current financial resources measurement focus and modified accrual basis of accounting.The other set views the government by function, combines all governmental activities in one column and all business-type activities in another column, and uses the full accrual basis of accounting for both columns.

Question 37

To fulfill the printing needs of its various departments and agencies, the City has established a Central Print Shop, which bills the various departments and agencies of the city for printing services rendered.The Central Print Shop should be accounted for in which of the following funds.

A)Internal service fund.
B)Enterprise fund.
C)General fund.
D)Special revenue fund.

Question 38

Which of the following transactions should the City of Highland account for in a trust fund?

A)General fund contributions received by the city pension plan.
B)Greens fees received from golfers at the city-owned golf course.
C)Grants received from the Federal government to purchase buses to be used for public transit.
D)Proceeds of bonds issued to construct a new city hall building.

Question 39

Which of the following sections is NOT required in the comprehensive annual financial report of a city?

A)Financial section.
B)Introductory section.
C)Statistical section.
D)Historical section.

Question 40

The state collects a gasoline tax that must be used to support highway construction and maintenance.The gasoline tax revenue should be accounted for in which of the following funds?

A)General fund.
B)Special revenue fund.
C)Debt service fund.
D)Internal service fund.

Question 41

The accounting equation applied by state and local governments is

A)Assets + deferred inflows of resources - liabilities = fund balance
B)Assets + deferred outflows of resources - liabilities - deferred inflows of resources = fund balance
C)Assets + deferred inflows of resources = liabilities + deferred outflows of resources + fund balance
D)Assets - deferred outflows of resources - liabilities + deferred inflows of resources = fund balance

Question 42

During the current fiscal year, Mountain View City's water utility, an enterprise fund, rendered billings for water supplied to the general fund.Which of the following accounts should be debited by the general fund?

A)Transfer-out to enterprise fund
B)Due to water utility enterprise fund
C)Appropriations
D)Expenditures

Question 43

Lakeside Art Center, a nongovernmental not-for-profit entity, receives a contribution of $5 million.The donor stipulates that the contribution must be used to acquire paintings by local artists.Lakeside should classify the contribution as

A)Permanently restricted
B)Temporarily restricted
C)Committed
D)Unrestricted

Question 44

When a fax machine purchased by a governmental entity is received, it should be recorded in the general fund as a(n)

A)Expense
B)Encumbrance
C)Expenditure
D)Capital asset

Question 45

Under the GASB Statement No.34 reporting model, fund financial statements include separate sets of financial statements for:

A)Each major function of the government.
B)Governmental funds, proprietary funds, and fiduciary funds.
C)Governmental funds, enterprise funds, and internal service funds.
D)Governmental funds, special revenue funds, and debt service funds.

Question 46

Which fund type would all governments normally include in their fund financial statements?

A)Capital projects funds
B)Special revenue funds
C)General fund
D)Fiduciary funds

Question 47

Which of the following is NOT included in the financial section of a comprehensive annual financial report?

A)Required supplementary information
B)Letter of transmittal
C)Financial statements
D)Notes to the statements

Question 48

Which of the following funds of Chessie City would be consolidated to form the governmental activities column in the city's government-wide financial statements?

A)General fund, special revenue fund, and agency fund.
B)General fund, debt service fund, and capital projects fund.
C)General fund, enterprise fund, and fiduciary fund.
D)Enterprise fund and internal service fund.

Question 49

Wigmore City receives a donation of $10 million from a wealthy citizen who stipulates that the funds be used to acquire and install park benches in the city's Veterans Park.The city should report the donation as an increase in

A)Unassigned fund balance
B)Assigned fund balance
C)Committed fund balance
D)Restricted fund balance

Question 50

A not-for-profit entity's statement of net assets will NOT report which of the following?

A)Net assets invested in capital assets, net of related debt.
B)Capital assets.
C)Temporarily restricted net assets.
D)Permanently restricted net assets.