Question 1

Which of the following is a governmental fund?
A)Enterprise fund.
B)Internal service fund.
C)Permanent fund.
D)Investment trust fund.
E)Agency fund.

Accepted Answer

A permanent fund is a governmental fund, which is used to account for resources that are restricted and required to be maintained permanently, and only the earnings from these resources are available for expenditure. The other options listed are all types of proprietary funds or fiduciary funds.

Question 2

Fiduciary funds are
A)Funds used to account for the activities of a government that are carried out primarily to provide services to citizens.
B)Funds used to account for a government's ongoing organizations and activities that are similar to those operated by for-profit organizations.
C)Funds used to account for monies held by the government in a trustee capacity.
D)Funds used to account for all financial resources except those required to be accounted for in another fund.
E)Funds used to account for revenues that have been legally restricted as to expenditure.

Accepted Answer

Fiduciary funds are used to account for monies held by the government in a trustee capacity, such as funds held for a specific purpose or for the benefit of others (such as employee retirement funds).

Question 3

Which standard issued by the Governmental Accounting Standards Board in 1999 required two distinct sets of financial statements for state and local governments?
A)GASB Statement No. 32.
B)GASB Statement No. 33.
C)GASB Statement No. 34.
D)GASB Statement No. 35.
E)GASB Statement No. 36.

Accepted Answer

GASB Statement No. 34 required state and local governments to prepare two distinct sets of financial statements: government-wide financial statements and fund financial statements.

Question 4

Trapper City issued 30-year bonds for the purpose of building a new City Hall. The proceeds of the bonds are deposited in the General Fund. For the Fund Financial Statements, in what fund will Bonds Payable appear?
A)General Fund.
B)Capital Projects Fund.
C)Permanent Fund.
D)Debt Service Fund.
E)Bonds Payable do not appear in Fund Financial Statements.

Accepted Answer

The answer of Trapper City issued 30-year bonds for the...

Question 5

Proprietary funds are
A)Funds used to account for the activities of a government that are carried out primarily to provide services to citizens.
B)Funds used to account for a government's ongoing organizations and activities that are similar to those operated by for-profit organizations.
C)Funds used to account for monies held by the government in a trustee capacity.
D)Funds used to account for all financial resources except those required to be accounted for in another fund.
E)Funds used to account for revenues that have been legally restricted as to expenditure.

Accepted Answer

Proprietary funds are used to account for a government's ongoing organizations and activities that are similar to those operated by for-profit organizations. These activities are primarily revenue-generating, such as a municipal utility providing water or electricity. The other choices are incorrect: (A) describes enterprise funds; (C) describes trust funds; (D) describes the general fund and other governmental funds; and (E) describes special revenue funds.

Question 6

A city received a grant of $5,000,000 from a private agency. The money was to be used to build a new city library. In which fund should the money be recorded for the Fund Financial Statements?
A)the General Fund.
B)an Expendable Trust Fund.
C)a Capital Projects Fund.
D)an Agency Fund.
E)a Permanent Fund.

Accepted Answer

Since the grant is specifically for the construction of a new library, it should be recorded in a Capital Projects Fund. This type of fund is used to account for financial resources that are restricted for the acquisition or construction of major capital facilities or equipment. The money cannot be used for any other purpose than construction of the library, so it cannot be recorded in the General Fund or an Expendable Trust Fund. A Permanent Fund is used for donations that are intended to be invested and the earnings used for a specific purpose, which is not the case for this grant. An Agency Fund is used to account for resources held by the government in a custodial capacity, which is also not applicable in this case.

Question 7

What are the broad types or classifications of funds for a governmental entity such as a city?
A)general, governmental, and trust funds.
B)governmental, proprietary, and fiduciary funds.
C)revenue, trust, and governmental funds.
D)enterprise, revenue, and fiduciary funds.
E)governmental, agency, and enterprise funds.

Accepted Answer

The broad types or classifications of funds for a governmental entity such as a city are governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used for general government activities, proprietary funds are used for business-like activities, and fiduciary funds are used for assets held in a trustee capacity or as agent for individuals, private organizations, or other governmental units. Option B accurately describes these three types of funds. Option A and C are incorrect as they do not include proprietary funds. Option D includes revenue funds which are not a separate type of fund, but rather a category of funds within governmental and proprietary funds. Option E includes agency funds which are a specific subset of fiduciary funds, but does not include proprietary funds.

Question 8

Under modified accrual accounting, revenues should be recognized when they are
A)collected.
B)realizable.
C)reasonably estimable.
D)measurable and available.
E)earned.

Accepted Answer

The answer of Under modified accrual accounting, revenues should be...

Question 9

Which group of governmental financial statements reports all revenues and all costs of providing services each year?
A)GAAP-Based Financial Statements.
B)Fund Financial Statements.
C)Cost-Based Financial Statements.
D)Government-Wide Financial Statements.
E)General Fund Financial Statements.

Accepted Answer

The Government-Wide Financial Statements report all revenues and all costs of providing services each year, including those from governmental funds and proprietary funds. This statement presents a full and complete view of the government's financial activities and position, making it the best choice for reporting all revenues and costs.

Question 10

Which type of fund is not included in the Government-Wide Financial Statements?
A)Governmental Funds
B)Proprietary Funds
C)Fiduciary Funds
D)Debt Service Funds
E)Special Revenue Funds

Accepted Answer

Fiduciary Funds are not included in the Government-Wide Financial Statements. These funds are held "in trust" by the government, such as pension funds or trust funds for individuals. The Government-Wide Financial Statements only include the results of the governmental activities and the business-type activities, which are reported in the governmental funds and the proprietary funds, respectively. The Debt Service Funds and Special Revenue Funds are both types of governmental funds and are therefore included in the Government-Wide Financial Statements.

Question 11

Which of the following funds is most likely created with an endowed gift?
A)Enterprise Fund.
B)Internal Service Fund.
C)Debt Service Fund.
D)Capital Projects Fund.
E)Permanent Fund.

Accepted Answer

Endowed gifts are typically set up to provide income in perpetuity, which is the function of a permanent fund. The other fund types listed are typically used for specific purposes with defined time periods for operations or expenditure.

Question 12

Which of the following is a fiduciary fund?
A)Pension trust fund.
B)Debt service fund.
C)Permanent fund.
D)Enterprise fund.
E)Capital projects fund.

Accepted Answer

A pension trust fund is a type of fiduciary fund that is used to account for funds that are held in trust for the benefit of an employee or group of employees. The fiduciary has the responsibility to manage and invest the assets of the fund in order to provide for future benefits. The other options listed are not fiduciary funds.

Question 13

The term "current financial resources" refers to
A)Those assets that can quickly be converted into cash.
B)Monetary assets available to meet the government's needs.
C)The government's current assets and current liabilities.
D)The current value of all net assets owned by the governmental unit.
E)Financial resources used to provide electricity to local citizens.

Accepted Answer

The answer of The term "current financial resources" refers to
A)Those...

Question 14

Which group of financial statements is prepared using the "modified accrual accounting" approach?
A)GAAP-Based Financial Statements.
B)Fund Financial Statements.
C)Cost-Based Financial Statements.
D)Government-Wide Financial Statements.
E)General Purpose Financial Statements.

Accepted Answer

Fund Financial Statements are prepared using the modified accrual accounting approach, which means revenues are recognized when they become measurable and available, and expenditures/expenses are recognized when the fund liability is incurred. This approach is specific to governmental and non-profit entities and differs from the accrual basis used in GAAP-based financial statements.

Question 15

Revenue from property taxes should be recorded in the General Fund
A)when received.
B)when there is an enforceable legal claim.
C)when they are available for recognition.
D)in the period for which they are required or permitted to be used.
E)in the period in which the tax bills are mailed.

Accepted Answer

Revenue from property taxes should be recorded in the period for which they are required or permitted to be used, called the period of levy or fiscal period. This is usually the fiscal year in which the tax is assessed, regardless of when it is collected. The other options are not correct because property taxes are not recognized when received, but when they are levied or assessed; there doesn't need to be an enforceable legal claim to record property taxes; "available for recognition" is not a relevant criterion for property taxes; and the mailing of the tax bills does not determine when revenue is recognized.

Question 16

Under modified accrual accounting, when should an expenditure be recorded to recognize interest on long-term debt?
A)at the end of each accounting period.
B)when payment is due within one fiscal year.
C)when payment is due.
D)when cash is available to pay the interest.
E)when the interest is incurred.

Accepted Answer

The answer of Under modified accrual accounting, when should an...

Question 17

Bay City received a federal grant to provide health care services to low income mothers and children. When should the revenues be recognized?
A)as health care services are provided.
B)when the awarding of the grant is announced.
C)when the grant money is received.
D)at the end of Bay City's fiscal year.
E)when the grant money is receivable.

Accepted Answer

Revenue from federal grants for health care services should be recognized as the services are provided, in accordance with the matching principle of accounting. This means that revenue should be recognized when the related expenses are incurred, which occurs as the health care services are provided.

Question 18

Governmental funds are
A)Funds used to account for the activities of a government that are carried out primarily to provide services to citizens.
B)Funds used to account for a government's ongoing organizations and activities that are similar to those operated by for-profit organizations.
C)Funds used to account for monies held by the government in a trustee capacity.
D)Funds used to account for all financial resources except those required to be accounted for in another fund.
E)Funds used to account for revenues that have been legally restricted as to expenditure.

Accepted Answer

Governmental funds are used to account for the activities of a government that are carried out primarily to provide services to citizens. These funds are typically used for public safety, education, and infrastructure, among other things. Examples of governmental funds include the general fund, special revenue funds, debt service funds, and capital projects funds.

Question 19

When a city received a federal grant for providing food and other assistance to the homeless, the money should have been recorded in
A)the General Fund.
B)an Expendable Trust Fund.
C)a Capital Projects Fund.
D)an Agency Fund.
E)a Special Revenue Fund.

Accepted Answer

The federal grant for providing food and other assistance to the homeless should be recorded in a Special Revenue Fund since it is a specific source of revenue that is restricted for a particular purpose. This ensures that the money is separated and used only for the intended purpose.

Question 20

Special Revenue funds are
A)Funds used to account for the activities of a government that are carried out primarily to provide services to citizens.
B)Funds used to account for a government's ongoing organizations and activities that are similar to those operated by for-profit organizations.
C)Funds used to account for monies held by the government in a trustee capacity.
D)Funds used to account for all financial resources except those required to be accounted for in another fund.
E)Funds used to account for revenues that have been legally restricted as to expenditure.

Accepted Answer

Special Revenue funds are used to account for revenues that have been legally restricted as to expenditure. This means that the funds can only be used for specific purposes, such as a government program or project, and cannot be used for other purposes. This helps ensure that the funds are used appropriately and in line with their intended purpose.

Quiz 11: Accounting for State and Local Governments, Part I

Which of the following is a governmental fund?

Fiduciary funds are

Which standard issued by the Governmental Accounting Standards Board in 1999 required two distinct sets of financial statements for state and local governments?

Trapper City issued 30-year bonds for the purpose of building a new City Hall. The proceeds of the bonds are deposited in the General Fund. For the Fund Financial Statements, in what fund will Bonds Payable appear?

Proprietary funds are

A city received a grant of $5,000,000 from a private agency. The money was to be used to build a new city library. In which fund should the money be recorded for the Fund Financial Statements?

What are the broad types or classifications of funds for a governmental entity such as a city?

Under modified accrual accounting, revenues should be recognized when they are

Which group of governmental financial statements reports all revenues and all costs of providing services each year?

Which type of fund is not included in the Government-Wide Financial Statements?

Which of the following funds is most likely created with an endowed gift?

Which of the following is a fiduciary fund?

The term "current financial resources" refers to

Which group of financial statements is prepared using the "modified accrual accounting" approach?

Revenue from property taxes should be recorded in the General Fund

Under modified accrual accounting, when should an expenditure be recorded to recognize interest on long-term debt?

Bay City received a federal grant to provide health care services to low income mothers and children. When should the revenues be recognized?

Governmental funds are

When a city received a federal grant for providing food and other assistance to the homeless, the money should have been recorded in

Special Revenue funds are