Question 1

Which of the following statement(s)are not included in the proprietary funds?
A) Statement of Revenues, Expenses, and Changes in Net Assets
B) Statement of Cash Flows
C) Balance Sheet
D) All of the above are included

Accepted Answer

Proprietary funds use a Statement of Net Position instead of a Balance Sheet.

Question 2

Which of the following fund types uses modified accrual accounting?
A) Debt Service
B) Internal Service
C) Investment Trust
D) Enterprise

Accepted Answer

Debt Service funds use modified accrual accounting, which means that revenue is recognized when it is measurable and available to finance current period expenditures, while expenditures are recognized when they are incurred. This method of accounting is used for funds that have a short-term focus and are heavily reliant on cash flows. Internal Service funds use full accrual accounting, while Investment Trust and Enterprise funds may use either modified accrual or full accrual accounting depending on the type of activities they engage in.

Question 3

Which of the following is not an environmental difference between governments and for-profit business enterprises?
A) Organizational purposes.
B) Sources of revenue.
C) Role of the budget.
D) Donor restrictions.

Accepted Answer

Donor restrictions are not an environmental difference between governments and for-profit business enterprises, as they primarily apply to non-profit organizations that rely on donations for funding. Governments and for-profit businesses may have different organizational purposes, sources of revenue, and roles of the budget, but they generally do not have to contend with donor restrictions in the same way that non-profit organizations do.

Question 4

What are Enterprise funds used for?
A) To account for pension and employee benefit funds for which the governmental unit is the trustee.
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.
C) To account for most of the basic services provided by the governmental units.
D) To account for resources provided primarily through the use of sales and service charges to parties external to the government.

Accepted Answer

Enterprise funds are used to account for resources provided primarily through the use of sales and service charges to parties external to the government. These funds are typically used for activities that function like businesses, such as water or electric utilities, where the revenue generated from customer payments covers the costs of providing the service.

Question 5

State and local governmental funds are organized into three categories including:
A) governmental, proprietary, and restricted
B) proprietary, fiduciary, and restricted
C) governmental, fiduciary, and restricted
D) governmental, proprietary, and fiduciary

Accepted Answer

State and local governmental funds are organized into three categories including governmental, proprietary, and fiduciary funds. Restricted funds are a subset of any of these three categories and refers to funds that are legally restricted by external parties or laws, such as grant funds.

Question 6

The ______ Funds are used when resources are provided primarily through the use of sales and service charges to parties external to the government.
A) Special Revenue
B) General
C) Enterprise
D) Agency

Accepted Answer

The Enterprise Funds are used when resources are provided primarily through the use of sales and service charges to parties external to the government, such as fees for water, sewer, or public transportation services. Special Revenue Funds are used when resources are restricted or committed for specific purposes other than debt service or capital projects, and are often supported by taxes or grants. General Funds are used for general government operations, while Agency Funds are used to hold resources in a custodial capacity for individuals, organizations, or other governments.

Question 7

The _______ sets the accounting and financial reporting standards for both state and local governments and public not-for-profits.
A) FASAB
B) FASB
C) GASB
D) AICPA

Accepted Answer

GASB (Governmental Accounting Standards Board) sets the accounting and financial reporting standards for both state and local governments and public not-for-profits. FASAB (Federal Accounting Standards Advisory Board) sets accounting and financial reporting standards for the federal government, while FASB (Financial Accounting Standards Board) sets accounting standards for private-sector entities. AICPA (American Institute of Certified Public Accountants) is a professional organization for certified public accountants and does not set accounting and financial reporting standards.

Question 8

Which of the following fund types does not use modified accrual accounting?
A) Debt Service
B) Special Revenue
C) Agency
D) Permanent

Accepted Answer

Agency funds use cash basis accounting, not modified accrual accounting. The other options (Debt Service, Special Revenue, and Permanent) all use modified accrual accounting.

Question 9

The ___________ is the government's official annual report prepared and published as a matter of public record.
A) comprehensive annual financial report
B) governmental annual financial report
C) independent auditor's report
D) complete audited financial report

Accepted Answer

The comprehensive annual financial report (CAFR) is the government's official annual report that includes financial statements, management's discussion and analysis, and other supplementary information. It is prepared and published as a matter of public record to provide transparency and accountability to taxpayers and other stakeholders. Option B is incorrect because there is no specific term called a "governmental annual financial report." Option C refers to the report issued by an external auditor, which is not the same as the government's official report. Option D is not a standard term used in government financial reporting.

Question 10

Which of the following is an environmental difference between governments and for-profit business enterprises?
A) Relationship with stakeholders
B) Donor restricted assets
C) Fiduciary responsibilities
D) Private inurement of residual earnings

Accepted Answer

The answer of Which of the following is an environmental...

Question 11

Which of the following funds is considered a Fiduciary Fund?
A) Debt Service Fund
B) Enterprise Fund
C) Internal Service Fund
D) Agency Fund

Accepted Answer

An Agency Fund is considered a Fiduciary Fund as it is used to account for assets held by the government on behalf of other entities or individuals, such as taxes collected for a school district. The other options (Debt Service Fund, Enterprise Fund, Internal Service Fund) are all considered Proprietary Funds, which account for business-type activities of the government.

Question 12

The ______ Fund accounts for all resources other than those required to be accounted for in other funds.
A) Special Revenue
B) General
C) Enterprise
D) Agency

Accepted Answer

The General Fund is used to account for all resources that are not required to be accounted for in other funds. It is the primary fund used by governmental entities and is used to finance most of the operations of the government. The other answer choices are different types of funds used for specific purposes.

Question 13

A government may have __________________ General Fund(s)in a given year.
A) As many as needed
B) Only one
C) The number will vary depending on the needs of the government.
D) None of the above.

Accepted Answer

The answer of A government may have __________________ General Fund(s)in...

Question 14

Which of the following funds is not a Fiduciary Fund?
A) Private Purpose Trust Fund
B) Special Revenue Fund
C) Pension Fund
D) Investment Trust Fund

Accepted Answer

Special Revenue Funds are not Fiduciary Funds because they are not held in trust for the benefit of others.

Question 15

Which of the following are included in the GASB standards budgetary principle?
A) Accounting systems should provide the basis for appropriate budgetary control.
B) Annual budgets should be adopted by every governmental unit.
C) Budgetary comparisons should be included in the appropriate financial statements.
D) All of the above

Accepted Answer

All of the options listed (A, B, and C) are included in the GASB standards budgetary principle.

Question 16

A permanent fund classified under governmental funds:
A) Accounts for most of the basic services provided by the governmental unit.
B) Accounts for financial resources intended for major capital projects.
C) Accounts for services provided by one department of a government to another.
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.

Accepted Answer

A permanent fund classified under governmental funds 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.

Question 17

Capitalized fixed assets are reported in which financial statement?
A) Agency fund
B) Proprietary fund
C) Governmental fund
D) All of the above

Accepted Answer

Capitalized fixed assets are reported in the proprietary fund financial statement, which includes the Statement of Net Position and the Statement of Revenues, Expenses, and Changes in Fund Net Position. They are not reported in agency funds or governmental funds.

Question 18

The ______ Funds are used to account for situations in which the government is acting as a collecting/disbursing agent.
A) Special Revenue
B) General
C) Enterprise
D) Agency

Accepted Answer

The Agency Funds are used to account for situations in which the government is acting as a collecting/disbursing agent. This typically involves funds collected from others that the government is holding temporarily until they are transferred to the rightful owner. The government is not the owner of these funds and therefore they are not reported in the government's financial statements.

Question 19

What basis of accounting would the Enterprise Fund use?
A) Accrual
B) Modified Accrual
C) Cash
D) Expended Accrual

Accepted Answer

Enterprise funds are proprietary funds and use accrual accounting.

Question 20

The ______ Fund accounts for and reports the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purpose other than debt service or capital projects.
A) Special Revenue
B) General
C) Enterprise
D) Agency

Accepted Answer

Special Revenue Funds account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for a specified purpose other than debt service or capital projects.

Quiz 1: Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations

Which of the following statement(s) are not included in the proprietary funds?

Which of the following fund types uses modified accrual accounting?

Which of the following is not an environmental difference between governments and for-profit business enterprises?

What are Enterprise funds used for?

State and local governmental funds are organized into three categories including:

The ______ Funds are used when resources are provided primarily through the use of sales and service charges to parties external to the government.

The _______ sets the accounting and financial reporting standards for both state and local governments and public not-for-profits.

Which of the following fund types does not use modified accrual accounting?

The ___________ is the government's official annual report prepared and published as a matter of public record.

Which of the following is an environmental difference between governments and for-profit business enterprises?

Which of the following funds is considered a Fiduciary Fund?

The ______ Fund accounts for all resources other than those required to be accounted for in other funds.

A government may have __________________ General Fund(s) in a given year.

Which of the following funds is not a Fiduciary Fund?

Which of the following are included in the GASB standards budgetary principle?

A permanent fund classified under governmental funds:

Capitalized fixed assets are reported in which financial statement?

The ______ Funds are used to account for situations in which the government is acting as a collecting/disbursing agent.

What basis of accounting would the Enterprise Fund use?

The ______ Fund accounts for and reports the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purpose other than debt service or capital projects.