Question 1

The modified accrual basis of accounting is used for
A)governmental funds.
B)proprietary funds.
C)internal service funds.
D)both A and C.

Accepted Answer

A

Question 2

Approved or authorized expenditures that provide legislative control over the expenditure budget are referred to as
A)appropriations.
B)allotments.
C)allocations.
D)encumbrances.

Accepted Answer

Appropriations are the approved or authorized expenditures that provide legislative control over the expenditure budget. Allotments refer to the portion of a budget that is allocated to a particular department or program. Allocations refer to the distribution of funds within a department or program. Encumbrances are commitments made for future expenditures, such as orders for goods or services yet to be received.

Question 3

The key focus of government fund accounting concerns
A)capital expenditures.
B)intergovernmental transfers from the general fund.
C)income measurement.
D)the current ability to provide and fund services and goods.

Accepted Answer

Government fund accounting is mainly focused on the current ability of the government to provide and fund services and goods. This includes managing the current resources, revenues, and expenditures. While capital expenditures are a part of this focus, it is not the sole concern. Intergovernmental transfers from the general fund and income measurement are also important factors but are not the key focus.

Question 4

The accounting equation for a governmental fund is
A)Assets = Liabilities + Equity.
B)Current assets + Noncurrent assets - Current liabilities - Noncurrent liabilities = Net assets.
C)Current assets - Current liabilities = Fund Balance.
D)Assets = Liabilities + Fund Balance.

Accepted Answer

The answer of The accounting equation for a governmental fund...

Question 5

The accounting equation for an agency fund is
A)Current assets - Current liabilities = Fund Balance.
B)Assets - Liabilities = Equity.
C)Assets = Equity + Liabilities.
D)Assets = Liabilities.

Accepted Answer

For an agency fund, the assets belong to the agency's clients, not to the agency itself. Therefore, the accounting equation is simplified to Assets = Liabilities, as the agency has no claim on the assets held.

Question 6

When examining revenue transactions,which of the following transactions is classified as an exchange transaction?
A)When a homeowner pays property taxes
B)When a university receives a federal grant that mandates a certain type of research activity
C)When an aquatic center receives cash for a group swim
D)When an employer deducts money for state tax withholding

Accepted Answer

An exchange transaction is when there is a direct exchange of goods or services for cash or other goods and services. In this case, the aquatic center is receiving cash in exchange for allowing a group to swim, making it an exchange transaction. The other transactions do not involve a direct exchange of goods or services for cash or other goods and services, so they are not classified as exchange transactions.

Question 7

Governmental fund financial statements are prepared on the ________ basis of accounting.Proprietary fund financial statements are prepared on the ________ basis of accounting.
A)modified accrual;modified accrual
B)accrual;fund
C)modified accrual;accrual
D)blended;discrete

Accepted Answer

Governmental fund financial statements are prepared on the modified accrual basis of accounting, while proprietary fund financial statements are prepared on the accrual basis of accounting.

Question 8

Government-wide financial statements include a
A)balance sheet,an income statement,and a statement of cash flows.
B)statement of net assets,a statement of activities,and a statement of cash flows.
C)statement of net position and a statement of activities.
D)statement of activities and a statement of cash flows.

Accepted Answer

Government-wide financial statements typically include a Statement of Net Position and a Statement of Activities. These statements provide a broader view of the government's overall financial status.

Question 9

Governmental accounting differs from corporate financial accounting primarily because
A)the size of the government and the various levels would make it unreasonable to use corporate GAAP.
B)governments lack a profit motive and must focus on accountability to the public they serve.
C)the government has no stakeholders who require financial reporting.
D)the government has too many types of organizations to use one type of corporate GAAP.

Accepted Answer

Governmental accounting differs from corporate financial accounting primarily because governments lack a profit motive and must focus on accountability to the public they serve. While corporate accounting focuses on generating profit and providing information to stakeholders, governmental accounting is geared towards transparency and demonstrating responsible stewardship of public resources. Additionally, the size and complexity of government operations require specialized accounting standards and reporting requirements that are tailored to the unique needs of the public sector.

Question 10

Which type of fund is used to account for a government activity that sells goods or services either solely or almost solely to external customers?
A)A temporary fund
B)A general fund
C)An agency fund
D)An enterprise fund

Accepted Answer

An enterprise fund is used to account for a government activity that sells goods or services either solely or almost solely to external customers. This fund is intended to be self-supporting through user fees or charges, like a business would be.

Question 11

Which pronouncements have the highest level of authority for state and local governments?
A)Financial Accounting Standards Board Statements
B)GASB Statements
C)Consensus Positions of GASB Emerging Issues Task Force
D)GASB Technical Bulletins

Accepted Answer

GASB Statements have the highest level of authority for state and local governments.

Question 12

Government-wide financial statements exclude the
A)general fund.
B)fiduciary funds.
C)proprietary funds.
D)special revenue funds.

Accepted Answer

Government-wide financial statements exclude fiduciary funds because these funds are held in a trustee or agency capacity for others and cannot be used to support the government's own programs.

Question 13

What basis of accounting is used to prepare Government-wide financial statements?
A)Modified accrual basis
B)Accrual basis
C)Cash basis
D)Fiduciary basis

Accepted Answer

Government-wide financial statements are prepared on the accrual basis of accounting, which recognizes revenue when earned and expenses when incurred, regardless of when cash is received or paid. This helps to provide a more accurate picture of the government's financial position and performance.

Question 14

Which fund would most likely report depreciation expense?
A)A special revenue fund
B)An enterprise fund
C)A capital projects fund
D)A debt service fund

Accepted Answer

Enterprise funds are used to account for activities that operate like a business, so they would most likely report depreciation expense. Special revenue funds are used to account for specific revenue sources, capital projects funds are used to account for projects that are funded by bonds, and debt service funds are used to account for the payment of principal and interest on debt.

Question 15

A comprehensive annual financial report has the following three major sections:
A)introductory,financial,and management's discussion and analysis.
B)introductory,financial,and statistical.
C)transmittal,financial,and statistical.
D)transmittal,financial,and management's discussion and analysis.

Accepted Answer

A comprehensive annual financial report (CAFR) is typically divided into three major sections: the introductory section, the financial section, and the statistical section. The introductory section provides an overview of the report, the financial section includes the basic financial statements and notes, and the statistical section presents additional financial and demographic information in a detailed format.

Question 16

What funds are reported in Government-wide financial statements?
A)Governmental only
B)Proprietary only
C)Governmental and proprietary
D)Governmental,proprietary and fiduciary

Accepted Answer

Government-wide financial statements include both governmental and proprietary funds, but exclude fiduciary funds, to provide a comprehensive overview of a government's overall financial status.

Question 17

Centralized data processing,central motor pools and garages,centralized risk-financing activities,and central stores typically would be accounted for using what type of fund?
A)An agency fund
B)An enterprise fund
C)An internal service fund
D)A trust fund

Accepted Answer

The activities mentioned suggest internal operations that provide goods or services within the same government. Internal service funds are used to account for the financing of goods and services provided by one department or agency to other departments or agencies of the same government.

Question 18

Because a fund is an accounting entity,each fund has
I.its own accounting equation.
II.its own journals,ledgers,and other accounting records.
III.its own separate auditor.
A)I only
B)II only
C)I and II
D)I,II and III

Accepted Answer

A fund is an independent accounting entity with its own set of financial transactions, resources, and limitations. As a result, each fund has its own accounting equation and accounting records in the form of journals and ledgers. However, it does not necessarily have its own separate auditor, as it may be audited as part of a larger entity's audit.

Question 19

Internal Service Funds differ from Enterprise Funds because Internal Service Funds
A)are a proprietary fund.
B)are intended to show a profit.
C)charge for their services.
D)provide goods and services primarily to other government agencies.

Accepted Answer

Internal Service Funds provide goods and services primarily to other government agencies, while Enterprise Funds provide goods and services to the general public. Internal Service Funds may or may not charge for their services, and their purpose is not necessarily to show a profit. However, both Internal Service Funds and Enterprise Funds are considered proprietary funds.

Question 20

Under the modified accrual basis of accounting,revenues are recognized in the period
A)when the relevant service is done.
B)when they are collected.
C)when the paying entity is billed.
D)when they become both measurable and available.

Accepted Answer

Under the modified accrual basis of accounting, revenues are recognized in the period when they become both measurable and available. This means that the revenue has been earned and the cash is expected to be collected in the near future. This approach recognizes revenues when the underlying transaction has occurred and the cash is expected to be collected soon, which provides a more accurate picture of the entity's financial performance.

Quiz 19: An Introduction to Accounting for State and Local Governmental Units

The modified accrual basis of accounting is used for

Approved or authorized expenditures that provide legislative control over the expenditure budget are referred to as

The key focus of government fund accounting concerns

The accounting equation for a governmental fund is

The accounting equation for an agency fund is

When examining revenue transactions,which of the following transactions is classified as an exchange transaction?

Governmental fund financial statements are prepared on the basis of accounting.Proprietary fund financial statements are prepared on the basis of accounting.

Government-wide financial statements include a

Governmental accounting differs from corporate financial accounting primarily because

Which type of fund is used to account for a government activity that sells goods or services either solely or almost solely to external customers?

Which pronouncements have the highest level of authority for state and local governments?

Government-wide financial statements exclude the

What basis of accounting is used to prepare Government-wide financial statements?

Which fund would most likely report depreciation expense?

A comprehensive annual financial report has the following three major sections:

What funds are reported in Government-wide financial statements?

Centralized data processing,central motor pools and garages,centralized risk-financing activities,and central stores typically would be accounted for using what type of fund?

Because a fund is an accounting entity,each fund has I.its own accounting equation. II.its own journals,ledgers,and other accounting records. III.its own separate auditor.

Internal Service Funds differ from Enterprise Funds because Internal Service Funds

Under the modified accrual basis of accounting,revenues are recognized in the period