Question 1

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 funds include enterprise funds, which are used to account for activities that provide goods or services to the public for a fee, and internal service funds, which are used to account for activities that provide goods or services to other departments or agencies within the government.

Question 2

The term "current financial resources" refers to
A)Those assets that can quickly be converted into cash.
B)Monetary assets that are 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

B

Question 3

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

Permanent fund is a governmental fund. It is used to account for resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government's programs.

Question 4

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

Pension trust fund is a type of fiduciary fund that holds and invests assets for pension plans. The other options are not fiduciary funds. Debt service fund is used to account for the repayment of principal and interest on debt, permanent fund is used to account for donations to be held in perpetuity, enterprise fund is used to report activities similar to those found in private sector businesses, and capital projects fund is used to account for the construction or acquisition of major capital assets.

Question 5

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

The revenues should be recognized as the health care services are provided, which is when the organization earns the revenue. The grant money is simply a funding source and does not represent revenue until the related services have been provided.

Question 6

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

A Special Revenue Fund is used to account for the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The federal grant for providing food and other assistance to the homeless is a specific revenue source, and the purpose is also specified as food and other assistance to the homeless. Therefore, a Special Revenue Fund is the appropriate fund for recording this grant.

Question 7

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

Accepted Answer

Fund-Based Financial Statements are prepared using the modified accrual accounting approach, which focuses on recording revenues when they become available and measurable and recording expenditures when the related fund liability is incurred. This accounting method is specific to government entities and not used in GAAP-Based or Cost-Based Financial Statements, while Government-Wide Financial Statements use the accrual accounting method. General Purpose Financial Statements can be prepared using either accrual or modified accrual accounting, depending on the entity's requirements.

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 recognized...

Question 9

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 usually intended to be permanently invested, with only the earnings from the investment used to fund the intended purpose. Therefore, the most likely fund created with an endowed gift is a Permanent Fund.

Question 10

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-Based 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

The money received for building a new city library would be best recorded in a Capital Projects Fund. This type of fund is used for funding long-term capital projects, such as construction of a new building, and is reported separately from the General Fund in the Fund-Based Financial Statements.

Question 11

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. These funds are usually set up to provide specific services or programs that are funded by grants, user fees, or taxes that are legally restricted as to their use. This means that the funds can only be used for the specific purpose for which they were collected, such as road repairs or education programs.

Question 12

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

Governmental entities such as cities typically use governmental, proprietary, and fiduciary funds to manage their finances. Governmental funds are used for basic services such as public safety and roads, while proprietary funds are used for commercial activities such as utilities and parking. Fiduciary funds are used to manage assets held in trust for others, such as pension and benefit funds.

Question 13

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

Under modified accrual accounting, an expenditure to recognize interest on long-term debt should be recorded when payment is due. This is because modified accrual accounting recognizes revenues when they become available and measurable, and recognizes expenses when they become due and payable. Since interest on long-term debt is typically due at set payment dates, it should be recorded as an expenditure at that time.

Question 14

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. This includes funds for general government services, public safety, public works, education, and social services.

Question 15

Which standard issued by the Governmental Accounting Standards Board in 1999 requires 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 requires state and local governments to prepare two distinct sets of financial statements: government-wide financial statements and fund financial statements.

Question 16

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 because they are held by the government in a trustee capacity and do not reflect the government's financial position or results of operations. The Government-Wide Financial Statements only include governmental and proprietary funds. Debt service funds and special revenue funds are both types of governmental funds and are therefore included in the Government-Wide Financial Statements.

Question 17

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

The answer of Revenue from property taxes should be recorded...

Question 18

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-Based 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-Based Financial Statements.

Accepted Answer

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

Question 19

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

Accepted Answer

Government-Wide Financial Statements report all revenues and all costs of providing services each year, allowing for a full picture of the financial position and operations of the government as a whole. Fund-based financial statements only report on specific funds, such as the General Fund, and may not provide a comprehensive view of financial activities. Cost-based financial statements do not exist in governmental accounting. The GAAP-Based Financial Statements and General Fund Financial Statements are subsets of the broader categories of Government-Wide and Fund-Based Financial Statements, respectively.

Question 20

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. These funds are separate from the government's other funds and cannot be used to finance government activities. Examples include pension trust funds, investment trust funds, and agency funds.

Quiz 11: Accounting for State and Local Governments Part 1

Proprietary funds are

The term "current financial resources" refers to

Which of the following is a governmental fund?

Which of the following is a fiduciary fund?

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

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

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

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

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

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-Based Financial Statements?

Special Revenue funds are

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

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

Governmental funds are

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

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

Revenue from property taxes should be recorded in the General Fund

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-Based Financial Statements,in what fund will Bonds Payable appear?

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

Fiduciary funds are