Question 1

Governmental funds use the:

Accepted Answer

Governmental funds use the current financial resources measurement focus modified accrual basis of accounting.

Question 2

Proprietary funds use the:

Accepted Answer

Proprietary funds use the economic resources measurement focus and accrual basis of accounting.

Question 3

A city government makes its semiannual payment of interest on revenue bonds issued to pay for the construction of additional public transit stations. Which fund would account for the payment?

Accepted Answer

Enterprise funds are used when resources are provided primarily through the use of sales and service charges to parties external to the government. Examples of enterprise funds include utilities, airports, swimming pools and transit systems.

Question 4

Which of the following organizations has authority to establish accounting and financial reporting standards for the federal government?

Accepted Answer

Accounting and financial reporting standards for the federal governments are published by the FASAB. The standards are technically "recommendations" since, as a sovereign nation, the federal government cannot relegate authority to an independent board.

Question 5

Which of the following is most correct with regard to Management's Discussion and Analysis MD&A?

Accepted Answer

Management's Discussion and Analysis is required by federal SFFAC 3) and state and local governments a component of RSI.

Question 6

Long-term debt of a governmental unit would be reported in the:

Accepted Answer

Government-wide statements are prepared using the economic resource measurement focus and accrual accounting. Balance sheets prepared using the economic resource focus reports the balances in fixed assets and long-term liabilities.

Question 7

Which of the following is not a fiduciary fund type?

Accepted Answer

Fiduciary funds include private purpose trust, investment trust, pension trust and agency funds.

Question 8

Level "A" GAAP for Cook County Hospital, a public hospital, would be established by the:

Accepted Answer

The hospital is a public hospital. The Governmental Accounting Standards Board sets accounting and financial reporting standards for state and local governments in the U.S., governmentally related not-for-profit organizations, such as colleges and universities, health care entities, museums, libraries, and performing arts organizations that are owned or controlled by governments. So GASB would be responsible for level "A" GAAP.

Question 9

A city government sells police cars no longer in use. No restrictions have been placed on the proceeds. Which fund should account for the receipt?

Accepted Answer

The general fund would account for the proceeds of the sale. The general fund accounts for most of the basic services provided by the government. It accounts for and reports all financial resources not accounted for and reported in another fund. Capital projects funds account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays. Enterprise funds are used when resources are provided primarily through the use of sales and service charges to parties external to the government. Debt service funds account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest, other than interest or principal on proprietary or fiduciary activities.

Question 10

According to the GASB, Capital assets:

Accepted Answer

Proprietary and fiduciary funds and government-wide statements are prepared using the economic resource measurement focus and accrual accounting. Statements of Net Position prepared using the economic resource focus reports the balances in capital assets and long-term liabilities.

Question 11

Government-wide statements use the:

Accepted Answer

Government-wide statements use the economic resources measurement focus and accrual basis of accounting.

Question 12

Under GASB, modified accrual accounting would be found in the:

Accepted Answer

Governmental funds use modified accrual accounting. Government-wide, proprietary fund, and fiduciary fund statements are prepared using accrual accounting.

Question 13

Long-term debt to be paid from proprietary funds is reported as a liability in

Accepted Answer

Proprietary and government-wide statements are both prepared using the economic resource measurement focus and accrual accounting. Balance sheets prepared using the economic resource focus reports the balances in fixed assets and long-term liabilities. No adjustment is necessary when proprietary funds are combined with other funds in the government-wide statements.

Question 14

GASB Concepts Statement No. 3, defines methods of presenting information in financial reports. Concepts Statement No. 3 states that:

Accepted Answer

Concepts Statement No. 3 states that the notes to the financial statements are intended to enhance the understanding of items appearing in the financial statements but are not a substitute for recognition when a transition or event can be measured with sufficient reliability.

Question 15

A city government collects local sales taxes legally restricted to pay for the construction of a new courthouse. Which fund should account for the receipt of the sales taxes?

Accepted Answer

Capital projects funds account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays. As such, it accounts for the purchase or construction of major capital improvements, except those purchased or constructed by a proprietary or fiduciary fund.

Question 16

A city government collects local sales taxes legally restricted to pay for the hiring of teachers for hearing impaired school children. Which fund should account for the receipt of the sales taxes?

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. These include activities funded by federal or state grants or by taxes specifically restricted to certain activities.

Question 17

Notre Dame University, a private institution, has level "A" GAAP established by the:

Accepted Answer

This is a private not-for-profit. Accounting and financial reporting standards for profit-seeking businesses and for and for nongovernmental not-for-profit organizations are set by the Financial Accounting Standards Board FASB).

Question 18

Which of the following is correct regarding fund classifications?

Accepted Answer

Governmental funds include permanent, debt service, capital project, special revenue and general. Proprietary funds include internal service and enterprise. Fiduciary funds include private purpose trust, investment trust, pension trust and agency.

Question 19

Under GASB, accrual accounting is used for:

Accepted Answer

Government-wide, proprietary fund, and fiduciary fund statements are prepared using accrual accounting. Governmental funds use modified accrual accounting.

Question 20

Governmental funds do not include:

Accepted Answer

Governmental funds include permanent, debt service, capital project, special revenue and general.

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