For governmental entities, the modified accrual basis of accounting is not sues for:a. Special revenue fundsb. Proprietary fundsc. Debt service fundsd. The general funde. Capital projects funds

When a city is a trustee for a private-purpose trust, the information is accounted for in

a. the general fundb. the entity-wide financial statements c. a permanent fundd. a fiduciary funde. an agency fund

Which classification of Fund balance may be used for the General fund, but no other fund?

a. Spendable b. Nonspendable c. Assignedd. Unassignede. Restricted

A local government’s basic financial statements include a statement of cash flows for all

a. proprietary funds typesb. governmental fund types.c. Fund types.d. Agency fund types.e. A statement of cash flows is not required for any fund types.

A city government has obtained an asset through a capital lease. Which of the following is true for the government-wide financial statements?

a. The accounting parallels that used in for profit accounting.b. The city must report another financing source.c. The city must report an expenditure.d. Governments do not use capital lease financing.e. Recognition of depreciation is optional.

Information from which type of fund is not included in the Government-wide financial statements?

a. Governmental fundsb. Proprietary fundsc. Fiduciary fundsd. Blended-component units.e. Special revenue funds.

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

a. as health care services are provided.b. When the awarding of the grant is announced publicly.c. When the grant money is received.d. At the end of Rerun City’s fiscal year.e. When the grant money is release by the federal government.

Torrance issued 20-year bonds for the purpose of building a new Municipal Records Center. The proceeds of the bonds are deposited in a capital projects fund. For the fund-based financial statements, in what fund will the Bonds payable account appear?

a. General fund.b. Permanent fundc. Debt service fundd. Capital projects funde. Bonds payable do not appear in the fund-based financial statements in

this case.

According to GASB Concepts Statement No. 1, what are the three groups of primary users of external state and local governmental financial reports?

a. The securities exchange commission, legislative and oversight bodies.b. The securities exchange commission, legislative and oversight bodies and

investors and creditors.c. The securities exchange commission, the citizenry and investors and

creditors.d. The citizenry, legislative and oversight bodies and investors and

creditors.e. The citizenry, management and the Governmental Accounting Office.

Which of the following statements is false regarding government wide (entry wide) financial statements?

a. Government-wide financial statements report a government’s activities and financial position as a whole.

b. The government wide financial statement approach helps users make long-term evaluations of the financial decision and stability of the government.

c. Government-wide financial statements assess the finances of the government in its entirety, including the year’s operating results.

d. Government wide financial statements focus on the short-term instead of long-term.

e. The measurement focus of government-wide financial statements is on all econcomic resources and utilizes accrual accounting.

For the purpose of government-wide financial statements, the cost of cleaning up a government-owned landfill and closing the landfill

a. is not recognized until the costs are actually incurred.b. Is measured at the future value and amortized over the expected useful

life of the landfill.c. Is measure on the current estimated cost and recognized on a pro-rated

basis each period based on how much the landfill has been filled.d. Is accrued in full at the time the costs become estimable.e. Is treated as an encumbrance at the time it becomes estimable and as

expenditure when it is actually paid.

What is the basis of accounting used in reporting the statement of activities for a government?

a. cash basis.b. Modified accrual basisc. Accrual basis.d. Either cash basis or accrual basis, depending on the type of revenue.e. Either modified accrual basis or accrual basis, depending on the type of

revenue.

Budgets are important in the governmental environment because of all of the following except:

a. they express public policy.b. They express financial intent for the upcoming year.c. They provide control by establishing spending limitations. d. They offer a means of evaluating performance.e. They are critical component of the government-wide financial

statements.

The city received a private donation of $1,000,000 stipulating that the principal would be reserved but interest income would be spent on maintaining city parks. Which fund would record the use of the interest income?

a. a special assessment fund.b. An agency fundc. A special revenue fundd. A permanent funde. The general fund

Downs Township has received a donation of a rare painting worth $1,000,000. For Downs’ government wide financial statements, three criteria must be met before Downs can opt not to recognize the painting as an asset. Which of the following is not one of the three criteria?

The painting is held for public exhibition, education or research in furtherance of public service, rather than financial gain.

The painting is scheduled to be sold immediately at auction to support the general government’s activities.

The painting is protected, kept unencumbered, cared for and preserved.

A, item 1 is not one of the three criteria. b. item 2 is not one of the three criteria.c. item 3 is not one of the three criteria.d. all three items are required criteria.e. none of the three items are required criteria

A method of recognizing the ongoing costs of infrastructure assets that allows the expensing of all maintenance costs each year in place of recognizing depreication is called

a. government wide depreciation b. proprietary depreciationc. modified approachd. alternative depreciatione. GASB depreciation

What account is debited in the general fund when equipment is received by a governmental entity?

a. encumbrancesb. plant assetsc. capital assetsd. expensese. expenditures

According to the GASB, a special purpose government a. is always called “a component unit.”b. Provided a wide range of services.c. Carries out a single function or limited number of functions for the public.d. Is a government that can issue preferred stock.

A government’s CAFR consists of:a. only the fund-based financial statements.b. Only the government-wide financial statements. c. Only the government-wide financial statements combined with the

fiduciary funds.d. The government’s financial statements, both fund-based and

government-wide, plus specific additional items like MD&A.

Which statement is false regarding the government wide statement of net assets?a. investments are reported at fair value rather than historical cost.b. The purpose of the statement of net assets is to report the economic

resources of the government as a whole.c. Assets are reported excluding capital assets.d. Capital assets are reported net of depreciation.e. Business-type activities include enterprise funds.

Which item is not included on the government wide statement of acitvities?a. revernuesb. liabilitiesc. expensesd. operating grantse. capital contributions.

In a city’s financial records, an encumbrance representsa. a receivable from a city employee.b. An unusual revenue source.c. The posting of the budget into a fundd. A purchase commitmente. A liability to an outside contractor.

Of the fiduciary funds, the one that would be used for recources held by a government as an agent for another government would be

a. a capital projects fund.b. An agency fundc. A pension trust fundd. A permanent funde. An investment trust fund

A proprietary fund that is used to account for any operation that provides services to another department or agency within the government on a cost-reimbursement basis is called

a. a captive business.b. A debt service fundc. A business-type operation.d. An internal service fund.e. Another financing source.

City college, a public institution of higher education, must prepare financial statements

a.in the same manner as private collegs and universities.b. as if the college was an internal service fundc. following the same rules as state and local governmentsd according to private sector GAAPf. as if the college was fiduciary fund.

Not for profit organizations should report expenses in the following categories:a. fund raising and other expenses.b. Cash expenses and non cash expenses.c. Temporarily restricted expenses and unrestricted expenses.d. Supporting (administrative and fund-raising) and program expenses.e. Functional expenses and program expenses.

The following statements are similar to the balance sheet of a corporation:a. Statement of activities and statement of fiduciary neet assetsb. Statement of revenues, expenditures and changes in fund balance and

statement of activities.c. Statement of financial position and statement of net assetsd. Statement of cash flows and statement of functional expenses.e. Statement of revennues, expenses and changes in fund net assets and

statement of activities.

A hospital provides $180,000 of charity services for poor patients. The hospital staff knows that no payment for the services can ever be collected but decides to treat the patients anyway. The hospital should

a. credit deferred revenuesb. credit reserve for charitable operationsc. recognize no revenue at alld. increase its allowance for uncollectible accountse. credit contractual adjustments.

Volunteers provide a lot of work for a local not-for-profit. Which donation of labor should be recognized as revenue?

a. High school students volunteer to stand outside Raley’s to collect donations.

b. Citizens gather fist Saturday of the month and mow the lawn and rake leaves.

c. Professional carpenters show up and completely remodeled the not-for-profit’s offices over the last weekend in May.

d. Local students work a few hours each week to alphabetize folders for filing

e. Local community members go door-to-door to collect donations for the organization.

Which of the following is not a question individuals ask for not-for-profit organizations in considering whether to make a contribution?

a. Will donated funds be used effectively by the organization to accomplish its purpose?

b. Will the donated funds be wasted?c. Is this organization profitable?d. How much should this organization receive?e. Is contributing to this charity a wise allocation of resources