Question 1

In accounting for governmental funds, which of the following items could appear only on government-wide financial statements?
I. Fixed assets
II. Long-term debt
III. Investments
A) I only
B) I and II
C) I and III
D) I, II, III

Accepted Answer

Fixed assets and long-term debt could appear on both governmentwide financial statements and governmental fund financial statements, but investments would only appear on governmentwide financial statements. This is because governmental fund financial statements only report current assets and liabilities, while investments are considered long-term assets.

Question 2

The following information was obtained from the general fund balance sheet of Lima Village on June 30, 20X9, the close of its fiscal year:  On June 30, 20X9, what was Lima's unassigned fund balance in its general fund?
A) $84,000
B) $44,000
C) $34,000
D) $24,000

Accepted Answer

C

Question 3

According to the latest GASB exposure draft, which of the following is the only governmental fund type that may report an unassigned fund balance?
A) General fund
B) Special revenue fund
C) Capital projects fund
D) Permanent fund

Accepted Answer

According to the GASB exposure draft issued in April 2021, only the general fund may report an unassigned fund balance, which is the residual amount when other fund balances are accounted for. This is because the general fund is the primary operating fund of a government and is used to account for all financial resources except those required to be accounted for in another fund. Special revenue funds are used to account for specific revenue sources and may have restricted or committed fund balances. Capital projects funds are used to account for the construction or acquisition of major capital facilities and may have restricted or committed fund balances. Permanent funds are used to account for assets that are legally restricted to the extent that only earnings, and not principal, may be used to support the government's programs.

Question 4

Which of the following characteristics are emphasized in the accounting for state and local government entities?
I. Revenues should be matched with expenditures to measure success or failure of the government entity.
II. There is an emphasis on expendability of resources to accomplish objectives of the governmental entity.
A) I only
B) II only
C) I and II
D) Neither I nor II

Accepted Answer

The accounting for state and local government entities emphasizes the expendability of resources to accomplish objectives, rather than matching revenues with expenditures to measure success or failure. This approach focuses on how resources are used to meet the entity's goals.

Question 5

Which of the following statements best describes the reporting process for profit seeking and governmental entities?
A) In profit-seeking enterprises the measurement focus is on the flow of all economic resources of the firm, whereas the focus for governmental funds is on current financial resources.
B) In profit-seeking enterprises the measurement focus is on the flow of current financial resources, whereas the focus for government funds is on all economic resources.
C) Both Profit-seeking enterprises and governmental entities have an objective to measure profitability.
D) Both Profit-seeking enterprises and governmental entities use the accrual or cash basis of accounting to record and report transactions.

Accepted Answer

The statement accurately describes the reporting process for profit-seeking enterprises and governmental entities. In profit-seeking enterprises, the measurement focus is on the flow of all economic resources of the firm, while the focus for governmental funds is mainly on current financial resources.

Question 6

At the end of the fiscal year, uncollected property taxes in the general fund should be:
A) reclassified from current to delinquent.
B) written off as uncollectible.
C) charged against unassigned fund balance.
D) reclassified from current to noncurrent.

Accepted Answer

Uncollected property taxes at the end of the fiscal year in the general fund are typically reclassified from current to delinquent, reflecting their status change rather than being written off, charged against balances, or reclassified as noncurrent. This process helps in managing and tracking the collection status of property taxes.

Question 7

In a statement of revenues, expenditures, and changes in fund balance, the unassigned fund balance will be increased by:
I. a decrease in the fund balance-Nonspendable
II. an excess of other financing sources over other financing uses.
A) I only
B) II only
C) Both I and II
D) Neither I nor II

Accepted Answer

Both a decrease in the fund balance-Nonspendable and an excess of other financing sources over other financing uses would increase the unassigned fund balance. The first reallocates funds from nonspendable to potentially unassigned, and the second directly increases available resources.

Question 8

Which of the financial statements described below is prepared by the general fund of a state or local government?
A) A statement of cash flows.
B) An income statement.
C) A statement of revenues, expenses, and changes in retained earnings.
D) A statement of revenues, expenditures, and changes in fund balance.

Accepted Answer

The general fund of a state or local government prepares a statement of revenues, expenditures, and changes in fund balance to report its financial activities. This statement provides information on the sources and uses of funds, and how the fund balance has changed over the reporting period. Option A is prepared by a business organization to report its cash inflows, outflows, and ending balances. Option B is prepared by a business organization to report its revenues and expenses for a period. Option C is prepared by a corporation to report its revenues, expenses, and changes in equity (retained earnings) over a period.

Question 9

Which accounts described below would have non-zero balances after the accounts are closed in the general fund of a state or local government?
I. Estimated Revenues Control.
II. Appropriations Control.
III. Budgetary Fund Balance Unreserved.
IV. Deferred Revenue.
V. Due to Internal Service Fund.
VI. Fund Balance-Reserved for Inventories.
A) I, II, III.
B) I, II, IV.
C) IV, V, VI.
D) III, IV, V.

Accepted Answer

IV, V, and VI are accounts that would have non-zero balances after closing because they represent actual assets or liabilities (Deferred Revenue, Due to Internal Service Fund, and Fund Balance-Reserved for Inventories) rather than temporary or budgetary accounts like Estimated Revenues Control, Appropriations Control, and Budgetary Fund Balance Unreserved, which are zeroed out at the end of the fiscal period.

Question 10

Which of the following funds are classified as governmental funds?
A) Internal service and capital projects funds.
B) Internal service and debt service funds.
C) Enterprise and agency funds.
D) The general and special revenue funds.

Accepted Answer

The general and special revenue funds are classified as governmental funds. These funds are used to account for the regular ongoing operations of the government, such as providing public services like police and fire protection or funding schools. The other funds listed are not classified as governmental funds: internal service funds are used to account for the activities of a government’s service departments, enterprise funds are used to account for government-owned businesses, and debt service funds are used to account for the repayment of debt.

Question 11

Which of the following statements is(are) correct about the funds used by governmental entities?
I. Funds are fiscal entities.
II. Funds are accounting entities.
A) I only
B) II only
C) I and II
D) Neither I nor II

Accepted Answer

Funds are both fiscal and accounting entities. They are fiscal entities because they represent a separate pool of money that is set aside for a specific purpose, such as a particular function or project. They are also accounting entities because they are used to monitor and track financial transactions and to ensure that money is being used for the intended purpose.

Question 12

Which of the following funds are classified as fiduciary funds?
A) Agency and Special revenue funds.
B) Internal service and Enterprise funds.
C) Private-purpose trust and Agency funds.
D) Capital projects and Debt service funds.

Accepted Answer

Private-purpose trust funds hold resources for the benefit of specific individuals or organizations external to the government, and agency funds hold resources as an agent for individuals, organizations, or other governments. Both types of funds have a fiduciary responsibility to manage those resources in accordance with the purpose of the fund and the wishes of the beneficiaries.

Question 13

Which organization has the authority to establish generally accepted accounting principles for state and local government entities?
A) The National Council on Governmental Accounting
B) The Governmental Accounting Standards Board
C) The Financial Accounting Standards Board
D) The Municipal Officers Finance Organization

Accepted Answer

The Governmental Accounting Standards Board (GASB) has the authority to establish generally accepted accounting principles (GAAP) for state and local government entities in the United States. The National Council on Governmental Accounting was dissolved in 1984 and the Municipal Officers Finance Organization is not a recognized standard-setting body. The Financial Accounting Standards Board establishes GAAP for private sector entities.

Question 14

Which of the following funds provides goods and services only to other departments or agencies of the government on a cost-reimbursement basis?
A) Internal service funds
B) Enterprise funds
C) Special revenue funds
D) The general fund

Accepted Answer

Internal service funds provide goods and services to other departments or agencies of the same government entity. The goods and services are provided on a cost-reimbursement basis, meaning that the departments or agencies receiving the goods and services are charged the full cost of providing them. This allows for better control and management of resources within the government entity.

Question 15

All of the following funds have a financial resources measurement focus with the exception of which fund?
A) debt service fund
B) special revenue fund
C) capital projects fund
D) private-purpose trust fund

Accepted Answer

Private-purpose trust fund has a fiduciary measurement focus, while the other funds listed have a financial resources measurement focus.

Question 16

Which governmental fund includes resources that are legally restricted so that the governmental entity must maintain the principal and can use only the earnings from the fund's resources to benefit the government's programs for all of its citizens?
A) General fund
B) Special revenue fund
C) Capital projects fund
D) Permanent fund

Accepted Answer

Permanent funds are governmental funds that include resources that are legally restricted so that the governmental entity must maintain the principal and can use only the earnings from the fund's resources to benefit the government's programs for all of its citizens. Examples of permanent funds include endowments and trust funds. The other options listed (general fund, special revenue fund, and capital projects fund) do not have the same legal restrictions on their resources.

Question 17

Which of the following items should not be included as revenue for a state government?
A) Property taxes levied in the current fiscal year.
B) Private property for which a state takes custody when the legal owner cannot be found.
C) Amounts received from other financing sources.
D) Fines and licensing fees for which amounts cannot be budgeted.

Accepted Answer

The answer of Which of the following items should not...

Question 18

All of the following are elements of the statement of financial condition for state and local governments with the exception of:
A) Assets and Liabilities
B) Deferred inflow and outflow of resources
C) Net position
D) Inflow and outflow of resources

Accepted Answer

The statement of financial condition for state and local governments include assets, liabilities, deferred inflow and outflow of resources, and net position. Inflow and outflow of resources are typically reported in the statement of revenues, expenditures, and changes in fund balances.

Question 19

The Town of Baker reported the following items on the June 30, 20X9, balance sheet of its general fund:  At June 30, 20X9, what amount should be reported for Fund Balance-Unassigned?
A) $46,000
B) $40,000
C) $30,000
D) $16,000

Accepted Answer

The answer of The Town of Baker reported the following...

Question 20

Which of the following funds are classified as proprietary funds?
A) Agency and special revenue funds.
B) Enterprise and internal service funds.
C) Debt service and capital projects funds.
D) Agency and pension trust funds.

Accepted Answer

Enterprise and internal service funds are classified as proprietary funds because they are operated like businesses and charge fees to users for their services. All other options listed are classified as either governmental funds or fiduciary funds.

Quiz 17: Governmental Entities: Introduction and General Fund Accounting

In accounting for governmental funds, which of the following items could appear only on government-wide financial statements? I. Fixed assets II. Long-term debt III. Investments

The following information was obtained from the general fund balance sheet of Lima Village on June 30, 20X9, the close of its fiscal year: On June 30, 20X9, what was Lima's unassigned fund balance in its general fund?

According to the latest GASB exposure draft, which of the following is the only governmental fund type that may report an unassigned fund balance?

Which of the following statements best describes the reporting process for profit seeking and governmental entities?

At the end of the fiscal year, uncollected property taxes in the general fund should be:

In a statement of revenues, expenditures, and changes in fund balance, the unassigned fund balance will be increased by: I. a decrease in the fund balance-Nonspendable II. an excess of other financing sources over other financing uses.

Which of the financial statements described below is prepared by the general fund of a state or local government?

Which of the following funds are classified as governmental funds?

Which of the following statements is(are) correct about the funds used by governmental entities? I. Funds are fiscal entities. II. Funds are accounting entities.

Which of the following funds are classified as fiduciary funds?

Which organization has the authority to establish generally accepted accounting principles for state and local government entities?

Which of the following funds provides goods and services only to other departments or agencies of the government on a cost-reimbursement basis?

All of the following funds have a financial resources measurement focus with the exception of which fund?

Which governmental fund includes resources that are legally restricted so that the governmental entity must maintain the principal and can use only the earnings from the fund's resources to benefit the government's programs for all of its citizens?

Which of the following items should not be included as revenue for a state government?

All of the following are elements of the statement of financial condition for state and local governments with the exception of:

The Town of Baker reported the following items on the June 30, 20X9, balance sheet of its general fund: At June 30, 20X9, what amount should be reported for Fund Balance-Unassigned?

Which of the following funds are classified as proprietary funds?