Question 1

Which of the following funds is considered a Fiduciary Fund?
A) Debt Service Fund
B) Enterprise Fund
C) Internal Service Fund
D) Pension Trust Fund

Accepted Answer

Pension Trust Funds are considered Fiduciary Funds as they hold resources in a trustee capacity for participants and their beneficiaries. The other funds listed are either governmental or proprietary funds.

Question 2

GASB Concepts Statement No.3,Communication Methods in General Purpose External Financial Reports that Contain Basic Financial Statements,states that
A) notes to the financial statements may include management's objective explanations.
B) required supplementary information must be objective and may not include predictions or subjective assessments.
C) disclosure in the notes is not an adequate substitute for recognition in the financial statements.
D) All of the above are correct.

Accepted Answer

All of the statements given in options A, B, and C are correct as per GASB Concepts Statement No.3. The statement explains the communication methods that can be used in general purpose external financial reports that contain basic financial statements. Option A highlights that notes to financial statements may include management's subjective explanations. Option B emphasizes that required supplementary information must be factual and may not contain predictions or estimations. Option C states that disclosure in the notes cannot replace recognition in financial statements. Thus, all options are correct.

Question 3

A city government collects local option 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?
A) Special revenue fund
B) Capital projects fund
C) Private-purpose trust fund
D) General fund

Accepted Answer

The special revenue fund is used to account for specific revenue sources that are legally restricted for particular purposes. In this case, the local option sales tax is restricted for hiring teachers for hearing impaired school children, making the special revenue fund the most appropriate choice to account for this receipt.

Question 4

Which of the following is most correct with regard to Management's Discussion and Analysis (MD&A)?
A) State and local governments are required to provide an MD&A.
B) Federal agency financial reports are required to provide an MD&A.
C) Both state and local governments and federal agencies are encouraged, but not required to provide an MD&A.
D) Both state and local governments and federal agencies are required to provide an MD&A.

Accepted Answer

Both state and local governments and federal agencies are required to provide an MD&A as per the guidelines provided by the SEC in the US. The MD&A provides insights into the company's financial condition, changes in financial condition, and results of operations.

Question 5

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?
A) Debt service fund
B) Capital projects fund
C) Enterprise fund
D) General fund

Accepted Answer

The best choice for accounting for the receipt from the sale of police cars no longer in use is the General fund. The General fund is used to account for the day-to-day operations of the government, including the sale of surplus property. Since there are no restrictions on the proceed, it makes sense to record the receipt in the General fund where it can be used for any purpose.

Question 6

Which of the following is not a fiduciary fund type?
A) Agency.
B) Expendable trust.
C) Private-purpose trust.
D) Investment trust.

Accepted Answer

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

Question 7

Which of the following is true regarding fund classifications?
A) Governmental funds include the General, special revenue, debt service, capital projects, and permanent.
B) Proprietary funds include enterprise, internal service, and private-purpose.
C) Both of the above.
D) None of the above.

Accepted Answer

The answer of Which of the following is true regarding...

Question 8

Which of the following is not true regarding GASB Concepts Statement No.2,Service Efforts and Accomplishments Reporting:
A) It encourages governments to experiment with reporting more complete information about an entity's performance than can be displayed in the traditional financial statements.
B) It outlines categories of information that might be reported.
C) It prescribes detailed standards governing the reporting of service efforts and accomplishments reporting.
D) None of the above, all are true.

Accepted Answer

GASB Concepts Statement No.2, Service Efforts and Accomplishments Reporting, does not prescribe detailed standards governing the reporting of service efforts and accomplishments reporting. Instead, it provides guidance and encourages governments to experiment with reporting more complete information about an entity's performance than can be displayed in the traditional financial statements, outlining categories of information that might be reported.

Question 9

Notre Dame University,a private institution,has level "A" GAAP established by the:
A) American Institute of Certified Public Accountants.
B) Governmental Accounting Standards Board.
C) Financial Accounting Standards Board.
D) National Association of College and University Business Officers

Accepted Answer

The Financial Accounting Standards Board (FASB) establishes GAAP for private institutions like Notre Dame University.

Question 10

Long-term debt of a governmental unit would be reported in the:
A) government-wide financial statements and proprietary fund financial statements.
B) government-wide financial statements only.
C) debt service funds of governmental fund financial statements and government-wide financial statements.
D) notes to the financial statements only.

Accepted Answer

Long-term debt is a significant liability of a governmental unit and is reported in both the government-wide financial statements and proprietary fund financial statements.

Question 11

Which of the following statement(s)are not included in the proprietary funds:
A) Statement of Revenues, Expenses, and Changes in Net Assets
B) Statement of Cash Flows
C) Statement of Net Assets
D) All of the above are included

Accepted Answer

All the statements listed (A, B, and C) are included in the financial reporting for proprietary funds.

Question 12

Under GASB Statement 34,accrual accounting is used for:
A) government-wide financial statements only.
B) government-wide financial statements and proprietary fund financial statements only.
C) government-wide, proprietary fund, and fiduciary fund financial statements only.
D) government-wide and all fund financial statements

Accepted Answer

The answer of Under GASB Statement 34,accrual accounting is used...

Question 13

Level "A" GAAP for Cook County Hospital,a public hospital,would be established by the:
A) Governmental Accounting Standards Board.
B) Financial Accounting Standards Board.
C) Hospital Financial Management Association.
D) American Institute of Certified Public Accountants.

Accepted Answer

The Governmental Accounting Standards Board (GASB) is the organization responsible for developing accounting and financial reporting standards for state and local governments, including public hospitals such as Cook County Hospital. Therefore, GASB would be responsible for establishing Level "A" GAAP for Cook County Hospital. The Financial Accounting Standards Board (FASB) develops accounting standards for private sector entities. The Hospital Financial Management Association is a professional organization for healthcare financial management, but does not have the authority to establish GAAP. The American Institute of Certified Public Accountants (AICPA) is a professional organization for certified public accountants and does not have the authority to establish GAAP for public hospitals.

Question 14

Long-term debt paid from proprietary funds is reported as a liability in
A) the proprietary fund Statement of Net Assets.
B) the government-wide Statement of Net Assets.
C) both A and B.
D) neither A nor B.

Accepted Answer

Long-term debt is reported as a liability both in the proprietary fund statement of net assets and in the government-wide statement of net assets as proprietary funds are considered part of the overall government's financial statements.

Question 15

Under GASB Statement 34,capital assets:
A) must be reported in government-wide statements but are not reported in any of the fund financial statements.
B) must be reported in government-wide statements and in proprietary fund financial statements.
C) are not to be reported in either government-wide or fund financial statements.
D) are to be reported but not depreciated in government-wide and fund financial statements.

Accepted Answer

Under GASB Statement 34, capital assets must be reported in both government-wide statements and in proprietary fund financial statements. However, they are not reported in any of the fund financial statements other than proprietary funds.

Question 16

Which of the following is an objective of federal financial reporting?
A) Budgetary Integrity
B) Operating Performance
C) Stewardship
D) All of the above

Accepted Answer

All three options, Budgetary Integrity, Operating Performance, and Stewardship, are objectives of federal financial reporting. Budgetary Integrity refers to reporting of actual financial activities compared to the original budget, Operating Performance aims to provide information on the government's efficiency and effectiveness in achieving its objectives, and Stewardship refers to the government’s accountability for the use of public resources. Therefore, option D is the correct answer.

Question 17

A city government collects local option sales taxes legally restricted to pay for the construction of a new courthouse.Which fund should account for the receipt of the sales taxes?
A) Special revenue fund
B) Capital projects fund
C) Private-purpose trust fund
D) General fund

Accepted Answer

The Capital Projects Fund should account for the receipt of the sales taxes because it is restricted for the specific purpose of constructing a new courthouse. The Special Revenue Fund accounts for revenues that are restricted or committed for specific purposes other than capital projects. The Private-Purpose Trust Fund accounts for resources that are held in trust for specific beneficiaries. The General Fund accounts for the government's day-to-day operations and is not appropriate for tracking the sales tax revenue that is restricted for a specific capital project.

Question 18

Under GASB Statement 34,modified accrual accounting would be found in the:
A) government-wide financial statements only.
B) governmental fund financial statements only.
C) governmental and fiduciary fund financial statements only.
D) governmental, proprietary, and fiduciary fund financial statements but not in the government-wide financial statements

Accepted Answer

Modified accrual accounting is used to report governmental fund financial statements under GASB Statement 34. The government-wide financial statements use full accrual accounting. Fiduciary fund financial statements use accrual accounting as well. Therefore, choice A, C, and D are not correct as they exclude either the governmental fund financial statements or the government-wide financial statements.

Question 19

Which of the following are the governmental funds?
A) General, special revenue, debt service, capital projects, permanent.
B) General, special revenue, debt service, capital projects, private purpose.
C) General, special revenue, debt service, capital projects, internal service.
D) None of the above.

Accepted Answer

The correct governmental funds are General Fund, Special Revenue Fund, Debt Service Fund, Capital Projects Fund, and Permanent Fund. Private Purpose and Internal Service Funds are not considered governmental funds.

Question 20

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?
A) Debt service fund
B) Capital projects fund
C) Enterprise fund
D) Internal service fund

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.

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

Which of the following funds is considered a Fiduciary Fund?

GASB Concepts Statement No.3,Communication Methods in General Purpose External Financial Reports that Contain Basic Financial Statements,states that

A city government collects local option 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?

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

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?

Which of the following is not a fiduciary fund type?

Which of the following is true regarding fund classifications?

Which of the following is not true regarding GASB Concepts Statement No.2,Service Efforts and Accomplishments Reporting:

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

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

Which of the following statement(s) are not included in the proprietary funds:

Under GASB Statement 34,accrual accounting is used for:

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

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

Under GASB Statement 34,capital assets:

Which of the following is an objective of federal financial reporting?

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

Under GASB Statement 34,modified accrual accounting would be found in the:

Which of the following are the governmental funds?

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?