Question 1

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 2

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 of a governmental unit would be reported in the government-wide financial statements and proprietary fund financial statements because they report on the entity as a whole, including all of its funds, and long-term debt is a significant component of the overall financial position.

Question 3

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

According to GASB Statement 34, modified accrual accounting is used in the governmental fund financial statements only. The government-wide financial statements use full accrual accounting, while fiduciary fund financial statements use a different basis of accounting.

Question 4

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

Level "A" GAAP for public hospitals is established by the Governmental Accounting Standards Board (GASB). The GASB is responsible for setting accounting and financial reporting standards for state and local governments, including public hospitals. The Financial Accounting Standards Board (FASB) sets GAAP for private hospitals, while the Hospital Financial Management Association and American Institute of Certified Public Accountants do not set GAAP for hospitals.

Question 5

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 local option sales taxes collected by the city government are legally restricted to pay for hiring teachers for hearing-impaired school children. This means that the government cannot use the funds for any other purpose. Therefore, the best fund to account for these receipts is the special revenue fund. Special revenue funds are used to account for and report on specific revenue sources that are restricted or committed to a specific purpose, such as the hiring of teachers for hearing-impaired school children.

Question 6

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

Governmental funds include the General, special revenue, debt service, capital projects, and permanent funds. Proprietary funds include enterprise and internal service funds, but not private-purpose funds.

Question 7

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

Accepted Answer

Long-term debt to be paid from proprietary funds is reported as a liability in the proprietary fund Statement of Net assets (or Net Position) as well as the government-wide Statement of Net assets (or Net Position). This is because the government-wide statements are intended to provide a consolidated view of the government's financial position, including all of its funds and activities, while the proprietary fund statements are focused specifically on the activities of the government's business-type activities. Therefore, the same liability must be reported in both sets of statements to ensure that the overall financial position of the government is accurately reflected.

Question 8

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

Capital assets must be reported in both government-wide statements and in proprietary fund financial statements under GASB Statement 34. It is important to report these assets to provide transparency and accountability for the government's use of resources.

Question 9

Which of the following statement(s)are not included in the proprietary funds for a government entity:
A) Statement of Revenues, Expenditures, and Changes in Fund Balances
B) Statement of Cash Flows
C) Statement of Net Position
D) All of the above are included

Accepted Answer

Proprietary funds prepare the Statement of Net Position, Statement of Revenues, Expenses and Changes in Fund Net Position and Statement of Cash Flows.

Question 10

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.

Question 11

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

A pension trust fund, created to hold and invest assets to finance pension plan benefits, is considered a Fiduciary Fund as it holds money for the benefit of its members or beneficiaries and is managed for their benefit. The other funds listed (Debt Service, Enterprise and Internal Service Fund) are all considered Proprietary Funds.

Question 12

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 local option sales taxes collected for the construction of a new courthouse are legally restricted for that specific purpose, so they should be accounted for in a capital projects fund. This fund is used to accumulate resources and expenditures for the acquisition or construction of major capital assets, such as buildings like a new courthouse. Special revenue funds are used for specific revenue sources that are legally restricted to certain purposes, but they are not used for capital projects. Private-purpose trust funds are used for resources held in trust for specific beneficiaries, and general funds are used for day-to-day operations and are not appropriate for accounting for the receipt of sales taxes that are legally restricted for a specific capital project.

Question 13

Which of the following fund types uses modified accrual accounting?
A) Enterprise
B) Internal Service
C) Investment Trust
D) Special Revenue

Accepted Answer

Special Revenue funds use modified accrual accounting, which is typical for governmental funds that focus on current financial resources and short-term fiscal accountability.

Question 14

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 not include management's objective explanations.
B) required supplementary information should be objective but may also include predictions or subjective assessments if management deems it necessary for understanding of the financial statements.
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

GASB Concepts Statement No.3 states that disclosure in the notes is not an adequate substitute for recognition in the financial statements. This means that simply disclosing information in the notes is not enough, and that information should also be recognized in the financial statements themselves. Choices A and B are incorrect because they are not stated in GASB Concepts Statement No.3.

Question 15

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

Accepted Answer

The governmental funds include general fund, special revenue fund, debt service fund, capital projects fund, and permanent fund. The private purpose and internal service funds are proprietary funds and therefore not considered governmental funds. Therefore, option B is the best choice as it includes all of the correct governmental funds and none of the incorrect ones.

Question 16

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) National Association of College and University Business Officers.
D) Financial Accounting Standards Board.

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 17

Capitalized fixed assets are reported in which of the following fund-basis statements?
A) Agency fund
B) Proprietary fund
C) Governmental fund
D) All of the above

Accepted Answer

Capitalized fixed assets are typically recorded and reported in proprietary fund-basis statements, since these funds are used for business-like activities and require a full set of accrual-based financial statements. Agency funds hold assets on behalf of other parties and governmental funds use modified accrual accounting, neither of which would typically report capitalized fixed assets.

Question 18

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

Under GASB Statement 34, accrual accounting is used for government-wide, proprietary fund, and fiduciary fund financial statements.

Question 19

Which of the following is not an objective of federal financial reporting?
A) Budgetary Integrity
B) Increase Taxpayer Awareness
C) Stewardship
D) Operating Performance

Accepted Answer

Increasing taxpayer awareness is not an objective of federal financial reporting. The objectives are to provide information about budgetary integrity, stewardship, and operating performance.

Question 20

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

Accepted Answer

Since there are no restrictions on the proceeds of the sale of police cars, the most appropriate fund to record the receipt would be the general fund, which is used to account for the everyday operations and expenditures of the city. The other funds listed, such as capital projects fund, enterprise fund and debt service fund, are used for specific purposes and would not be applicable in this situation.

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

Which of the following is not a fiduciary fund type?

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

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

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

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 true regarding fund classifications?

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

Under GASB Statement 34,capital assets:

Which of the following statement(s) are not included in the proprietary funds for a government entity:

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?

Which of the following funds is considered a Fiduciary Fund?

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?

Which of the following fund types uses modified accrual accounting?

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

Which of the following are the governmental funds?

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

Capitalized fixed assets are reported in which of the following fund-basis statements?

Under GASB Statement 34,accrual accounting is used for:

Which of the following is not an objective of federal financial reporting?

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?