Accounting for Governmental and Nonprofit Entities Exam
Review
Course Introduction
This course explores the unique concepts, principles, and procedures of accounting for governmental and nonprofit organizations. Students will learn about fund accounting, budgeting processes, financial reporting requirements, and compliance with regulatory standards such as GASB and FASB. The course emphasizes the preparation and analysis of governmental and nonprofit financial statements, providing insight into topics such as revenue recognition, expenditure tracking, and accountability practices. Through case studies and practical exercises, students gain a comprehensive understanding of the differences between private sector and public/nonprofit financial management, preparing them for careers in public administration, municipal government, or nonprofit finance.
Recommended Textbook
Essentials of Accounting for Governmental and Not for Profit Organizations 11th Edition by Copley
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14 Chapters
1814 Verified Questions
1814 Flashcards
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Page 2
Chapter 1: Introduction to Accounting and Financial
Reporting for Governmental and Not-For-Profit Organizations
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) Which of the following organizations has authority to establish accounting and financial reporting standards for the federal government?
A) Federal Accounting Standards Advisory Board.
B) Office of Management and Budget.
C) Governmental Accounting Standards Board.
D) None of the above; no one has been granted authority to set standards for the federal government
Answer: A
Q2) Contrast the economic resources measurement focus and the current financial resources measurement focus with regard to the accounting treatment of capital assets.
Answer: Under the economic resources measurement focus,capital assets are capitalized and depreciated.Under the current financial resources measurement focus,capital assets are not capitalized or depreciated,but are charged to expenditures when received.
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Chapter 2: Overview of Financial Reporting for State and Local Governments
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) Which of the following is true regarding Management's Discussion and Analysis (MD&A)?
A) MD&A is not considered part of Required Supplementary Information (RSI).
B) MD&A takes the place of footnotes.
C) MD&A should present an analysis of significant variations between the original and final budget.
D) All of the above are true.
Answer: C
Q2) Entities which are determined to be component units of state and local governmental units must be discretely presented in the financial statements.
A)True
B)False
Answer: False
Q3) Management's Discussion and Analysis (MD&A)in The Comprehensive Annual Financial Report (CAFR)is part of the Introductory Section A)True
B)False
Answer: False
Page 4
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Chapter 3: Modified Accrual Accounting: Including the Role of
Fund Balances and Budgetary Authority
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) A donation received is considered a voluntary nonexchange transaction only if it is unrestricted.
A)True
B)False
Answer: False
Q2) The Fire Department of a given city received an appropriation in the amount of $14,000,000 for the fiscal year ended June 30,2014.During the month ended July 31,2013,the following transactions occurred: (a)purchase orders were issued in the amount of $650,000; (b)purchase orders,related to (a)above,were filled in the amount of $610,000; the related invoice amount was $595,000; invoices were paid in the amount of $550,000; (c)salaries were accrued and paid in the amount of $600,000.The balance available for the fire department as of July 31,2013 is:
A) $12,740,000.
B) $12,800,000.
C) $12,765,000.
D) $12,840,000.
Answer: C
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Chapter 4: Accounting for the General and Special Revenue Funds
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) Liabilities incurred,such as for accrued payroll,but still unpaid at year-end,should be recorded in the General Fund by a debit to which one of the following accounts?
A) Current Expense.
B) Appropriations.
C) Encumbrances.
D) Expenditures.
Q2) In the General Fund,revenues are recognized when measurable and available.
A)True
B)False
Q3) When establishing funds,governments should attempt to have a large number of special revenue and other funds to provide the user with maximum detail to understand the transactions.
A)True
B)False
Q4) The journal entry to record an encumbrance would include:
A) A debit to Encumbrance Control
B) A debit to Budgetary Fund Balance - Reserve for Encumbrances
C) A credit to Budgetary Fund Balance - Reserve for Encumbrances
D) A and C would both be included in the journal entry
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Chapter 5: Accounting for Other Governmental Fund Types:
Capital Projects, Debt Service, and Permanent
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) Which of the following is true with respect to special assessment levies?
A) Taxpayers may opt out of a service-type special assessment if they agree to not use the service funded by the assessment
B) Service-type special assessments may not be accounted for in the General or special revenue fund.
C) Construction-type special assessments are accumulated until there is enough money to finance the construction project
D) If the government is not liable for the special assessment debt directly or through guarantee, the special assessment is accounted for in an agency fund
Q2) Which of the following projects would normally be accounted for in a capital projects fund?
A) The construction of a police station addition.
B) The construction of a parking garage operated as an enterprise fund.
C) Payment of interest on bonds issued to finance the construction of a new city hall.
D) Both A and B would be accounted for in a capital projects fund.
Q3) What is the difference between Permanent Funds and Private Purpose Trust Funds?
Q4) What is a bond refunding and why do governments refund bonds?
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Chapter 6: Proprietary Funds
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Sample Questions
Q1) Long term debt serviced from proprietary funds is recorded in the Long Term Debt Account Group.
A)True B)False
Q2) The Balance Sheet and the Statement of Revenues,Expenditures,and Changes in Fund Balances are required for Proprietary funds.
A)True
B)False
Q3) All of the following are true about proprietary funds EXCEPT:
A) They include Internal Service Funds and Enterprise Funds.
B) The economic resources measurement focus is used.
C) They include the Enterprise and Special Revenue Funds.
D) Accrual accounting is used as the basis of accounting.
Q4) Proprietary funds report using the current financial resources measurement focus and the modified accrual basis of accounting.
A)True B)False
Q5) Why might it be desirable for an enterprise fund to operate at a profit?
Q6) Under GASB Statement 34,enterprise funds must be used under which circumstances?
Page 8
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Chapter 7: Fiduciary Trustfunds
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Sample Questions
Q1) Investment Trust Funds are restricted to:
A) External investment pools.
B) Open-end mutual funds.
C) Debt securities.
D) All the above.
Q2) Which of the following funds is used to account for the external portion of investment pools?
A) Special Revenue Fund
B) Investment Trust Fund
C) Enterprise Fund
D) Private-purpose Trust Fund
Q3) Which of the following is not an example of the function of an Agency Fund?
A) Payment of pension benefits to retired government employees
B) Collection of local government sales taxes by the state government
C) Collection of property taxes for the school district by an elected county government official.
D) Periodic distribution by the state government of county sales taxes
Q4) Fiduciary Funds are not included in the government-wide financial statements. A)True B)False
Page 9
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Chapter 8: Government-Wide Statements, Capital Assets,
Long-Term Debt
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Sample Questions
Q1) When preparing the government-wide statements,a worksheet entry is required to eliminate the current period expenditures for capital outlay and record those expenditures as capital assets
A)True
B)False
Q2) General long-term debt,to be paid out of resources of the government's taxing power,is reported in both the governmental fund Balance Sheet and the government-wide Statement of Net Assets.
A)True
B)False
Q3) Assume a government reported $300,000 in capital outlay expenditures in the governmental fund Statement of Revenues,Expenditures,and Changes in Fund Balances.Secondly,assume depreciation of capital assets amounted to $250,000,in the governmental activities column in the Statement of Activities.Those adjustments would cause an increase of $50,000 when preparing the reconciliation between the change in governmental fund balances to the change in net assets of governmental activities in the Statement of Activities.
A)True
B)False
Page 10
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Chapter 9: Accounting for Special-Purpose Entities, Including
Public Colleges and Universities
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) Public colleges and universities may choose to report as:
A) special-purpose entities engaged in governmental and business-type entities.
B) special-purpose entities engaged in business-type activities only.
C) either (a) or (b) depending on the nature of their operations.
D) neither (a) nor (b).
Q2) Special-purpose governments that are engaged in both governmental and business-type activities or in more than one governmental activity are required to include which items in its financial reporting?
Q3) Tuition waived for academic and athletic scholarships is deducted from student fee revenue when preparing a Statement of Revenues,Expenses,and Changes in Net Assets.
A)True
B)False
Q4) Assume a government is a special-purpose government engaged in only one governmental activity.Which financial statements would be required?
A) Government-wide statements only.
B) Statements combining the governmental funds and government-wide statements.
C) Both government-wide and governmental fund basis statements.
D) Either B or C above.
Page 11
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Chapter 10: Accounting for Private Not-For-Profit Organizations
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) FASB statement 116 requires unconditional pledges of support to be recorded as revenue when the contribution is promised.
A)True
B)False
Q2) FASB Statement 136 Transfer of Assets to a Not-for-Profit Organization or Charitable Trust that Raises or Holds Contributions for Others provides guidance on how intermediary recipient organizations should record receipt of resources held for others.Briefly describe the issue and how such transfers should be recorded.
Q3) The equity section of Statement of Financial Position for private not-for-profits includes which accounts?
A) Unrestricted, Temporarily Restricted, Permanently Restricted Net Assets.
B) Invested in Capital Assets net of related debt, Restricted and Unrestricted net assets.
C) Unreserved Fund Balance, Reserved Fund Balance.
D) None of the above.
Q4) Distinguish between an exchange transaction and a contribution.How is the accounting different for these two events?
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Page 12
Chapter 11: College and University Accounting Private Institutions
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Sample Questions
Q1) The FASB has the authority to set accounting standards for all of the following organizations except:
A) Public colleges.
B) Private colleges.
C) For profit proprietary schools.
D) Educational foundations established to support a private college or university.
Q2) According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,depreciation is recorded.When reporting by function,depreciation is allocated to functional categories.
A)True
B)False
Q3) What is the distinction between discounts and expenses for private colleges and universities?
Q4) Tuition revenue for summer classes spanning two fiscal periods must be recorded in the period when the drop date passes and refunds are no longer an option.
A)True
B)False
Q5) How should the income earned by a private college's endowment be classified?
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Chapter 12: Accounting for Hospitals and Other Health Care
Providers
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100 Verified Questions
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Sample Questions
Q1) A donor contributed $1,000,000 to a not-for-profit hospital with the restriction that the funds be invested indefinitely and the income be used for cancer research.Which of the following would be true?
A) The gift would be recorded as an increase in permanently restricted net assets.
B) The income from the endowment would be recorded as an increase in temporarily restricted net assets.
C) Both (a) and (b) above.
D) Neither (a) nor (b) above.
Q2) Health care organizations that are privately owned and operated to provide a return to investors follow GASB standards.
A)True
B)False
Q3) Private for-profit health care organizations follow FASB standards excluding those written specifically for not-for-profits.
A)True
B)False
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14
Chapter 13: Auditing, Tax-Exempt Organizations, and Evaluating Performance
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151 Flashcards
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Sample Questions
Q1) Which of the following is not true of Tax-exempt Entities having 501(c)(3)status?
A) Donors to the organization may deduct their contributions as charitable donations.
B) Churches and public charities with tax-exempt status must file an information return (Form 990, 990EZ or 990-N) with the IRS annually.
C) Tax-exempt entities are prohibited from certain activities such as supporting political candidates.
D) None of the above, these are all true of tax-exempt entities.
Q2) Which of the following is true regarding the Single Audit Act and its amendments?
A) An auditor is expected to express an opinion on "major programs," which are chosen based on size.
B) An auditor is required to select all "Type A" programs as major programs.
C) Both A and B above.
D) Neither A nor B above.
Q3) List four sources of income that are not subject to the unrelated business income tax.
Q4) What is the objective of the single audit process?
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Page 15
Chapter 14: Financial Reporting by the Federal Government
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Sample Questions
Q1) The Statement of Changes in Net Position of a federal agency presents the same information as a Statement of Cash Flows for a state or local government.
A)True
B)False
Q2) Which of the following is (are)true regarding the Chief Financial Officers Act?
A) The Act created the position of chief financial officer within federal agencies
B) The Act called for audits of the financial statements of federal agencies
C) Both (a) and (b) above
D) Neither (a) nor (b) above
Q3) Which organization promulgates Statements of Federal Financial Accounting Standards?
A) The American Institute of Certified Public Accountants
B) The Federal Accounting Standards Advisory Board
C) The U.S. Office of Management and Budget
D) The U.S. Government Accountability Office
Q4) The budgetary accounts of a federal agency reflect the status of an appropriation.
A)True
B)False
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