Accounting for Governmental and Nonprofit Entities
Test Preparation
Course Introduction
Accounting for Governmental and Nonprofit Entities explores the unique principles, standards, and procedures that govern financial reporting and accounting for public sector and nonprofit organizations. The course covers topics such as fund accounting, budgeting and financial planning, revenue recognition, accountability, and compliance with governmental regulations and standards such as GASB (Governmental Accounting Standards Board). Students will also examine the preparation and analysis of financial statements specific to government and nonprofit entities, the challenges of managing restricted resources, and the role of ethics and transparency in public financial management. The course equips students with the skills necessary to ensure fiscal responsibility and informed decision-making in organizations serving the public interest.
Recommended Textbook
Introduction to Governmental and Not for Profit Accounting 7th Edition by Patton
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15 Chapters
538 Verified Questions
538 Flashcards
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Chapter 1: Governmental and Not-For-Profit
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17 Verified Questions
17 Flashcards
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Sample Questions
Q1) To what extent do organizations that use fund accounting also report on the entity as a whole?
A)Organizations that use fund accounting are not required to report on the entity as a whole
B)Organizations that choose to report on the entity as a whole are not permitted to use fund accounting for internal purposes
C)Organizations that use fund accounting are required to report on the entity as a whole
D)Organizations that use fund accounting have the option of reporting either on funds or on the organization as a whole
Answer: C
Q2) Which entity establishes financial accounting standards and principles for the federal government?
A)FASB
B)GASB
C)FASAB
D)None of the above.
Answer: C
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Chapter 2: The Use of Funds in Governmental Accounting
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49 Verified Questions
49 Flashcards
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Sample Questions
Q1) Which of the following activities is the most likely to be accounted for in a General Fund?
A)payment of salaries of police and firefighters
B)construction of a new school building from bond proceeds
C)accumulation of resources to pay pension benefits to employees
D)accumulation of resources required by law to be used only to beautify parks
Answer: A
Q2) A long-term loan from the General Fund to another fund is reported in the General Fund as:
A)due from other fund
B)due to other fund
C)advance to other fund
D)advance from other fund
Answer: C
Q3) The three broad categories of funds used by governmental entities are:
A)Governmental,Proprietary,and Fiduciary
B)Unrestricted,Partially Restricted,and Fully Restricted
C)General,Special,and Fiduciary
D)General,Enterprise,and Agency
Answer: A
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Chapter 3: Budgetary Considerations in Governmental Accounting
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) Which of the following is an estimated amount?
A)encumbrance
B)appropriation
C)expenditure
D)tax levy
Answer: A
Q2) The document that lists the steps of the budget process is the
A)budget request
B)budget summary
C)budget calendar
D)budget worksheet
Answer: C
Q3) The City of Kent has estimated that it will spend $4,500,000 and have revenues of $4,800,000 next year.At the beginning of its new fiscal year,it will need to:
A)debit estimated expenditures for $4,500,000
B)debit estimated revenues for $4,800,000
C)debit budgetary fund balance for $300,000
D)debit appropriations for $4,500,000
E)none of the above.
Answer: B
Page 5
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Chapter 4: The Governmental Fund Accounting Cycle
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39 Verified Questions
39 Flashcards
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Sample Questions
Q1) At the beginning of the year,a town adopted a budget based on estimated revenues of $1,800,000 and appropriations of $1,780,000.Because of an emergency late in the year,the town found it necessary to increase the sanitation department appropriation by $8,000.What entry should the town make to record the emergency appropriation?
A)debit estimated revenues;credit appropriations for $8,000
B)debit appropriations;credit budgetary fund balance for $8,000
C)debit budgetary fund balance;credit appropriations for $8,000
D)debit appropriations;credit estimated revenues for $8,000
Q2) A county borrows cash on a short-term basis.Which of the following account could be credited in this transaction?
A)tax anticipation notes payable
B)revenues from borrowing
C)appropriations--borrowed money
D)assigned fund balance
Q3) Under the modified accrual basis of accounting
A)expenditures are recognized when paid in cash if not previously encumbered
B)property tax revenues are recognized when earned
C)property tax revenues are recognized when measurable and available
D)encumbrances are equivalent to expenditures
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Page 6
Chapter 5: The Governmental Fund Accounting Cycle
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47 Verified Questions
47 Flashcards
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Sample Questions
Q1) The measurement focus used by governmental fund measures:
A)capital resources
B)spendable resources
C)spendable resources and capital resources
D)economic resources
Q2) The City of Maysville's General Fund balance sheet for its December 31,2013 year end shows inventory of $28,000 and prepaid rent of $10,000.The city also had $60,000 of outstanding encumbrances related to unassigned resources in its General Fund at year-end.In December 2013,a grantor provided the City with $42,000 that must be used to pay musicians who perform in the city's series of summer concerts in the park during 2014.How much should the city report as assigned fund balance in its General Fund on December 31,2013?
A)$28,000
B)$38,000
C)$42,000
D)$60,000
E)$98,000
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Chapter 6: The Governmental Fund Accounting Cycle
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37 Verified Questions
37 Flashcards
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Sample Questions
Q1) Capital assets that were financed through governmental fund activities will appear in which financial statement?
A)government-wide statement of net assets
B)capital projects fund balance sheet
C)debt service fund balance sheet
D)enterprise fund balance sheet
Q2) What type of fund is most likely used to account for the spending of income earned by a Permanent Fund?
A)agency fund
B)private-purpose trust fund
C)enterprise fund
D)special revenue fund
Q3) The largest dollar amount of resources flowing into a general obligation debt service fund normally will come from
A)tax revenues and interfund transfers
B)interest on investments and user charges
C)fiscal agent fees and fines
D)liquidation of encumbrances
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Chapter 7: The Governmental Accounting Cycle
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37 Verified Questions
37 Flashcards
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Sample Questions
Q1) A city's Water and Sewer Enterprise Fund should include which of the following components in its statement of net position?
A)only assets,liabilities,and net position
B)assets,deferred outflows,liabilities,deferred inflows,and net position
C)assets,deferred outflows,liabilities,deferred inflows,and retained earnings
D)assets,liabilities,and retained earnings
Q2) An Enterprise Fund issued bonds in the amount of $100,000 and immediately acquired capital assets from the bond proceeds at a cost of $100,000.As of December 31,2013,accumulated depreciation on the assets was $10,000.Also,as of December 31,2013,the Enterprise Fund had paid back $15,000 of the debt principal.In its December 31,2013,statement of net position,how much should the Fund report as its net investment in capital assets?
A)$90,000
B)$85,000
C)$15,000
D)$5,000
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9
Chapter 8: The Governmental Fund Accounting
Cycle--Fiduciary Funds
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35 Verified Questions
35 Flashcards
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Sample Questions
Q1) How much revenue should Bevo County recognize in its Agency Fund?
A)$0
B)$4 million
C)$6 million
D)$10 million
Q2) Which of the following statements is true regarding an agent multi-employer pension plan?
A)the annual required pension contributions are unique to each participating employer
B)the annual required pension contributions are uniform for each participating employer
C)a participating government legally must make the required annual contribution in full each year
D)a participating government must account for its pension contributions using a pension trust fund
Q3) Which of the following is not a fiduciary fund?
A)pension trust fund
B)permanent fund
C)private-purpose trust fund
D)agency fund
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Chapter 9: Reporting Principles and Preparation of Fund
Financial Statements
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41 Verified Questions
41 Flashcards
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Sample Questions
Q1) Which of the following financial statements is not required to be prepared for proprietary funds in the fund-level financial statements?
A)Statement of net position (or balance sheet)
B)Statement of revenues,expenses,and changes in fund net assets
C)Statement of revenues,expenditures,and changes in fund balances
D)Statement of cash flows
Q2) Which of the following account captions are you least likely to see on a governmental funds balance sheet?
A)Due from other governments
B)Property,plant and equipment
C)Advance deposits
D)Due to other funds
Q3) The General Fund and other funds for which individual fund financial information is presented in separate columns in the basic governmental fund financial statements are known as
A)principal funds
B)primary funds
C)major funds
D)master funds
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Chapter 10: Government-Wide Financial Statements
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40 Verified Questions
40 Flashcards
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Sample Questions
Q1) A city government levies property taxes that are recorded directly into a Debt Service Fund,rather than the General Fund.How should those property taxes be reported in the government-wide statement of activities?
A)as property tax revenue in the general revenues section
B)as a direct reduction of interest expenses in the functional expense section
C)as an element of program revenue,which reduce gross interest expenses
D)as a negative expense,which is then allocated to all functions or programs
Q2) What must a government do to avoid depreciating its infrastructure assets and still meet the GASB's financial reporting standards?
A)have an asset management system and document that its assets are being preserved at a condition level that it establishes and discloses
B)estimate the dollar amount of its infrastructure assets and report that amount in the government-wide statement of net position
C)leave the dollar value of its infrastructure assets off both the government-wide statement of net position and the governmental fund balance sheet
D)take a compete inventory of its infrastructure assets every year
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Chapter 11: Federal Government Accounting and Reporting
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20 Verified Questions
20 Flashcards
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Sample Questions
Q1) When do federal agencies make an entry to record "Fund Balance with the Treasury"?
A)when the Treasury tells the agency the Federal government has sufficient cash to pay bills
B)each time the department of which the agency is a part allots funds to the agency
C)when the Office of Management and Budget apportions funds to the department of which the agency is a part
D)when the Congress makes and the President approves an appropriation
Q2) What is the name of the entity that recommends accounting standards for the federal government?
A)the Governmental Accounting Standards Board
B)the Federal Accounting Standards Advisory Board
C)the Financial Accounting Standards Board
D)the American Institute of Certified Public Accountants
Q3) What is the federal counterpart of the state and local government "encumbrance"?
A)obligation
B)allotment
C)outlay
D)apportionment
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13
Chapter 12: Accounting for Not-For-Profit Organizations
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43 Verified Questions
43 Flashcards
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Sample Questions
Q1) In not-for-profit accounting,under what circumstances does a reclassification occur?
A)Temporarily restricted net assets are released from time or purpose restrictions.
B)Unrestricted net assets are reclassified to temporarily restricted net assets.
C)Resources of the current unrestricted fund are transferred to the land,building and equipment fund.
D)A pledge previously classified as a "conditional promise" becomes "unconditional."
Q2) A not-for-profit arts organization receives a $300,000 gift from a donor who specifies that the gift must be maintained in perpetuity and that the income from the gift is to be used only to take disabled persons to the theater.How should the entity report the $300,000 gift in the net asset section of its statement of financial position?
A)as unrestricted
B)as temporarily restricted
C)as permanently restricted
D)as restricted for programs for the disabled
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Chapter 13: Accounting for Health Care Organizations
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40 Verified Questions
40 Flashcards
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Sample Questions
Q1) When a hospital uses funds for internal record-keeping purposes,Plant Replacement and Expansion Funds are used to report:
A)resources contributed by outsiders that can only be used to replace or expand the hospital's existing physical plant
B)resources contributed by outsiders and those designated by the hospital's governing board that can only be used to replace or expand the hospital's existing physical plant
C)capital asset expenditures
D)resources restricted by any legal agreement,such as a bond agreement or a trust arrangement
Q2) Which three categories of net position are reported by governmental hospitals?
A)restricted,committed,and unassigned
B)net investment in capital assets,restricted ,and unrestricted
C)temporarily restricted,permanently restricted,and unrestricted
D)permanently restricted,current,and noncurrent
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Chapter 14: Analysis of Financial Statements and Financial Condition
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27 Verified Questions
27 Flashcards
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Sample Questions
Q1) You are assessing the financial condition of a county.Its financial statements have captions for "transfers in" and "transfers out," both containing significant amounts.What consideration should you give to these transfers in assessing financial condition?
A)do not consider them in your analysis,because transfers in will equal transfers out
B)see if transfers in equal transfers out.Then,check the balance sheet to see if the captions "due to" and "due from" also are equal.If so,no further review is needed
C)see if the transfers are recurring,rather than one-shots.If they are recurring,no further inquiry is needed
D)only transfers in should be considered
Q2) To compute a government's debt burden,which of the following is the most appropriate denominator?
A)current liabilities
B)accounts receivable
C)full value of taxable real property
D)pension benefits paid in the preceding year
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Chapter 15: Fundamentals of Accounting
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29 Verified Questions
29 Flashcards
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Sample Questions
Q1) Assume that an organization's operations result in a net profit for the year.When the books are closed,what is the accounting effect of the journal entry that closes out the net profit?
A)it is added to the cash balance
B)it is subtracted from the cash balance
C)it is added to the opening balance of owner's equity
D)it is subtracted from the liabilities
Q2) A business borrows $100,000 from a bank on July 1,2008.Under the agreement with the bank,the loan must be repaid in full on June 30,2009,with interest at 6% a year.The business wants to prepare financial statements for the year ended December 31,2008.How much interest expense should it report for that year?
A)$0
B)$3,000
C)$6,000
D)$12,000
Q3) Angel's Appliances buys four washing machines for its inventory at a price of $400 each.It makes the purchase on credit.It then sells three of the machines for cash at $550 each.Make journal entries to record these transactions.Then state how much gross profit Angel made.
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