Fund Accounting Exam Bank
Course Introduction
Fund Accounting is a specialized area of accounting predominantly used by non-profit organizations, governments, and other entities that manage resources held in trust for specific purposes. This course introduces students to the principles and practices of fund accounting, focusing on the separation of resources into various funds according to intended activities, restrictions, or donor requirements. Emphasis is placed on budgeting, recording, and reporting transactions for different fund types, such as general, special revenue, capital projects, debt service, and permanent funds. Students will learn to prepare and analyze financial statements that reflect financial performance and compliance with legal and regulatory requirements, gaining insights crucial for accountability and stewardship in the public and nonprofit sectors.
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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Page 2
Chapter 1: Governmental and Not-For-Profit
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17 Verified Questions
17 Flashcards
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Sample Questions
Q1) Which of the following is a distinguishing characteristic of a nonbusiness organization?
A)Its revenues do not exceed its expenses
B)There is an absence of ownership interests that can be sold,transferred,or redeemed
C)It does not depreciate its capital assets
D)It does not charge fees for any of its services
Answer: B
Q2) Not-for-profit organizations obtain their revenues primarily from A)Sales to customers
B)Contributions from donors
C)Taxes on personal property
D)Taxes on real property
Answer: B
Q3) Government and nonprofit accounting focuses on which of the following?
A)Calculating profit or loss
B)Protecting investors from fraud
C)Demonstrating accountability
D)Reporting to management
Answer: C
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Page 3
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) A governmental fund has total liabilities in excess of its total assets at the end of the fiscal year.It has no deferred resource inflows or outflows.Which of the following statements is always true?
A)fund balance is negative
B)cash is less than short-term receivables
C)payables exceed receivables
D)payables exceed cash
Answer: A
Q2) A local government sells bonds having a face value of $1,000,000 at par.The bond proceeds will be accounted for in a Capital Projects Fund.What account will be credited to offset the debit to cash?
A)other financing sources
B)citizens' equity
C)fund balance
D)bonds payable
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) If a City Manager is looking at the cash forecast,he or she is most likely concerned about which of the following issues?
A)anticipated police overtime pay resulting from the 4th of July parade next summer
B)the expected cost of bridge repairs in the coming five years
C)anticipated short-term borrowing to cover the end of month payroll
D)the total amount to be spent for Fire Department operations in the current year
Answer: C
Q2) For a typical city government,the budget has an important influence on the determination of the annual
A)income tax rate
B)hotel/motel tax rate
C)sales tax rate
D)property tax rate
Answer: D
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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) A city that uses encumbrance accounting places a purchase order for three fire trucks at a cost of $100,000 each,specifying that two are to be delivered in March and one in August.The vendor delivers the first two trucks,and sends an invoice for $200,000.How should the city handle the encumbrance accounting when it prepares the $200,000 voucher to pay for the first two trucks?
A)it should make no encumbrance entry until all three trucks have been received
B)it should reduce encumbrances by $100,000
C)it should reduce encumbrances by $200,000
D)it should reduce encumbrances by $300,000
Q2) Which of the following is not required to be prepared for the General Fund according to GASB standards?
A)budgetary comparison statement or schedule
B)statement of revenues,expenditures,and changes in fund balance
C)balance sheet
D)all of the above are required
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6
Chapter 5: The Governmental Fund Accounting Cycle
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47 Verified Questions
47 Flashcards
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Sample Questions
Q1) Which of the following is not considered to be a "derived" tax revenue based on GASB standards?
A)sales taxes
B)property taxes
C)income taxes
D)all of the above are derived tax revenues
Q2) Which of the following interfund transactions will be reported as a separate line item in the operating statement of a General Fund?
A)short-term interfund loan received
B)transfer out to a debt service fund
C)reimbursement received from a special revenue fund
D)long-term interfund loan received
Q3) The General Fund provides a recurring annual subsidy to the Mass Transit Enterprise Fund to keep bus fares at a reasonable level.How should the General Fund report the subsidy in its financial statements?
A)as an expenditure
B)as a long-term advance
C)as a transfer out
D)as a reimbursement
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Page 7
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) The operations of a debt service fund generally are controlled by which of the following mechanisms?
A)bond indentures
B)encumbrance accounting
C)legislative oversight and review
D)break-even analysis
Q3) A government may have arbitrage when:
A)it finances capital projects through federal grants
B)it borrows money at lower tax-exempt rate,but invests it at a higher rate
C)it pays a higher rate on its tax-exempt debt than the rate that it receives from its investments
D)its debt pays a lower rate of interest than federally issued debt of the same credit quality
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Page 8
Chapter 7: The Governmental Accounting Cycle
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37 Verified Questions
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Sample Questions
Q1) 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
Q2) In what way do Internal Service Funds differ from Enterprise Funds?
A)in the basis of accounting that they use
B)in the nature of the entities to which they supply goods or services
C)in the measurement focus that they use
D)in the kinds of financial statements that they prepare
Q3) In Proprietary Fund accounting,which of the following statements are true?
A)materials and supplies are recognized as expenditures when purchased
B)materials and supplies are recognized as expenses when consumed
C)capital assets are considered as expenditures when they are acquired
D)capital assets are not recorded in proprietary funds
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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) A recent proposed changed in pension reporting is that:
A)a net pension liability is reported in an employer's government-wide financial statements
B)the actuarial accrued liability is reported in an employer's government-wide statement of net position
C)governments no longer have the option of reporting or not reporting the net pension liability in an employer's government-wide statement of net position
D)changes in the net pension liability are reported as an expense in an employer's government-wide statement of activities
Q2) Liberty County maintains an investment pool on behalf of certain cities within the county.When it prepares its statement of fiduciary net position at year-end,how should Liberty value the corporate securities that it holds on behalf of the cities?
A)at the amount of cash originally sent by the cities for investment
B)at the amount paid by the county to acquire the securities
C)at the fair value (at year-end)of the securities held on behalf of the cities
D)at the average value of the securities held during the year on behalf of the cities
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Page 10
Chapter 9: Reporting Principles and Preparation of Fund
Financial
Statements
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41 Verified Questions
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Sample Questions
Q1) 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
Q2) Which basis of accounting is used when presenting governmental and proprietary funds in fund-level financial statements?
A)governmental - modified accrual;proprietary - modified accrual
B)governmental - accrual;proprietary - accrual
C)governmental - modified accrual;proprietary - accrual
D)governmental - accrual;proprietary - modified accrual
Q3) An entity can be a component unit of how many primary governments in the same fiscal year? A)1 B)2 C)3
D)4 or more
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Chapter 10: Government-Wide Financial Statements
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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) A small village (which keeps its records on a calendar-year basis)issued $1 million of bonds on April 1,2012.The first payment of principal was due April 1,2013,but interest at 6 percent per annum on the outstanding debt was due on October 1,2012 and April 1,2013.How much interest expenditure (expense)should the village recognize in its governmental fund and government-wide financial statements for the calendar year 2012? \(\begin{array}{lll}&\text { Fund } & \text { Government-wide } \\ &\text { Statements } & \text { Statement }\\
\text { a. } & \$ 30,000 & \$ 30,000 \\
\text { b. } & \$ 30,000 & \$ 45,000 \\
\text { c. } & \$ 30,000 & \$ 60,000 \\
\text { d. } & \$ 45,000 & \$ 45,000 \end{array}\)
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Chapter 11: Federal Government Accounting and Reporting
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Sample Questions
Q1) What is the federal counterpart of the state and local government "encumbrance"?
A)obligation
B)allotment
C)outlay
D)apportionment
Q2) If a federal agency were to take a trial balance of the budgetary accounts at any point in time,what would the right side of the trial balance show?
A)the cumulative results of the agency's appropriations
B)the status of the agency's budgetary resources
C)the agency's fund balance with Treasury
D)the total amount appropriated to the agency
Q3) When a federal agency receives supplies that have been ordered previously,what kind of entry (or entries)is (or are)required?
A)both a budgetary and a proprietary entry
B)only a proprietary entry
C)only a budgetary entry
D)neither a budgetary nor a proprietary entry
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Chapter 12: Accounting for Not-For-Profit Organizations
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Sample Questions
Q1) A not-for-profit entity conducts a special fund-raising campaign at the end of fiscal year 2012,intended to raise funds for general operations that take place during fiscal year 2013.It receives pledges totaling $200,000.Based on past experience,the entity expects to receive $150,000 in cash.How should the entity report these events?
A)recognize the entire amount pledged as unrestricted contribution revenue in 2012
B)recognize the amount pledged (net of a $50,000 allowance for estimated uncollectibles)as unrestricted contribution revenue in 2012
C)recognize the amount pledged (net of a $50,000 allowance for estimated uncollectibles)as temporarily restricted contribution revenue in 2012;and report the 2013 expenses as changes in temporarily restricted net assets in 2013
D)recognize the amount pledged (net of a $50,000 allowance for estimated uncollectibles)as temporarily restricted contribution revenue in 2012;and reclassify the net assets as unrestricted at the beginning of 2013
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14
Chapter 13: Accounting for Health Care Organizations
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40 Flashcards
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Sample Questions
Q1) In a governmental hospital's operating statement,which of the following is true?
A)The last category reports other comprehensive income
B)Restricted revenues are distinguished from unrestricted revenues
C)Operating expenses are deducted from operating revenues to show operating income
D)Bad debt expense is reported to the extent that patients are not expected to pay their bills.
Q2) Catlett County Hospital,a governmental hospital,has its financial statement audit done by a local CPA firm.In 2012,the CPA firm announced that it would no longer charge for the audit.How is the County Hospital required to report the donated audit in 2013,assuming that it would have been billed $20,000 for the audit and that the cost incurred by the CPA firm is estimated at $11,000?
A)Report contribution revenue of $20,000 and audit fees of $11,000
B)Report contribution revenue of $0 and audit fees of $0
C)Report contribution revenue of $20,000 and audit fees of $20,000
D)Report contribution revenue of $11,000 and audit fees of $11,000.
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Page 15
Chapter 14: Analysis of Financial Statements and Financial Condition
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Sample Questions
Q1) What is Olde Towne's debt service coverage?
A)0.8 times
B)1.6 times
C)2.0 times
D)2.7 times
Q2) What can an analyst learn from the liquidity indicators?
A)the amount of cash than an entity can obtain from liquidating its capital assets
B)the amount of cash needed to liquidate its long-term debt
C)the amount that an entity is likely to realize from selling all of its assets
D)the ability of an entity to meet its short-term obligations
Q3) The following information comes from a hospital's financial statements: Net patient accounts receivable - $3.5 million;Gross patient service revenues - $15 million;Contractual adjustments - $3 million;and Charity care - $1 million.What is the hospital's number of days' revenue in patient accounts receivable (rounded to nearest whole day)?
A)85
B)106
C)116
D)1147
Page 16
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Chapter 15: Fundamentals of Accounting
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Sample Questions
Q1) Herman Appliance buys and sells refrigerators.Herman starts the year with an inventory of $20,000.During the year,Herman buys refrigerators totaling $182,000.At year-end,Herman takes inventory and finds that he has $28,000 of refrigerators on hand.During the year,Herman's sales revenue was $256,000.What was Herman's gross profit on the sales for the year?
A)$54,000
B)$66,000
C)$74,000
D)$82,000
Q2) Robert Plant invests $50,000 of his own money in a business.What journal entry should be made to record Robert's investment in the business?
A)debit cash (business);and credit cash (personal)
B)debit cash;and credit Robert Plant,capital
C)debit cash;and credit loans payable
D)debit Robert Plant,capital;and credit cash
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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Page 17