Fund Accounting Final
Exam Questions
Course Introduction
Fund Accounting explores the specialized accounting framework used by governmental and nonprofit organizations to track financial resources whose use is restricted by donors, grant authorities, or regulations. The course covers the principles and practices of fund-based accounting, including fund types, fund structure, budgetary control, and financial reporting. Students will learn how to prepare and analyze fund financial statements, understand the distinctions between governmental and proprietary funds, and apply relevant accounting standards such as GASB and FASB. This course equips students with the skills necessary to manage and report on financial activities within public sector and nonprofit entities, ensuring transparency, accountability, and compliance with external requirements.
Recommended Textbook
Essentials of Accounting for Governmental and Not for Profit Organizations 10th Edition by Paul
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14 Chapters
1903 Verified Questions
1903 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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Sample Questions
Q1) Which of the following fund types does not use modified accrual accounting?
A) Debt Service
B) Special Revenue
C) Agency
D) Permanent
Answer: C
Q2) Government-wide statements use the:
A) current financial resources measurement focus and accrual basis of accounting.
B) economic resources measurement focus and accrual basis of accounting.
C) economic resources measurement focus and modified accrual basis of accounting.
D) none of the above, the fiduciary funds have no revenues.
Answer: B
Q3) The Federal Accounting Standards Advisory Board and the Governmental Accounting Standards Board are parallel bodies under the oversight of the Financial Accounting Foundation.
A)True
B)False
Answer: False
Page 3
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Chapter 2: Overview of Financial Reporting for State and Local Governments
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Sample Questions
Q1) The government-wide financial statements are prepared using the economic resources measurement focus and accrual basis of accounting.
A)True
B)False
Answer: True
Q2) Which of the following is not considered Required Supplementary Information (RSI)?
A) Management's Discussion and Analysis.
B) Budgetary Comparison Statement.
C) Notes to the financial statements.
D) None of the above; all are considered RSI.
Answer: C
Q3) The Government-wide financial statements include separate columns for discretely presented component units.
A)True
B)False
Answer: True
Q4) List the Government-wide financial statements required by GASB Statement 34.
Answer: Government-wide financial statements:
Page 4
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Chapter 3: Modified Accrual Accounting: Including the Role of
Fund Balances and Budgetary Authority
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Sample Questions
Q1) Which of the following expenditure classification schemes may be used by governmental funds?
A) Activity
B) Character
C) Function
D) All of the above
Answer: D
Q2) The GASB has categorized nonexchange transactions into two categories: (1)imposed nonexchange revenues and (2)voluntary nonexchange transactions.
A)True
B)False Answer: False
Q3) The Budgetary Comparison Schedule requires a column for the original budget,a column for the final revised budget,and a column for actual figures,computed on the accrual basis.
A)True
B)False Answer: False
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Chapter 4: Accounting for the General and Special Revenue Funds
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Sample Questions
Q1) Inter-fund Transfers are flows of cash or other assets that:
A) Require repayment.
B) Are an exchange between funds of equal value.
C) Are taxable.
D) Do not require repayment.
Q2) What is the difference between reciprocal interfund activity and nonreciprocal interfund activity?
Q3) Under the consumption method to account for supplies inventory,the expenditures account is debited when the supplies are received and the inventory account is adjusted at year end if significant.
A)True
B)False
Q4) Which of the following occurs when uncollectible delinquent taxes are written off? (Ignore interest and penalties)
A) Net receivables remain unchanged.
B) Accounts receivable goes down and the Estimated Uncollectible Taxes Account is increased.
C) Delinquent Tax Receivable is increased.
D) Uncollectible Delinquent Tax Expense is increased.
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Chapter 5: Accounting for Other Governmental Fund Types:
Capital Projects, debt Service, and Permanent
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170 Flashcards
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Sample Questions
Q1) What amount would be reported as debt service expenditures for 2013?
A) $356,000.
B) $352,000.
C) $354,000.
D) $360,000.
Q2) Capital projects funds are established by a governmental unit to account for all plant and equipment acquired by construction." Do you agree?
Why or why not?
Q3) When a payment is due to a contractor from capital projects fund resources,the debit would be to:
A) A capital asset account.
B) Capital expenditures.
C) Capital Expense.
D) Encumbrances Control.
Q4) Capital projects funds use the financial resources measurement focus and accrual basis of accounting.
A)True
B)False
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Q5) What is the difference between Permanent Funds and Private Purpose Trust Funds?
Chapter 6: Proprietary Funds
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Sample Questions
Q1) Governmental units use which fund type to account for services provided to the general public on a user-charge basis?
A) General Fund.
B) Enterprise fund.
C) Permanent fund.
D) Internal service fund.
Q2) Which of the following are best described as proprietary funds?
I.Internal Service funds
II.Pension funds
III.Enterprise funds
A) I only.
B) I and II.
C) I and III.
D) I, II, and III.
Q3) Proprietary funds are required to have a Statement of Revenues,Expenses,and Change in Net Assets,a Statement of Net Assets,and a Statement of Cash Flows.
A)True
B)False
Q4) Why might it be desirable for an enterprise fund to operate at a profit?
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Chapter 7: Fiduciary Trustfunds
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Sample Questions
Q1) Which of the following is true regarding fiduciary funds?
A) Fiduciary funds use the financial resources measurement focus and accrual accounting.
B) Fiduciary funds include pension (and other employee benefit) trust, investment trust, agency, and permanent funds.
C) Both of the above.
D) Neither of the above.
Q2) Which of the following statements is not correct with respect to Agency Funds?
A) Agency funds use modified accrual accounting.
B) Assets accounted for in an agency fund belong to the party or parties for which the government acts as agent.
C) Assets are offset by an equal amount of liabilities.
D) Assets and liabilities are recognized at the time the government becomes responsible for the assets.
Q3) In an agency fund the government is acting as an agent for another entity and therefore they do not have rights to these types of funds.
A)True
B)False
Q4) Contrast a defined benefit and defined contribution retirement plan.
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Chapter 8: Government-Wide Statements, capital Assets, long-Term Debt
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Sample Questions
Q1) In its government-wide Statement of Net Assets,a government reported assets of $150 million,including $50 million in capital assets (net of depreciation),and liabilities of $80 million,including long-term debt of $60 million,$40 million of which was issued to acquire capital assets.In addition,$30 million was restricted for debt service and other purposes.The government's unrestricted net assets would be reported as:
A) $80 million.
B) $50 million.
C) $40 million.
D) $30 million.
Q2) When using the modified approach to account for infrastructures,expenditures to extend the life of the infrastructure assets are capitalized.
A)True
B)False
Q3) Fiduciary activities are not reported in the government-wide statements.
A)True
B)False
Q4) Identify and describe the required supplementary information schedules that must be prepared when using the modified approach.
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Chapter 9: Advanced Topics for State and Local Governments
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Sample Questions
Q1) Park districts and village government are examples of special-purpose local governments.
A)True
B)False
Q2) What are the required parts of the annual financial reports for special-purpose governments engaged only in fiduciary-type activities?
Q3) GASB Statement 39:
Determining Whether Certain Organizations Are Component Units requires most public college foundations to be reported as discretely presented component units in the college's financial reports.
A)True
B)False
Q4) Which of the following is true regarding the Statement of Cash Flows for a public college?
A) The indirect method must be used.
B) The statement is in the same format required for state and local governmental enterprise funds.
C) Both of the above are true.
D) Neither of the above is true.
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Chapter 10: Accounting for Private Not-For-Profit Organizations
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Sample Questions
Q1) When might it be appropriate for a not-for-profit organization to report a surplus (increase in net assets)?
Q2) Country clubs and labor unions are not included in the category "other not-for-profit" organizations because they provide benefit to their members only and not to the general public.
A)True
B)False
Q3) What are the criteria established by Statement of Position 98-02 for allocation of costs that involve fund raising?
Q4) Performing arts organizations are an example of other private not-for-profit organizations.
A)True
B)False
Q5) With respect to the Statement of Cash Flows for a private not-for-profit organization,the purchase of equipment would be considered an investing activity. A)True
B)False
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Chapter 11: College and University Accounting
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Sample Questions
Q1) Private colleges and universities recognize revenue in the year in which the unconditional pledge is made.
A)True
B)False
Q2) Funds that are restricted for a certain number of years and then released are considered to be term endowments and are classified as temporarily restricted funds by private colleges and universities.
A)True
B)False
Q3) In 2012,a major drug company agreed to give a not-for-profit private college
$1,700,000 to perform testing of a new drug.An advance payment of $700,000 was received in 2012.The college was to receive $4,000 per individual test.In 2012,the college completed 100 tests.How much revenue should the college report for 2012?
A) $- 0 - .
B) $400,000.
C) $700,000.
D) $1,700,000.
Q4) 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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Sample Questions
Q1) Which of the following is correct with respect to the recording of charity care for health care organizations?
A) Charity care is recorded as revenue and an adjustment is recorded for the difference between the value of the revenue and expenses incurred in providing health care services.
B) Revenues are not recorded for the value of charity care services provided, but related expenses are included with other expenses on the Statement of Operations.
C) The value of foregone charity care revenue is deducted as a charitable contribution.
D) Management's policy for providing charity care and the level of charity care provided is an optional disclosure.
Q2) Voluntary health and welfare organizations raise a significant amount or nearly all of their resources from contributions and grants and are subject to the rules of the AICPA Not-for-Profit Guide.
A)True
B)False
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Chapter 13: Auditing, tax-Exempt Organizations, and Evaluating Performance
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Sample Questions
Q1) The three major user groups identified by the GASB are (1)citizen groups,(2)legislative and oversight officials,and (3)investors and creditors.
A)True
B)False
Q2) Supporting expenses are not included in the numerator of the program expense ratio.
A)True
B)False
Q3) Entities that are tax exempt under IRS Section 501(c)3 are prohibited from having surpluses (revenues exceed expenses).
A)True
B)False
Q4) Organizations exempt under section 501(c)(3)of the Internal Revenue code are required to file Form 990 or in some cases an alternate form by the 15th day of which month?
A) The 9th month following the taxable year of the organization
B) The 3rd month of the calendar year
C) The 5th month following the taxable year of the organization
D) The month in which the organization originally filed
Page 15
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Chapter 14: Financial Reporting by the Federal Government
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Sample Questions
Q1) Which of the following are included in the Financial Snapshot section of the federal government's Citizens' Guide to the Financial Report of the US Government?
A) The Net Operating Cost of the federal government
B) The Net Position (assets minus liabilities) of the federal government
C) Both (a) and (b) above
D) Neither (a) nor (b) above
Q2) The budgetary accounts of a federal agency are used to prepare the accrual basis financial statements of the federal government and its agencies.
A)True
B)False
Q3) Federal agencies must include a Managements' Discussion and Analysis in their financial report.
A)True
B)False
Q4) The Statement of Operations and Changes in Net Position for the consolidated report of the federal government is prepared on the budgetary basis of accounting.
A)True
B)False
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