Fund Accounting Test Preparation
Course Introduction
Fund Accounting provides an in-depth understanding of accounting principles and practices specific to funds, such as those used in government, nonprofit, and institutional settings. The course covers the unique methods of recording, classifying, and reporting financial transactions for various funds, emphasizing legal compliance, stewardship of resources, and transparency for stakeholders. Students will explore fund structures, budgeting, and financial statement preparation, gaining skills to manage restricted and unrestricted resources, ensure accountability, and support decision-making processes in organizations that use fund-based accounting systems.
Recommended Textbook
Accounting for Governmental and Nonprofit Entities 17th Edition by Jacqueline Reck
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17 Chapters
1144 Verified Questions
1144 Flashcards
Source URL: https://quizplus.com/study-set/2906 Page 2
Chapter 1: Introduction to Accounting and Financial
Reporting for Governmental and Not-For-Profit Entities
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59 Verified Questions
59 Flashcards
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Sample Questions
Q1) Which of the following should be included in the financial section of a comprehensive annual financial report?
A) Transmittal letter.
B) The basic financial statements, including notes thereto.
C) Tables and charts showing demographic and economic data.
D) A description of the government.
Answer: B
Q2) Which of the following is not an objective of financial reporting by state and local governments?
A) To assist users in assessing the adequacy of systems and controls.
B) To assist users in assessing financial condition and results of operations.
C) To assist financial report users in comparing actual financial results with the legally adopted budget.
D) To assist in determining compliance with finance-related laws, rules, and regulations.
Answer: A
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3
Chapter 2: Principles of Accounting and Financial Reporting
for State and Local Governments
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66 Verified Questions
66 Flashcards
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Sample Questions
Q1) The measurement focus and basis of accounting that are most unlike those used by business entities are those used by
A) Governmental funds.
B) Fiduciary funds.
C) Proprietary funds.
D) Contribution funds.
Answer: A
Q2) A permanent endowment is an example of a nonspendable fund balance. A)True
B)False Answer: True
Q3) Expenditures are never recorded in governmental funds.
A)True
B)False Answer: False
Q4) Revenues is an example of what the GASB terms an inflow of resources. A)True
B)False Answer: True
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Chapter 3: Governmental Operating Statement Accounts
Budgetary Accounting
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80 Verified Questions
80 Flashcards
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Sample Questions
Q1) When the budget for the General Fund is recorded,the required journal entry will include:
A) A credit to Estimated Revenues.
B) A debit to Encumbrances.
C) A credit to Appropriations.
D) A credit to Fund Balance.
Answer: C
Q2) Budgetary accounts used in the General Fund include Estimated Revenues,Estimated Other Financing Sources,Appropriations,Estimated Other Financing Uses,and Encumbrances.
A)True
B)False
Answer: True
Q3) All purchases of goods and services and all interfund transfers of the General Fund are recorded as Expenditures.
A)True
B)False
Answer: False
Page 5
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Chapter 4: Accounting for Governmental Operating
Activitiesillustrative Transactions and Financial Statements
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) Which of the following will require a credit to Fund Balance-Unassigned of a governmental fund when operating statement accounts are closed at the end of the year,assuming there are no other financing sources or uses?
A) Revenues are less than expenditures.
B) Revenues are more than expenditures.
C) Revenues are more than expenditures and encumbrances.
D) Revenues are less than expenditures and encumbrances.
Q2) Supplies recorded in the General Fund under the purchases method will initially include a
A) Debit to Inventory of Supplies.
B) Credit to Fund Balance-Restricted-Inventory of Supplies.
C) Debit to Expenditures.
D) Debit to Fund Balance-Restricted-Inventory of Supplies.
Q3) Year-end interfund receivable or payable balances will appear in the line item internal balances within their respective columns on the government-wide statement of net position.
A)True
B)False
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Chapter 5: Accounting for General Capital Assets and Capital Projects
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82 Verified Questions
82 Flashcards
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Sample Questions
Q1) In late April,the Acme Construction Co.submitted a $1,200,000 progress billing on a construction contract.On May 2,the bill was approved for payment,subject to a ten percent retention,as provided by the contract.The amount that should be debited to Construction Expenditures is:
A) $ 0.
B) $ 12,000.
C) $1,080,000.
D) $1,200,000.
Q2) The following balances are included in the subsidiary records of Carrollwood: Town hall building .................... $500,000
Town pool (supported by user fees)...... 100,000
Police cars .......................... 20,000
Equipment .......................... 7,500
Office supplies ....................... 1,000
What is the total amount of general capital assets held by the town?
A) $527,500.
B) $528,500.
C) $627,500.
D) $628,500.
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Chapter 6: Accounting for General Long-Term Liabilities and Debt Service
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72 Verified Questions
72 Flashcards
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Sample Questions
Q1) How are general long-term liabilities distinguished from other long-term liabilities of the government? How does the financial reporting of general long-term liabilities differ from the financial reporting of other long-term liabilities?
Q2) Which of the following is not properly recorded in the governmental activities accounts?
A) Tax-supported general obligation bonds.
B) Obligations under capital leases used to finance general capital assets.
C) The long-term portion of judgments and claims.
D) Revenue bonds issued by an enterprise fund.
Q3) Governments should report an estimated loss from a claim or judgment as an expense and as a liability in the government-wide financial statements if a claim appears reasonable.
A)True
B)False
Q4) Explain the financial reporting for special assessment bonds when a government assumes responsibility for debt service should special assessment collections be insufficient,and when the government assumes no responsibility whatsoever.
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Chapter 7: Accounting for the Business-Type Activities of
State and Local Governments
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75 Verified Questions
75 Flashcards
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Sample Questions
Q1) Under GASB standards,an internal service fund should prepare all of the following financial statements except a:
A) Statement of revenues, expenditures, and changes in fund balance.
B) Statement of revenues, expenses, and changes in net position.
C) Statement of net position.
D) Statement of cash flows.
Q2) Unlike the General Fund and other major governmental funds for which a budget is legally adopted,proprietary funds are not required by GASB standards to record budgets in their accounting systems,nor are they required to present a budgetary comparison schedule.
A)True
B)False
Q3) Which of the following illustrates the appropriate basis of accounting for enterprise and internal service funds? Enterprise Funds Internal Service Funds
A) Modified Accrual Modified Accrual
B) Modified Accrual Accrual
C) Accrual Modified Accrual
D) Accrual Accrual
Q4) What are the alternative methods of dissolving an internal service fund?
Page 9
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Chapter 8: Accounting for Fiduciary Activitiesagency and Trust Funds
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63 Verified Questions
63 Flashcards
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Sample Questions
Q1) An investment trust fund is used to report the net position available to the:
A) Sponsoring government only.
B) External participants only.
C) Financial institution that acts as custodian for the fund's investments.
D) All of the above.
Q2) Which of the following financial statements is prepared by fiduciary funds?
A) Statement of net position.
B) Statement of activities.
C) Statement of cash flows.
D) All of the above.
Q3) GASB standards provide comprehensive guidance on pension accounting and financial reporting for defined benefit pension plan employers,but the FASB provides guidance for plan sponsors.
A)True
B)False
Q4) A common example of a private-purpose trust fund is a state-sponsored 529 savings plan,structured such that parents make after-tax contributions to an investment fund managed by the state government.
A)True
B)False
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Chapter 9: Financial Reporting of State and Local Governments
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65 Verified Questions
65 Flashcards
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Sample Questions
Q1) A not-for-profit organization could be reported as a component unit of a primary government.
A)True B)False
Q2) The three sections of the comprehensive annual financial reports of state and local governments are (1)an introductory section,(2)a financial section,and (3)a supplemental section.
A)True
B)False
Q3) Combining financial statements for nonmajor funds of a government should be included
A) In the basic financial statements.
B) In the notes to the financial statements.
C) As a part of the financial section of the comprehensive annual financial report (CAFR).
D) As part of the statistical section of the comprehensive annual financial report (CAFR).
Q4) Under GASB standards,only proprietary funds prepare a statement of cash flows.
A)True
B)False
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Chapter 10: Analysis of Governmental Financial Performance
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59 Verified Questions
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Sample Questions
Q1) A measure of whether the government lived within its means in the measurement year,was required to use prior year resources to fund a portion of current year costs,or shifted the funding of some current year costs to future periods,is:
A) Business-type activities revenues/business-type activities expenses.
B) Unrestricted net position/total revenues.
C) Total revenues/total expenditures.
D) Total net position (governmental activities and business-type activities) less total net position at the beginning of the year.
Q2) Electronic Municipal Market Access (EMMA)is an electronic database of government financial reports provided by the Securities and Exchange Commission.
A)True
B)False
Q3) An effective system of monitoring financial condition may permit management to identify unfavorable financial trends in sufficient time to take preventive action to avoid financial distress.
A)True
B)False
Q4) Explain the importance of evaluating governmental financial performance.
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Chapter 11: Auditing of Governmental and Not-For-Profit Organizations
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65 Verified Questions
65 Flashcards
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Sample Questions
Q1) An auditor performing nonaudit work for a client may be in danger of violating the independence rules in Government Auditing Standards when he or she provides:
A) Valuation services.
B) Advice on establishing or improving internal controls.
C) Benchmarking information to the client.
D) The client with answers to technical questions.
Q2) Which of the following is not a required component of the audit report for a single audit?
A) A report on internal control over financial reporting and compliance with federal statutes, regulations, and the terms and conditions of the federal award.
B) An opinion on the completeness of the schedule of expenditures.
C) A report on compliance for each major program and on internal control over compliance.
D) A schedule of findings and questioned costs.
Q3) Governments may engage one auditor to audit the primary government and other auditors to audit certain component units.
A)True
B)False
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Chapter 12: Budgeting and Performance Measurement
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Sample Questions
Q1) Service efforts and accomplishments reporting is also referred to as citizen-centric reporting.
A)True
B)False
Q2) Describe what is meant by the direct costs of a program (for example,a fire prevention program)and why it is important to distinguish direct costs from indirect costs.
Q3) Service efforts and accomplishments (SEA)reporting helps citizens,elected officials,appointed officials,investors and creditors,and other interested parties evaluate the government's performance in the absence of a "bottom line" measure such as exists for for-profit entities.
A)True
B)False
Q4) Public hearings must be held to provide adequate opportunity for citizens' input to governmental budgets,prior to legislative adoption of the budget.
A)True
B)False
Q5) Under federal guidelines,when is a cost considered reasonable?
Q6) Are governments required to report their budgets externally? Explain.
14
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Chapter 13: Accounting for Not-For-Profit Organizations
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74 Verified Questions
74 Flashcards
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Sample Questions
Q1) Which of the following terms is used to indicate that a donor provided a gift with explicit instructions that the gift is to be used for a specific purpose by the not-for-profit but the entire amount may be spent right away?
A) Board-designated net assets.
B) Permanently restricted net assets.
C) Endowment assets.
D) Temporarily restricted net assets.
Q2) The FASB requires that long-term unconditional pledges (those that will not be collected within a year)be reported at fair value.
A)True
B)False
Q3) Similarity in the characteristics of nongovernmental not-for-profit (NFP)organizations and governmental NFP organizations can make it difficult to determine whether the NFP is nongovernmental or governmental in nature.
A)True
B)False
Q4) Explain when donated materials should be recognized as a contribution and as an expense by a nongovernmental not-for-profit organization.
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Chapter 14: Not-For-Profit Organizationsregulatory, Taxation,
and Performance Issues
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Sample Questions
Q1) All not-for-profit organizations are required to file some type of Form 990 with the Internal Revenue Service.
A)True
B)False
Q2) The Form 990 consists of 12 parts (core form)and several schedules.Which of the following would not be included as one of the parts of the core form of the Form 990?
A) Statement of program service accomplishments.
B) Management analysis of the financial condition of the organization.
C) Balance sheet.
D) A checklist of required schedules.
Q3) The term that means information skewed toward a particular belief with a tendency to have little or no factual basis is:
A) Political influence.
B) Legislation.
C) Propaganda.
D) Lobbying.
Q4) Explain the purpose of "intermediate sanctions".
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Chapter 15: Accounting for Colleges and Universities
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61 Verified Questions
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Sample Questions
Q1) Private colleges report intangible assets as a separate asset classification; whereas,public colleges report intangible assets as part of the capital asset classification.
A)True
B)False
Q2) A college has collected returnable dormitory room deposits from students.How would these deposits be reported by the college?
A) A current liability.
B) Unrestricted revenue.
C) Restricted revenue.
D) A long-term liability.
Q3) Nongovernmental (private)colleges and universities should follow FASB standards; governmental (public)colleges and universities should follow GASB standards.
A)True
B)False
Q4) The organizational form of a college can be governmental,nongovernmental not-for-profit,or for-profit.
A)True
B)False
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Chapter 16: Accounting for Health Care Organizations
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59 Verified Questions
59 Flashcards
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Sample Questions
Q1) The "equity" section (assets minus liabilities)of a health care entity's balance sheet or statement of net position will indicate whether the health care organization is for-profit,not-for-profit,or governmental.
A)True
B)False
Q2) Which of the following volunteer services is most likely to be reported by a nongovernmental not-for-profit hospital as contribution revenue and an expense?
A) Community members who plant flowers on the grounds once a year in the spring.
B) Volunteers in the gift shop who work a few hours a day serving customers.
C) Nurses from a religious organization who volunteer to assist in the care of critically ill children.
D) An accountant who is a member of the board of directors.
Q3) Patient service revenues and related receivables exclude charges for charity care services.
A)True
B)False
Q4) Describe what prepaid health care plans are and some of the related accounting issues.
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Page 18
Chapter 17: Accounting and Reporting for the Federal Government Glossary
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Sample Questions
Q1) Which of the following is not a part of the FASAB due process for establishing a federal financial accounting standard?
A) Public comment on a discussion memorandum.
B) Issuing an exposure draft.
C) Unanimous approval by the FASAB.
D) Support (or lack of opposition) of the standard by the three principals (Comptroller General, Secretary of the Treasury, and Director of the Office of Management and Budget).
Q2) Which of the following is an example of a stewardship asset?
A) The Treasury Building.
B) The Lincoln Memorial.
C) The George Washington Bridge.
D) A stealth fighter jet.
Q3) Social Security is an example of a trust fund administered by the federal government.
A)True
B)False
Q4) Describe the budgetary accounts used in federal agency accounting and the flow of budgetary authority through those accounts.
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