Governmental Accounting Practice Exam
Course Introduction
Governmental Accounting introduces students to the principles and procedures of accounting for public sector entities such as federal, state, and local governments. The course explores the unique environment of governmental organizations, the regulatory framework governing public sector accounting, and fund accounting concepts. Emphasis is placed on accounting for governmental funds, proprietary funds, and fiduciary funds, including budgeting, financial reporting, and the preparation and analysis of comprehensive annual financial reports. Through practical examples and case studies, students gain an understanding of how to record, classify, and report financial transactions in accordance with standards set by the Governmental Accounting Standards Board (GASB).
Recommended Textbook
Essentials of Accounting for Governmental and Not for Profit Organizations
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13 Chapters
1497 Verified Questions
1497 Flashcards
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Page 2
9th Edition by Paul Copley
Chapter 1: Introduction to Accounting and Financial
Reporting for Governmental and Not-For-Profit Organizations
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Which of the following is true regarding the governmental fund financial statements?
A) The governmental fund financial statements include the Balance Sheet and the Statement of Revenues, Expenditures and Changes in Fund Balances
B) The governmental fund financial statements are prepared using the current financial resources measurement focus and the modified accrual basis of accounting
C) Both of the above
D) Neither of the above
Answer: C
Q2) Separate financial information is required to be presented for all funds.
A)True
B)False
Answer: False
Q3) Governmental accounting standards do not require the statistical section.
A)True
B)False
Answer: True
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Chapter 2: Overview of Financial Reporting for State and Local Governments
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95 Flashcards
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Sample Questions
Q1) An organization is presumed to be governmental if it has the ability to issue directly debt that is exempt from federal taxes.
A)True
B)False
Answer: True
Q2) Fund accounting exists primarily to provide assurance that resources are used according to legal or donor restrictions.
A)True
B)False
Answer: True
Q3) The Federal Accounting Standards Advisory Board requires less extensive reports than does the FASB or GASB.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Modified Accrual Accounting: Including the Role of
Fund Balances and Budgetary Authority
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88 Verified Questions
88 Flashcards
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Sample Questions
Q1) At what point would the general fund account "reserve for encumbrances" be debited?
A) When an item is ordered by the government
B) When an authorized liability is incurred (government receives item)
C) When cash is paid to the vendor
D) (A) or (B) depending on authorized appropriations
Answer: B
Q2) Revenues in governmental fund accounting
A) Include taxes, fees, resources provided by other governments and interfund transfers
B) Are recognized in the fiscal year they are available for expenditure
C) Are recognized when earned
D) None of the above describes revenues in governmental accounting
Answer: B
Q3) The Reserve for Encumbrances account is properly considered to be a(an):
A) Current liability if paid within a year; otherwise, long-term debt
B) Equity account; a reservation of fund equity
C) Budgetary account
D) Long-term liability
Answer: B
Page 5
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Chapter 4: Accounting for the General and Special Revenue Funds
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Sample Questions
Q1) In the General Fund, revenues are recognized when earned and available
A)True
B)False
Q2) Under the purchases 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
Q3) The Expenditures control account in the General Fund is debited when:
A) Equipment previously ordered is received
B) The budget is recorded
C) The books are closed at the end of the year
D) Supplies are ordered
Q4) Interfund services provided and used are recognized as Increases and Decreases in Fund Balance
A)True
B)False
Q5) What is the difference between an extraordinary and special item?
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Chapter 5: Accounting for Other Governmental Fund Types:
Capital Projects, Debt Service, and Permanent
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) Which of the following is/are true regarding Capital Projects Funds?
A) The major source of funding for capital projects funds is the issuance of long-term debt
B) Capital project funds only exist for the duration of the project for which it is created
C) Capital Project funds use the Modified Accrual Basis of Accounting
D) All of the above are true
Q2) What is a bond refunding and why do governments refund bonds?
What is the difference between a current refunding and advance refunding?
Q3) Which of the following is true regarding accounting for investments of permanent funds?
A) Investments with determinable fair values must be reported at fair value
B) Gains and losses on investments would not be reported in the Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances until realized by sale
C) Both of the above are true
D) Neither of the above is true
Q4) General funds and special revenue funds typically record budgets.
A)True
B)False
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Chapter 6: Proprietary Funds
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Sample Questions
Q1) Under GASB Statement 34, enterprise funds must be used in which of the following circumstances?
A) When debt is backed solely by fees and charges
B) When services are provided to other governmental units for a fee
C) When the activities are expected to make a profit to be used to fund other government programs
D) None of the above; enterprise funds are optional
Q2) A city government has decided to build and operate a convention center. Identify what factors should be considered in deciding whether to account for the convention center as an Enterprise Fund or as part of general governmental activities?
Q3) According to GASB 34, restricted net assets include those that are the results of constraints imposed by law through constitutional provisions or enabling legislation.
A)True
B)False
Q4) Postclosure costs are recorded in a solid waste landfill enterprise fund at the present value of estimated future costs.
A)True
B)False
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8
Chapter 7: Fiduciary Trust Funds
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Sample Questions
Q1) Investment Trust Funds account for the external portion of investment pools.
A)True
B)False
Q2) Private-purpose trust funds account for donated resources that benefit the general citizenry.
A)True
B)False
Q3) Which of the following statements is not true regarding agency funds?
A) Agency funds use modified accrual accounting
B) Agency funds have only assets and liabilities; no fund equities, revenues or expenditures are recorded
C) Agency funds are reported in the fiduciary funds Statement of Fiduciary Net Assets
D) None of the above; all are true
Q4) If a government is liable for payment of special assessment debt in the event of default by the property owners, then an agency fund must be used.
A)True
B)False
Q5) Contrast a defined benefit and define contribution retirement plan.
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Chapter 8: Government-Wide Statements, Capital Assets,
Long-Term
Debt
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) The governmental funds follow __________ where the government-wide statements follow ___________.
A) Modified accrual accounting, accrual accounting
B) Accrual accounting, modified accrual accounting
C) Accrual accounting, accrual accounting
D) None of the above
Q2) The difference between assets and liabilities in the government-wide statements is called net equity.
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 a decrease 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
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Q4) With regard to the government-wide statements, list the required statements.
Chapter 9: Accounting for Special-Purpose Entities, Including
Public Colleges and Universities
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Sample Questions
Q1) Which of the following is true regarding the Statement of Cash Flows for a public college?
A) Cash received for interest is reported as an increase in cash flows from investing activities
B) Cash paid for interest is reported as a decrease in cash flows from either noncapital or capital and related financing activities
C) Both of the above are true
D) Neither of the above is true
Q2) State appropriations for higher education institutions are to be reported as non operating revenues in the Statement of Revenues, Expenses and Changes in Net Assets.
A)True
B)False
Q3) GASB Statement 39 applies to all of the following except:
A) General governments
B) Booster clubs
C) Museums
D) Health care entities
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Page 11
Chapter 10: Accounting for Private Not-For-Profit Organizations
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Sample Questions
Q1) The FASB requires that expenses of voluntary health and welfare organizations to be reported according to function. Which of the following is one of the FASB required function categories:
A) Operating
B) Program
C) Supporting
D) Both B and C
Q2) A Statement of Functional Expenses is required for
A) State governments
B) Tax agencies
C) Voluntary health and welfare organizations
D) Colleges and universities
Q3) According to FASB, which of the following is not something that distinguishes a not-for-profit organization from a business?
A) Absence of ownership interests
B) Operating purposes other than to provide goods or services at a profit
C) Lack of ability to earn a profit
D) Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return
Page 12
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Chapter 11: College and University Accounting Private Institutions
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Sample Questions
Q1) College and universities treat uncollectible accounts as reductions in revenue, rather than bad debt expense.
A)True
B)False
Q2) Private colleges and universities record depreciation expense.
A)True
B)False
Q3) In 2009, 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 2009. The college was to receive $4,000 per individual test. In 2009, the college completed 100 tests. How much revenue should the college report for 2009?
A) $ - 0 -
B) $ 400,000
C) $ 700,000
D) $1,700,000
Q4) FASB standards require private college and universities to use encumbrances.
A)True
B)False
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Q5) How should the income earned by a private college's endowment be classified?
Chapter 12: Accounting for Hospitals and Other Health Care
Providers
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91 Flashcards
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Sample Questions
Q1) Investor owned health care organizations have the following equity section accounts:
A) Paid in capitals and retained earnings
B) Unrestricted, temporarily restricted or permanently restricted net assets
C) Invested in capital assets net of related debt, restricted and unrestricted net assets
D) Paid in capital, restricted and unrestricted net assets
Q2) For hospitals, contractual adjustments to 3<sup>rd</sup> party payers, such as insurance companies, are recorded with a debit to Contractual Adjustments (a contra-revenue account) and a credit to an allowance for contractual adjustments.
A)True
B)False
Q3) The AICPA Health Care Guide requires a performance indicator in the financial statements of private sector not-for-profit health care providers. A)True B)False
Q4) Assume you are reviewing the financial statements of a not-for-profit hospital. Where would you find the account "Assets whose is limited" and how is it used?
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Chapter 13: Auditing, Tax-Exempt Organizations, and Evaluating Performance
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Sample Questions
Q1) The Government Accountability Office has authority for issuing Governmental Auditing Standards.
A)True
B)False
Q2) Bonds which carry the full faith and credit of a government are called general obligation bonds.
A)True
B)False
Q3) To compute the unreserved fund balance/revenues-General Fund, one would need to look in the CAFR for the:
A) Governmental funds Balance Sheet
B) Governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances
C) Both of the above
D) Neither of the above
Q4) In a governmental audit the auditor is only required to report to the board or audit committee
A)True
B)False
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Q5) Describe the different types of governmental audit and attestation engagements.
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