Municipal Accounting Exam Bank
Course Introduction
Municipal Accounting explores the principles, standards, and practices associated with financial management in local government entities. The course covers topics such as fund accounting, budget preparation and execution, financial reporting, compliance with regulatory frameworks (such as GASB standards), and the use of accounting information for decision-making by city councils and public administrators. Students will analyze the unique challenges of accounting for public resources, including revenue recognition, expenditure tracking, and accountability to the public, while gaining practical skills necessary for roles in municipal finance departments and agencies.
Recommended Textbook
Essentials of Accounting for Governmental and Not for Profit Organizations 10th Edition by Paul
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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 funds is not a Fiduciary Fund?
A) Private Purpose Trust Fund
B) Special Revenue Fund
C) Pension Fund
D) Investment Trust Fund
Answer: B
Q2) FASAB,GASB and FASB standards are set forth primarily in documents called interpretations.
A)True
B)False Answer: False
Q3) Governmental activities fund statements must be changed to the accrual basis from the modified accrual basis when preparing government-wide financial statements.
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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Sample Questions
Q1) Which of the following is true regarding Management's Discussion and Analysis (MD&A)?
A) MD&A is not considered part of Required Supplementary Information (RSI).
B) MD&A takes the place of footnotes.
C) MD&A should present an analysis of significant variations between the original and final budget.
D) All of the above are true.
Answer: C
Q2) List the Government-wide financial statements required by GASB Statement 34. Answer: Government-wide financial statements:
Q3) With respect to MD&A,a government may discuss any issues it deems important to the completeness of the annual report.
A)True
B)False
Answer: False
Q4) Capital assets must be itemized on governmental fund balance sheets. A)True
B)False
Answer: False
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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) Where is tax-supported long term debt reported?
A) General Fund Balance Sheet
B) Special Revenue Funds Balance Sheet
C) Debt Service Funds Balance Sheet
D) Government-wide Statement of Net Assets
Answer: D
Q2) Which of the following results in an expenditure?
A) Place a purchase order.
B) Receive goods previously ordered.
C) Receive an invoice on goods previously received.
D) Payment of an invoice previously received.
Answer: B
Q3) Revenues,but not expense are recorded the same under accrual and modified accrual accounting.
A)True
B)False
Answer: False
Q4) What are the four classes of nonexchange revenues?
Answer: Imposed nonexchange transactions Derived tax revenues
Government-mandated nonexchange transactions Voluntary nonexchange transactions
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Chapter 4: Accounting for the General and Special Revenue Funds
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Sample Questions
Q1) The initial transfer of cash from the General Fund to establish a motor pool internal service fund would require the General Fund to credit cash and debit:
A) Investment in Internal Service Fund.
B) Other Financing Uses-Transfers Out Control.
C) Expenditures - Vehicle maintenance.
D) Accounts Receivable-Internal Service Fund.
Q2) The entry to re-establish encumbrances related to purchase orders from the prior year would include:
A) A debit to Fund Balance.
B) A debit to Encumbrances Control.
C) A credit to Budgetary Fund Balance - Reserved for Encumbrances.
D) None of the above.
Q3) When delinquent taxes are written off:
A) Fund balance will decrease.
B) Fund balance will be unaffected.
C) Expenditures will increase.
D) Both a and c.
Q4) What is the difference between reciprocal interfund activity and nonreciprocal interfund activity?
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Chapter 5: Accounting for Other Governmental Fund Types:
Capital Projects,
Service, and Permanent
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Sample Questions
Q1) Which of the following is not a source of funding for capital projects?
A) Issuance of long term debt
B) Proceeds of dedicated taxes
C) Gifts from individuals or organizations
D) All of the above are sources of funding for capital projects.
Q2) What is the correct debit or credit for the following scenario: A contract was issued for the major part of work to be done by a private contractor for the amount of $1,200,000?
A) Debit: Budgetary Fund Balance -- Reserve for Encumbrances.
B) Debit: Construction expenditures.
C) Credit: Cash.
D) Debit: Encumbrances.
Q3) Which of the following funds has an indefinite life?
A) General Fund.
B) Special revenue.
C) Capital projects.
D) Debt Service.
Q4) All of the governmental funds use the modified accrual basis of accounting.
A)True
B)False
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Chapter 6: Proprietary Funds
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Sample Questions
Q1) Solid waste landfills are required to estimate the cost of closure which include:
A) Cost of equipment used.
B) Cost of landfill cover.
C) Cost of caring for the site for 30 years.
D) all of the above.
Q2) According to GASB 34,restricted net assets include those that are the results of constraints imposed by creditors,grantors,contributors,or laws or regulations of other governments.
A)True
B)False
Q3) 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.
Q4) Budgetary comparison schedules are required for proprietary funds.
A)True
B)False
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Chapter 7: Fiduciary Trustfunds
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Sample Questions
Q1) Financial reporting requirements for defined benefit pension plans include all of the following statements and schedules except?
A) Schedule of Funding Progress.
B) Statement of Changes in Plan Net Assets.
C) Statement of Plan Net Assets.
D) Schedule of Employee Contributions.
Q2) Fiduciary funds use accrual accounting.
A)True
B)False
Q3) GASB Statement 31,Accounting and Financial Reporting for Certain Investments and for External Investment Pools,does not apply to which of the following investment types?
A) External investment pools.
B) Open-end mutual funds.
C) Debt securities.
D) Investments of pension funds.
Q4) Pension Funds are used to account for assets provided to pension trusts.
A)True
B)False
Q5) Contrast the purpose of Private-purpose Trust Funds and Permanent Funds.
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Chapter 8: Government-Wide Statements, capital Assets,
long-Term Debt
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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) Few adjustments to internal service funds are necessary when converting from proprietary funds statements to the government-wide statements as internal service funds are generally reported as business-type activities in the government-wide statements.
FALSE
A)True
B)False
Q3) Government-wide financial statements are prepared using the accrual method of accounting.
A)True
B)False
Q4) What conditions must be satisfied in order to use the modified approach for recording infrastructure?
Q5) With regard to the government-wide statements,list the required statements.
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Chapter 9: Advanced Topics for State and Local Governments
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Sample Questions
Q1) According to GASB Statement 34,governmental activities are generally financed through taxes,intergovernmental revenues and other nonexchange revenues.
A)True
B)False
Q2) What are the required parts of the annual financial report for special-purpose local governments engaged only in business-type activities?
Q3) Public colleges who waive fees for graduate assistants must report tuition income net of the fees waived.
A)True
B)False
Q4) Which of the following is true regarding the Statement of Revenues,Expenses and Changes in Net Assets for a public college reporting as a special purpose entity engaged in business type activities only?
A) Full accrual accounting is used to measure revenues and expenses.
B) Grants are treated as operating revenue and contributions as non-operating revenue.
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) Which of the following is not correct with respect to the reporting of expenses for a private not-for-profit?
A) Expenses can be reported in the unrestricted net asset class or restricted net asset class, as appropriate.
B) Expenses are reported by function in the Statement of Activities or in the notes.
C) The FASB describes functions as either program or supporting.
D) Major program classifications should be shown in the Statement of Activities or in the notes.
Q2) What are the criteria established by Statement of Position 98-02 for allocation of costs that involve fund raising?
Q3) Which organization has standard setting authority over state and local governments,including governmentally related not-for-profit organizations such as hospitals colleges and universities?
A) GASB.
B) FASB.
C) AICPA.
D) SEC.
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Page 12
Chapter 11: College and University Accounting
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Sample Questions
Q1) The NACUBO Financial Accounting and Reporting Manual treats estimates of uncollectible student accounts as:
A) Bad debt expense.
B) Reduction in revenue.
C) Other financing uses.
D) None of the above.
Q2) Which of the following is true of a Statement of Cash Flows for a private college or university?
A) Four categories are used: Operating, Capital Related Financing, Non-capital Related Financing, and Investing.
B) Either the direct or indirect method is acceptable.
C) Cash flows must be presented separately for Unrestricted, Temporarily Restricted, and Permanently Restricted categories.
D) All of the above are true.
Q3) Private colleges and universities record depreciation expense.
A)True B)False
Q4) How should the income earned by a private college's endowment be classified?
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Page 13
Chapter 12: Accounting for Hospitals and Other Health Care
Providers
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Sample Questions
Q1) The AICPA Audit and Accounting Guide: Health Care Organizations applies to:
A) Private not-for-profit health care organizations.
B) Governmentally owned health care organizations.
C) Investor-owned health care organizations.
D) All of the above.
Q2) Health care organizations require a "performance indicator" in the statement displaying revenues and expenses.Which of the following must be reported below that performance indicator?
A) Transfers-in from affiliated organizations.
B) Investment returns restricted by donors or by law.
C) Both of the above.
D) Neither of the above.
Q3) An unrestricted balance sheet category used in health care reporting to show limitations on the use of assets due to bond covenant restrictions and governing board plans for future use is called:
A) Assets whose use are limited.
B) Restricted net assets.
C) Temporarily restricted net assets.
D) Unrestricted net assets.
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Chapter 13: Auditing, tax-Exempt Organizations, and Evaluating Performance
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Sample Questions
Q1) Section 501(c)(3),exempt organizations are prohibited from supporting political candidates or campaigning to influence legislation.
A)True
B)False
Q2) The Taxpayer Bill of Rights requires tax-exempt organizations to provide copies,upon request,of the five most recent annual form 990s.
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) To apply for tax-exempt status,an organization must complete an IRS Form 1023.
A)True
B)False
Q5) List and explain the five ethical concepts outlined by the Yellow Book.
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Chapter 14: Financial Reporting by the Federal Government
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Q1) Which of the following are true of the proprietary accounts of the federal government?
A) The accounts provide a record by which federal expenditures may be traced to the budgetary authority granted by Congress.
B) The accounts are used to present the financial position and results of operations of the federal government and its agencies using the accrual basis of accounting.
C) Both (a) and (b) above
D) Neither (a) nor (b) above
Q2) Which of the following steps in the budgetary authority process occurs when the Office of Management and Budget establishes the quarterly amount available to a federal agency for spending?
A) Appropriation
B) Apportionment
C) Allotment
D) Obligation
Q3) Federal agencies must include a Statement of Cash Flows in their annual report.
A)True
B)False
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