Municipal Accounting
Mock Exam
Course Introduction
Municipal Accounting focuses on the principles and practices involved in the financial management of city and local government entities. This course covers the unique accounting standards that govern municipal operations, including fund accounting, budgetary control, financial reporting, revenue and expenditure cycles, and the regulatory framework that applies to public sector organizations. Students will examine methods for recording, reporting, and analyzing financial transactions in municipal governments, explore the roles of various municipal funds, and assess issues related to transparency and compliance. By the end of the course, learners will be equipped to understand and prepare municipal financial statements, assist in budget preparation, and ensure accurate financial stewardship in the public domain.
Recommended Textbook
Essentials of Accounting for Governmental and Not for Profit 12th Edition by Copley
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14 Chapters
1794 Verified Questions
1794 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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132 Verified Questions
132 Flashcards
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Sample Questions
Q1) Which of the following are the governmental funds?
A) General, special revenue, debt service, capital projects, private purpose.
B) General, special revenue, debt service, capital projects, permanent.
C) General, special revenue, debt service, capital projects, internal service.
D) None of the above.
Answer: B
Q2) The "Hierarchy of GAAP" is established by the:
A) Financial Accounting Standards Board.
B) Federal Accounting Standards Advisory Board
C) Governmental Accounting Standards Board
D) All of the above have established a hierarchy
Answer: D
Q3) General fixed assets of the government are reported both in the government-wide financial statements and the governmental fund financial statements.
A)True
B)False
Answer: False
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Chapter 2: Overview of Financial Reporting for State and Local Governments
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136 Verified Questions
136 Flashcards
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Sample Questions
Q1) The basic financial statements of a state or local governmental unit include the MD&A,government-wide statements,fund statements,and the notes.
A)True
B)False
Answer: False
Q2) The fund balance reported in the Governmental Funds Balance Sheet must equal the total Net Position in the governmental activities column of the government-wide Statements of Net Position.
A)True
B)False
Answer: False
Q3) In addition to a Statement of Net Position,Proprietary Fund level financial statements include which of the following?
A) Statement of revenues, expenses, and changes in fund Net Position.
B) Statement of cash flows.
C) Both of the above.
D) Neither of the above.
Answer: C
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Chapter 3: Modified Accrual Accounting: Including the Role of
Fund Balances and Budgetary Authority
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) The general ledger journal entry in the General Fund to record encumbrances for the issuance of purchase orders would include:
A) A credit to Encumbrance Control
B) A debit to Expenditures Control
C) A credit to Accounts Payable
D) A credit to Budgetary Fund Balance-Reserve for Encumbrances
Answer: D
Q2) A Budgetary Comparison Schedule is:
A) optional under GASB standards for all funds.
B) required by GASB for internal management reports only; not permitted for external financial reporting.
C) required for all governmental fund types.
D) required for the General Fund, and for special revenue funds, for which an annual budget has been adopted.
Answer: D
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Page 5
Chapter 4: Accounting for the General and Special Revenue Funds
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) Governmental fund financial statements are prepared using the accrual basis of accounting.
A)True
B)False
Q2) Expenditures for claims and judgments,compensated absences,and special termination benefits should be recognized in the General Fund whether or not the liabilities are to be paid with available resources.
A)True
B)False
Q3) What would be the effect on the General Fund's Fund Balance at the end of the current fiscal year of recording the purchase of a $5,000 new computer with a five year estimated useful life and zero salvage?
A) Have no effect on the General Fund's Fund Balance.
B) Reduce the General Fund's Fund Balance $1,000.
C) Reduce the General Fund's Fund Balance $5,000.
D) Reduce the General Fund's Fund Balance $6,000.
Q4) Every general purpose government may have more than one General Fund.
A)True
B)False
Page 6
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Chapter 5: Accounting for Other Governmental Fund Types:
Capital Projects, Debt Service, and Permanent
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) Positive fund balances of capital projects funds are classified as nonspendable,restricted,committed,or assigned.
A)True
B)False
Q2) Which of the following is not true regarding permanent funds?
A) Permanent funds are considered governmental funds.
B) Permanent funds use the current financial resources measurement focus and modified accrual basis of accounting.
C) Permanent funds are appropriate when a gift must be invested and the proceeds used to benefit individuals or organizations.
D) Major permanent funds would be reported in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances.
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) Encumbrances Control.
C) Expenditures-Capital Outlay.
D) None of the above, no entry is made until payment.
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Chapter 6: Proprietary Funds
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130 Flashcards
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Sample Questions
Q1) Impact fees imposed on commercial developers by an enterprise fund and not associated with specific projects or improvements are recorded as:
A) Transfers from the enterprise fund to a capital projects fund.
B) Operating revenues to the enterprise fund.
C) Unearned revenue to the enterprise fund.
D) Capital contributions to the enterprise fund.
Q2) This fund accounts for activities that produce goods or services to be provided to other departments or other governmental units.
A) Enterprise fund.
B) Internal Service fund.
C) Special Revenue fund.
D) Debt Service fund.
Q3) Proprietary Funds use the accrual basis of accounting.
A)True
B)False
Q4) An internal service fund is required whenever an activity is funded by fees or charges from other government departments.
A)True
B)False
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Chapter 7: Fiduciary Funds, Inter-fund Transactions
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Sample Questions
Q1) If a government has no potential liability for payment of special assessment debt in the event of default by the property owners,then an agency fund may be used to account for the proceeds of the special assessment.
A)True
B)False
Q2) The Accrual Basis and Economic Resource Measurement Focus are used for Private-Purpose,Investment Trust and Pension Funds.
A)True
B)False
Q3) Which fund is used when a contributor specifies that the income of trust assets be used for the benefit of the general citizenry?
A) Private-purpose trust fund.
B) Agency fund.
C) Investment trust fund.
D) Permanent fund.
Q4) What are the four types of fiduciary funds and the function of each?
Q5) What is a defined benefit pension plan?
Q6) Contrast a defined benefit and defined contribution retirement plan.
Q7) What is a cost sharing state pension plan?
Page 9
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Chapter 8: Government-Wide Statements: Capital Assets; Long-Term Debt
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Sample Questions
Q1) For the depreciation of infrastructure
A) Governments are required to record depreciation in the same manner as other depreciable fixed assets.
B) Governments are required to record depreciation using a modified approach.
C) Governments do not record depreciation for infrastructure.
D) Governments can choose to expense expenditures that extend the life of infrastructure assets in lieu of depreciation
Q2) A government reported the following transfers in its governmental funds Statement of Revenues,Expenditures,and Changes in Fund Balances: (1)a transfer from the General Fund to a special revenue fund in the amount of $500,000; (2)a transfer from the General Fund to an enterprise fund in the amount of $400,000; (3)a transfer from the General Fund to a permanent fund in the amount of $100,000.The amount that would be shown as a transfer out in the governmental activities column in the Statement of Activities would be:
A) $0; no transfer would be shown.
B) $ 400,000.
C) $ 700,000.
D) $1,000,000.
Q3) With regard to the government-wide statements,list the required statements.
Page 10
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Chapter 9: Accounting for Special-Purpose Entities
Including Public Colleges and Universities
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104 Verified Questions
104 Flashcards
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Sample Questions
Q1) Revenue for reimbursement grants may be recognized before expenditures take place as long as the grant has been awarded.
A)True
B)False
Q2) City and county governments are not typically classified as special purpose governments.
A)True
B)False
Q3) A special-purpose government engaged in business-type activities financed in whole or part by fees charged to external parties are usually reported in fiduciary funds.
A)True
B)False
Q4) Special-purpose governments that are engaged in both governmental and business-type activities are required to use the full reporting model including MD&A,government-wide and fund-basis statements,notes to the financial statements and RSI.
A)True
B)False
Page 11
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Chapter 10: Accounting for Private Not-For-Profit Organizations
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) The institution's governing board decided to create an endowment from contributed funds,this is called a(n)________ and the funds are unrestricted.
A) Endowment.
B) Term endowment.
C) Quasi-endowment.
D) None of the above.
Q2) Cash flows must be presented separately in the Statement of Cash Flows for the three classes (unrestricted,temporarily restricted,and permanently restricted).
A)True
B)False
Q3) Which of the following would be a contribution increasing permanently restricted net assets?
A) A contribution by a donor in the amount of $1,000,000, set aside by the governing board as funds not to be expended.
B) A contribution by a donor in the amount of $1,000,000 to be used to acquire fixed assets.
C) A contribution of $1,000,000 to fund an endowment.
D) None of the above.
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Chapter 11: College and University Accounting Private Institutions
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125 Flashcards
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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) NACUBO guidelines require both revenues and expenses for split summer sessions to be apportioned to the two fiscal years.
A)True
B)False
Q3) According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,depreciation is recorded. When reporting by function,depreciation is allocated to functional categories.
A)True
B)False
Q4) Distinguish between (a)true endowments,(b)term endowments,and (c)quasi-endowments. Explain how the net assets of each is classified by a private college or university.
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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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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) If a clinic raises a significant amount or nearly all their resources from voluntary contributions or grants,they are subject to the guidance in the AICPA:
A) Not-for-Profit Guide.
B) Health Care Guide.
C) Voluntary Health and Welfare Guide.
D) Contributions and Grants Guide.
Q2) Health care organizations that are privately owned and operated to provide a return to investors report the same net asset classifications as private not-for-profit health care organizations.
A)True
B)False
Q3) Private not-for-profit health care organizations include what categories in the equity section of the Statement of Net Assets?
A) Paid in capital and retained earnings.
B) Unrestricted, temporarily restricted, and permanently restricted.
C) Net investment in capital assets, restricted, and unrestricted.
D) Operating, investing, financing.
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Page 14
Chapter 13: Auditing, Tax-Exempt Organizations, and Evaluating Performance
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) What is not an advantage of obtaining section 501(c)(3)status?
A) The charitable organization is permitted to engage in a trade or business unrelated to its mission without having to pay income taxes.
B) Donors to the charitable organization are permitted to deduct contributions to the organization in computing their income taxes.
C) The charitable organization does not have to pay state sales tax.
D) Neither (A) nor (C) is an advantage.
Q2) Governmental Auditing Standards identifies four categories of professional engagements: financial audits,performance audits,attestation engagements,and non-audit services.
A)True B)False
Q3) Bonds which carry the full faith and credit of a government are called revenue bonds.
A)True B)False
Q4) What is the objective of the single audit process?
Q5) What is required for an organization to qualify for tax-exempt status?
Page 15
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Chapter 14: Financial Reporting by the Federal Government
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Sample Questions
Q1) The Statement of Custodial Activity is not required of every federal agency but is prepared by the SEC,IRS and Customs.
A)True
B)False
Q2) Which of the following is (are)true regarding the Government Accountability Office?
A) The GAO establishes accounting standards applicable to the federal government and its agencies
B) The GAO establishes auditing standards applicable to the federal government and its agencies
C) Both (a) and (b) above
D) Neither (a) nor (b) above
Q3) 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) Apportionment
B) Appropriation
C) Allotment
D) Obligation
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