State and Local Government Accounting Exam Materials
Course Introduction
State and Local Government Accounting explores the principles, standards, and procedures unique to the financial management of state and local governmental entities. The course examines governmental fund accounting, the use of the modified accrual basis, budgetary reporting, and the preparation of financial statements in accordance with Governmental Accounting Standards Board (GASB) requirements. Students will analyze how governmental organizations track revenues and expenditures, manage public funds, and ensure transparency and accountability to stakeholders. Key topics include fund types, encumbrance systems, general and special revenue funds, capital project funds, and the role of audits in the public sector. This course provides a foundation for understanding the distinctive nature of public sector financial statements compared to those of for-profit organizations.
Recommended Textbook
Introduction to Governmental and Not for Profit Accounting 7th Edition by Patton
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15 Chapters
538 Verified Questions
538 Flashcards
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Page 2
Chapter 1: Governmental and Not-For-Profit
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Sample Questions
Q1) Which of the following is a distinguishing characteristic of a nonbusiness organization?
A)Its revenues do not exceed its expenses
B)There is an absence of ownership interests that can be sold,transferred,or redeemed
C)It does not depreciate its capital assets
D)It does not charge fees for any of its services
Answer: B
Q2) Which of the following is the most authoritative source of accounting standards for cities and counties?
A)Current practices widely used by not-for-profit entities
B)GASB Statements and Interpretations
C)AICPA Industry Audit Guides
D)Implementation guides published by GASB staff
Answer: B
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Chapter 2: The Use of Funds in Governmental Accounting
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Sample Questions
Q1) Which of the following is a characteristic of an Agency Fund's financial reporting?
A)Its statement of fiduciary net position shows assets,liabilities,and fund balance
B)Its statement of fiduciary net position shows no net position
C)Its statement of fiduciary net position shows no liabilities
D)Its statement of fiduciary net position shows no assets
Answer: B
Q2) The three broad categories of funds used by governmental entities are:
A)Governmental,Proprietary,and Fiduciary
B)Unrestricted,Partially Restricted,and Fully Restricted
C)General,Special,and Fiduciary
D)General,Enterprise,and Agency
Answer: A
Q3) Which of the following are fiduciary-type funds?
A)Pension Trust Fund,Agency Fund,and Permanent Fund
B)Investment Trust Fund,Special Revenue Fund,and Internal Service Fund
C)Agency Fund,Internal Service Fund,and Pension Trust Fund
D)Pension Trust Fund,Investment Trust Fund,and Agency Fund
Answer: D
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Chapter 3: Budgetary Considerations in Governmental Accounting
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28 Flashcards
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Sample Questions
Q1) Which of the following classifications will not appear in the annual budget for a General Fund?
A)depreciation
B)capital outlay
C)debt service
D)current operating
Answer: A
Q2) Which of the following approaches to budgeting requires each activity to be justified each year?
A)object-of-expenditure approach
B)performance approach
C)planning-programming-budgeting approach
D)zero-based budgeting approach
Answer: D
Q3) The largest revenue source in a city government's General Fund normally is A)fines and forfeits
B)property taxes
C)interest on investments
D)charges for building inspections
Answer: B
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Chapter 4: The Governmental Fund Accounting Cycle
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39 Verified Questions
39 Flashcards
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Sample Questions
Q1) Liabilities in the General Fund and Special Revenue Fund represent:
A)claims against the fund's cash resources
B)claims against the fund's current financial resources
C)claims against the fund's economic resources
D)claims that must be paid within one year
Q2) The City of Seales has a December 31<sup>st</sup> fiscal year end.Salaries earned by city's General Fund employees for the period December 24<sup>th</sup> through December 31<sup>st</sup> will not be paid until January 7<sup>th</sup> of the next year.On December 31<sup>st</sup>,the City of Seales' accounting personnel would:
A)debit salaries expense and credit salaries payable.
B)debit expenditures-salaries and credit cash.
C)make no journal entry because cash has not yet been paid.
D)none of the above
Q3) What is budgetary fund balance?
A)budgetary fund balance is assigned
B)budgetary fund balance is permanent in nature
C)budgetary fund balance is the anticipated change in fund balance as a result of adopting the budget
D)budgetary fund balance can be appropriated
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Page 6
Chapter 5: The Governmental Fund Accounting Cycle
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Sample Questions
Q1) The General Fund lends cash at the beginning of the year to an Enterprise Fund,expecting to be repaid before the end of the year.What account should be debited in the General Fund?
A)transfer out to enterprise fund
B)due from enterprise fund
C)other financing uses - enterprise fund
D)expenditures - enterprise fund loans
Q2) The city council decides to close the Library Special Revenue fund and send its remaining resources ($45,000 cash)to the General Fund.What account should the Library Special Revenue Fund debit when it sends the cash to the General Fund?
A)advance to general fund
B)transfer out to general fund
C)due from general fund
D)expenditures - fund closeout
Q3) For the general fund,the residual fund balance classification is:
A)unassigned fund balance
B)assigned fund balance
C)committed fund balance
D)restricted fund balance
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Page 7
Chapter 6: The Governmental Fund Accounting Cycle
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37 Flashcards
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Sample Questions
Q1) A city constructs a new building by issuing debt in the amount of $3 million.How should the city report the debt proceeds in its Capital Projects Fund statement of revenues,expenditures,and changes in fund balance?
A)as a revenue
B)as an other financing source
C)as a liability captioned general long-term obligations
D)as a liability captioned due to the debt service fund
Q2) Which of the following is a characteristic of a Permanent Fund?
A)both the corpus of the fund and its earnings must be kept intact permanently.
B)permanent funds are created to support programs that benefit other governmental units.
C)earnings of a permanent fund are used to support programs that benefit the government or its citizens.
D)permanent Funds are established when a government receives a bequest without a legal trust agreement.
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Chapter 7: The Governmental Accounting Cycle
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Sample Questions
Q1) At December 31,2013,a Water Enterprise Fund has outstanding revenue bonds payable of $1 million,of which $40,000 is due to be paid on February 15,2014,and $50,000 is due to be paid on August 15,2014.How should it report this liability in its fund statement of net position as of December 31,2013?
A)It should report $40,000 as a current liability and disclose $960,000 in a note
B)It should report $40,000 as a current liability and $960,000 as a noncurrent liability
C)It should report $90,000 as a current liability and $910,000 as a noncurrent liability
D)It should report no liability for this obligation on the fund statement of net position
Q2) Proprietary fund net position must be reported in which three elements?
A)nonexpendable,restricted,and unrestricted
B)net investment in capital assets,restricted,and unrestricted
C)restricted,committed and unrestricted
D)additional- paid-in-capital,restricted,and unrestricted
E)restricted,committed,assigned
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Chapter 8: The Governmental Fund Accounting
Cycle--Fiduciary
Funds
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Sample Questions
Q1) A Pension Trust Fund prepares two financial statements and two supplementary schedules.Where does the obligation (calculated by the actuary)for the total benefits earned by employees and retirees,as of a specific point in time,appear?
A)in the Statement of Fiduciary Fund Net Position
B)in the Schedule of Funding Progress
C)in both the Statement of Fiduciary Fund Net Position and the Schedule of Funding Progress
D)in the Statement of Changes in Fiduciary Fund Net Position
Q2) If Bevo County prepares an Agency Fund statement of fiduciary net position before it collects the property taxes,how much should it report as property taxes receivable?
A)$0
B)$4 million
C)$6 million
D)$10 million
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10
Chapter 9: Reporting Principles and Preparation of Fund
Financial Statements
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Sample Questions
Q1) An entity can be a component unit of how many primary governments in the same fiscal year?
A)1
B)2
C)3
D)4 or more
Q2) What is the general rule for reporting on funds in the fund-level financial statements for fiduciary funds?
A)There is no requirement for reporting on fiduciary funds in the fund-level statements.
B)All individual major funds must be reported in separate columns of the fund-level financial statements for fiduciary funds;nonmajor funds may be combined in a single column.
C)All individual fiduciary funds,whether major or nonmajor,must be reported in separate columns of the fund-level financial statements for fiduciary funds.
D)Separate columns should be shown for each fund type,such as Investment Trust Funds (rather than individual funds),in the fund-level financial statements for fiduciary funds.
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11
Chapter 10: Government-Wide Financial Statements
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Sample Questions
Q1) Describe the adjustment or adjustments needed to prepare government-wide financial statements from the city's calendar year 2012 fund-level financial statements
A)No adjustments are needed
B)Record capital assets,and record six months' depreciation ($10,000)
C)Record capital assets,reduce capital outlay expenditures,and record six months' depreciation ($11,667)
D)Record capital assets,reduce capital outlay expenditures,and record six months' depreciation ($10,000)
Q2) How should bonds payable be reported on government-wide financial statements?
A)Bonds payable should be reported as an offset to capital assets in the assets section of the statement of net position
B)Bonds payable should not be reported on the government-wide financial statements
C)Bonds payable should be separated between amounts due to be paid in one year and amounts due to be paid in more than one year
D)Bonds payable should be reported in the net position section of the statement of net position
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Chapter 11: Federal Government Accounting and Reporting
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Sample Questions Q1) (Matching)
Match the entity that takes the action with the nature of the action taken by putting the number of the action taken (second column)next to the letter for the entity (first column). Entity that takes action\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)Nature of action taken
a.
Congress\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\ (\quad\)\(\quad\)\(\quad\)1. Allots
b. Office of Management and Budget\(\quad\)2. Appropriates
c.
Treasury\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\( \quad\)\(\quad\)\(\quad\)3. Obligates
d.
Department\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad \)\(\quad\)\(\quad\)4. Apportions
e.
Agency\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\ quad\)\(\quad\)\(\quad\)\(\quad\)5. Disburses
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Page 13
Chapter 12: Accounting for Not-For-Profit Organizations
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Sample Questions
Q1) According to the Financial Accounting Standards Board,the distinguishing characteristics of not-for-profit organizations (NFPOs)do not include which of the following?
A)NFPOs can issue debt on which the interest is exempt from federal taxation
B)NFPOs receive significant contributions from resource providers who do not receive proportionate value in return
C)NFPOs operate for purposes other than to provide goods and/or services at a profit
D)NFPOs do not have defined ownership interests that can be sold or transferred
Q2) Which of the following characteristics of a brochure prepared by an NFPO is not relevant to whether the cost of the brochure can be allocated between program and fund-raising functions?
A)page count
B)content
C)purpose
D)audience
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Chapter 13: Accounting for Health Care Organizations
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40 Flashcards
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Sample Questions
Q1) A not-for-profit hospital's trustees designate $600,000 of the hospital's unrestricted resources for the future acquisition of equipment.The trustees tell the hospital comptroller to purchase a separate certificate of deposit for it.How should the hospital record and report this investment?
A)as an investment,the resources of which will be designated as restricted in the net assets section of the balance sheet
B)report the investment as "assets limited as to use," and report $600,000 of net assets as restricted net assets
C)report the investment as "assets limited as to use," and report $600,000 of net assets as unrestricted net assets
D)report the investment as "restricted" investments and report $600,000 of net assets as restricted net assets
Q2) Differences between a hospital's established rates and amounts negotiated with third-party payers are referred to as:
A)contractual adjustments
B)unrecovered costs
C)equity adjustments
D)restricted revenues
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Chapter 14: Analysis of Financial Statements and Financial Condition
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Sample Questions
Q1) You are assessing the financial condition of a county.Its financial statements have captions for "transfers in" and "transfers out," both containing significant amounts.What consideration should you give to these transfers in assessing financial condition?
A)do not consider them in your analysis,because transfers in will equal transfers out
B)see if transfers in equal transfers out.Then,check the balance sheet to see if the captions "due to" and "due from" also are equal.If so,no further review is needed
C)see if the transfers are recurring,rather than one-shots.If they are recurring,no further inquiry is needed
D)only transfers in should be considered
Q2) The Government Finance Officers Association recommends general-purpose government's have a financial policy to maintain the General Fund's unrestricted fund balance at:
A)ten percent of expected annual General Fund expenditures.
B)45 days of expected governmental fund expenditures
C)no less than two months of regular General Fund revenues or expenditures.
D)no less than two months of total annual governmental fund revenues
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Page 16
Chapter 15: Fundamentals of Accounting
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Sample Questions
Q1) Herman Appliance buys and sells refrigerators.Herman starts the year with an inventory of $20,000.During the year,Herman buys refrigerators totaling $182,000.At year-end,Herman takes inventory and finds that he has $28,000 of refrigerators on hand.During the year,Herman's sales revenue was $256,000.What was Herman's gross profit on the sales for the year?
A)$54,000
B)$66,000
C)$74,000
D)$82,000
Q2) Which of the following statements is true about control accounts?
A)control accounts are used to control amounts spent during the year
B)control account totals must equal the total of the individual subsidiary accounts
C)control accounts are used to limit the amounts of liabilities incurred during the year
D)control accounts avoid the need for making postings to ledgers.
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