Test 1

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LyonGirl2003
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101821
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Test 1
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2011-09-14 22:55:17
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Governmental & Not-for-Profit Test 1 - Chapters 1-4
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  1. The private sector organization that has been given primary authority to set accounting and financial reporting standards for state and local governments is the
    Governmental Accounting Standards Board (GASB)
  2. The private sector organization that has been given primary authority to set accounting and financial reporting standards for private sector, not-for-profit organizations is the
    Financial Accounting Standards Board (FASB)
  3. The organization that has been given primary authority to set accounting and financial reporting standards for the federal government and its agencies is the
    Federal Accounting Standards Advisory Board (FASAB)
  4. The hierarchy of GAAP for all entities is established by the
    American Institute of Certified Public Accountants (AICPA)
  5. Objectives of financial accounting and reporting have been established by the
    FASB, GASB and FASAB
  6. The three main sections of a comprehensive annual financial report are
    Introductory, financial and statistical
  7. The government-wide financial statements include a
    Statement of net assets and a statement of activities
  8. Governmental funds include
    General, special revenue, debt service, capital projects and permanent funds
  9. Governmental funds use the
    Current financial resources measurement focus and modified accrual basis of accounting
  10. Which of the following is true regarding accounting for fixed assets of state and local government units?
    • Fixed assets are to be recorded at historical cost, or if donated, at the fair value at date of donation
    • Fixed assets are to be reported and depreciated in the government-wide financial statements
    • Fixed assets are to be reported and depreciated in the proprietary fund financial statements but not in the governmental fund financial statements
  11. Which of the following organizations would not have accounting and financial reporting principles estsablished by the FASB?
    Cook County Hospital
  12. Objectives adopted by the GASB include which of the following
    • Financial reporting plays an important role in fulfilling government's duty to be publicly accountable in a democratic society
    • Financial reports are used to compare actual financial results with the legally adopted budget
    • Financial reports are used to assess financial condition and results of operation
  13. Which of the following would not be included in the financial section of a comprehensive annual financial report?
    Letter of transmittal
  14. Proprietary fund financial statements include:
    Statement of net assets, statement of revenues, expenses and changes in fund net assets, and statement of cash flows.
  15. Which of the following statements would not be prepared using full accrual accounting?
    Governmental fund statement of revenues, expenditures and changes in fund balances.
  16. Which of the following is not a governmental fund?
    Private-purpose
  17. Which of the following fund types uses the same measurement focus and basis of accounting as the general fund?
    Permanent
  18. Which of the following is not true regarding the reporting of infrastructure by state and local governmental units?
    All are true.
  19. Which of the following is not true regarding the recording of collections by state and local governments?
    All are true.
  20. Which of the following is not true regarding accounting and financial reporting for long-term debt and other long-term liabilities by state and local governmental units?
    Long-term debt and other long-term liabilities are going to be reported in the governmental fund balance sheet.
  21. Which of the following is not part of the basic financial statements?
    Combining Balance Sheet - Nonmajor Governmental Funds
  22. Which of the following could be a component unit?
    The DeKalb Public Library
  23. Which of the following is true regarding the Management's Discussion & Analysis (MD&A) section of a Comprehensive Annual Financial Report?
    The MD&A is considered Required Supplementary Information
  24. Which of the following is true regarding the government-wide financial statements?
    • The government-wide financial statements include the Statement of Net Assets and Statement of Activities
    • The government-wide financial statements are to be prepared using the economic resources measurement focus and accrual basis of accounting
    • The government-wide financial statements include information for governmental activities, business-type activities, the total primary government, and component units
  25. In the government-wide Statement of Net Assets
    Designations of net assets may not be presented
  26. In the Statement of Activities
    It is possible to determine the net program expense (revenue) for major functions and programs of the primary government and component units
  27. Fund financial statements are to be prepared for which of the following fund categories?
    Governmental, Fiduciary, and Proprietary
  28. In the governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances
    Expenditures are classified as current, debt service, and capital outlay
  29. Which of the following are the statements required for proprietary funds?
    Statement of Fund Net Assets (or Balance Sheet), Statement of Revenues, Expenses, and Changes in Fund Net Assets, and Statement of Cash Flows
  30. Which of the following is true regarding financial reporting under GASB Statement 34?
    Special purposes governments that have only business-type activities are permitted to report only the financial statements required for enterprise funds.
  31. Which of the following is not part of the basic financial statements?
    Budgetary Comparison Schedules - General and Special Revenue Funds
  32. Which of the following is not true regarding GASB requirements pertaining to the financial reporting entity?
    An example of a reporting entity might be when a county is considered to be a component unit of a state, the primary government
  33. Which of the following is not true regarding the organization of the Comprehensive Annual Financial Report?
    The Management's Discussion and Analysis (MD&A) is considered to be part of the Introductory Section.
  34. Which of the following is not true regarding the government-wide financial statements?
    The government-wide financial statements are prepared on the current financial resources measurement focus for governmental activities and the economic resources measurement focus for business-type activities.
  35. Which of the following would be considered "restricted" in the government-wide Statement of Net Assets?
    • A contribution to a public university restricted by a donor
    • A state grant to a municipality restricted by state legislation
    • A local tax, restricted by local legislation to a specific purpose
  36. With regard to recording infrastructure by state and local governments
    Infrastructure must be recorded and depreciated, unless a modified approach is used, in which case, depreciation is not required
  37. With regard to determining "major" funds for the fund financial statements
    • The general fund is always considered major
    • Other funds are considered major if both of the following conditions exist: (1) total assets, liabilities, revenues, expenditures/expenses of that individual governmental or enterprise fund constitute 10 percent of the governmental or enterprise category, and (2) total assets, liabilities, revenues, expenditures/expenses are 5 percent of the total of the governmental and enterprise category
    • A government may choose to reflect a fund as major even if it does not meet the criteria for major funds.
  38. The fund statements required for fiduciary funds include:
    Statement of Fiduciary Net Assets and Statement of Changes in Fiduciary Net Assets
  39. Which of the following is true regarding the notes to the financial statements?
    • Notes are considered part of the basic financial statements
    • The notes must include a summary of significant accounting policies
    • The notes include disclosure of the information necessary to use the modified approach for infrastructure
  40. Regarding special purpose governments:
    • Special purpose governments that have more than one governmental activity or that have both governmental and business-type activities are required to present both government-wide and fund reporting
    • Special purpose governments that have only business-type activities are permitted to report only those statements required for enterprise funds
    • Special purpose governments that are fiduciary only in nature, such as an independent pension plan, are to prepare only those statements required for fiduciary funds
  41. Which of the following in the acquisition of goods and services occurs first?
    Appropriation
  42. Which of the following is true regarding the term expenditure?
    • Expenditures are decreases in fund financial resources other than through interfund transfers
    • Expenditures may be for current, capital outlay, or debt service purposes
    • Expenditures are generally recognized when goods and services are received
  43. Debt issue proceeds received by a governmental fund would be recorded as
    An other financing source
  44. Which of the following is true regarding governmental budgetary reporting?
    The budget-actual schedule (or statement) must provide information on the original as well as the revised budget
  45. Which of the following would be an example of expenditure reporting by character?
    Current
  46. The Board of Commissioners of the City of Belvedire's adopted budget for the year ending July 31, 2004, indicated revenues of $1,000,000 and appropriations of $970,000. When the budget is formally integrated into the accounting records, what is the required journal entry?
    Debit Estimated Revenues Control; Credit Appropriations Control and Budgetary Fund Balance
  47. When a purchase order is issued for the General Fund, which of the following entries would be prepared, assuming the purchase order amount is $500?
    Debit Encumbrances Control and Credit Budgetary Fund Balance Reserved for Encumbrances
  48. Assume the following facts for the City of Evanston Police Department for the month of July, 2003, the first month of the fiscal year: The appropriation for the year was passed, amounting to $10,000,000. Purchase orders and contracts were issued in the amount of $300,000. Of the purchase orders already mentioned, $250,000 were filled, with invoices amounting to $260,000. Salaries, not encumbered, amounted to $500,000. What is the available balance at the end of July?
    $9,190,000
  49. Which of the following refers to an actual cost rather than an estimate?
    Expenditure
  50. The Encumbrances Control account would be decreased when:
    Goods, related to purchase orders, are received
  51. The Fire Department of a certain city received an appropriation in the amount of $13,000,000 for the fiscal year ended June 30, 2004. During the month ended July 31, 2003, the following transactions occurred: (a) purchase orders were issued in the amount of $600,000; (b) purchase orders, related to (a) above were filled in the amount of $585,000; the related invoice amount was $587,000; invoices were paid in the amount of $540,000; (c) salaries were accrued in the amount of $630,000. The balance available for the Fire Department as of July 31, 2003 is
    $11,768,000
  52. The City of X adopted an appropriations ordinance in the amount of $23,000,000 for the General Fund for a certain fiscal year. Rebenues other than property taxes amounted to $9,000,000. The total market value of taxable property in City X amounted to $1.2B. The assessment ratio (assessment percentage of market value was 33 1/3 percent. Homestead, veterans, and other exemptions, amounted to $10,000.,000, based on assessed value. It is estimated that 2 percent of the assessed taxes will not be collected. The property tax rate per $100 net assessed value would be (rounded to the nearest penny):
    $3.66
  53. An example of an expenditure classified by object would be:
    Salaries
  54. A certain government passed its budget for the fiscal year ended June 30, 2004. Estimated Revenues amounted to $12,000,000; Appropriations amounted to $11,300,000; Estimated Other Financing Sources amounted to $600,000; and Estimated Other Financing Uses amounted to $700,000. In the budgetary entry, Budgetary Fund Balance would be:
    Credited for $600,000
  55. When goods, which had previously been encumbered, are received, and the invoice amount is different that the purchase order amount
    Budgetary Fund Balance-Reserved for Encumbrances would be debited for the purchase order amount
  56. Which of the following is true regarding teh Budgetary Comparison Schedule?
    • Columns are required for the original budget, the revised budget and the actual amount.
    • The Budgetary Comparison Schedule is presented as part of Required Supplementary Information.
    • The Budgetary Comparison Schedule may be presented as one of the basic financial statements.
  57. Which of the following is true regarding the Budgetary Comparison Schedule?
    • A variance column may be presented by is not required.
    • the Schedule is required for the General Fund and all major special revenue funds that have a legally adopted annual budget.
    • The actual presented must be on the budgetary basis, even if the budgetary basis is different that GAAP.
  58. If Budgetary Fund Balance is debited in the process of recording the budget in the General Fund, it can be assumed that:
    Appropriations and Estimated Other Financing Uses exceeded Estimated Revenues and Estimated Other Financing Sourceds.
  59. Under accrual accounting, property tax revenue, net of estimated uncollectibles is recognized:
    In the year for which the tax is levied.
  60. Under modified accrual accounting, an expenditure is recognized
    When goods or services are received
  61. Which of the following would not be an example of a nonexchange transaction?
    Charges for services
  62. Which of the following would be an example of a derived tax revenue?
    • Sales Taxes
    • Income Taxes
  63. Which of the following would be an example of a voluntary nonexchange transaction?
    A grant from the state, not accompanied by legislation, that requires grant resources be expended for certain purposes.
  64. Which of the follwoing is true regarding nonexchange transactions
    • If a donor specifies that a contribution is not to be expended until a future year, then that contribution would not be recognized as a revenue until that future year.
    • If a donor attaches a contingency to a gift that has not yet been met, then a revenue would not be recognized until that contingency is met.
  65. Which of the following is true regarding nonexchange transactions?
    Grants and gifts that are payable only on the incurrence of expenditures are not recognized as revenue until the expenditure occurs.
  66. Which of the following is true regarding recognition of sales taxes using accrual accounting?
    • Assets should be recognized when the tax is imposed or when the resources are received, whichever occurs first.
    • revenue should be recognized at the same time as the receivable providing the underlying transaction has taken place.
  67. Which of the following is true regarding the recognition of property taxes, using accrual accounting?
    • Assets should be recognized when an enforceable legal claim exists or when the resources are received, whichever occurs first.
    • Revenues should be recognized in the year for which the taxes are levied.
  68. Which of the following is true regarding modified accrual accounting?
    Neither
  69. Which of the following is true regarding modified accrual accounting?
    Expenditures should generally be recognized for activities normally paid out of governmental fund resources even if those resources are not available at the present time.
  70. Which of the following is true regarding modified accrual accounting?
    • Debt service expenditures for principal and interest are generally recorded when due and are not accrued at year-end.
    • If a government has resources available in a debt service fund at year-end, an expenditure may be accrued as long as the maturity date is no longer than one month from the end of the year.
  71. The City of Evansville's governing body adopted a budget consisting of anticipated revenues of $30,000,000, anticipated expenditures and encumbrances of $29,000,000, anticipated transfers in of $200,000, and anticipated transfers out of $900,000. To complete the budget entry:
    Budgetary Fund Balance would be credited in the amount of $300,000.
  72. For the budgetary year ending December 31, 2004, Johnson County's General Fund expects the following inflow of resources: Property taxes, licenses and fines: $7,000,000; Proceeds of debt issue: $2,000,000; Interfund transfer from enterprise fund: $600,000; In the budgetary entry, what amount should Johnson record for Estimated Revenues?
    $7,000,000
  73. During the fiscal year ended June 30, 2004, Allison Township issued purchase orderes totaling $8,000,000, which were properly charged to Encumbrances Control at that time. Allison received goods and related invoices at the encumbered amounts totaling $7,600,000 before year-end. The remaining goods of $400,000 were not received until after year-end. The related invoices amount to $7,650,000, and Allison paid $7,500,000 of those invoices prior to the end of the year. What amount of Allison's encumbrances were outstanding on June 30, 2004?
    $400,000
  74. The City of Elmwood reported the following for the fiscal year ended December 31, 2004: Purchase orders authorized by 2004 appropriations and outstanding as of December 31, 2004: $300,000; Expenditures authorized by 2004 appropriations: $2,900,000; Expenditures authorized by 2003 appropriations: $200,000; Unencumbered and unexpended balance of 2004 appropriations. Assume that appropriations do not lapse. What amount would be reported for Expenditures (and Encumbrances, if appropriate) in the Statement of Revenues, Expenditures and Changes in Fund Balances?
    $3,100,000
  75. Items 5 and 6 are based on the following information relating to property taxes levied by Western Oaks Village for the calendar year 2004: Collections during 2004: $800,000; Expected collections during the first 60 days of 2005: $100,000; Expected collections during the balance of 2005: $50,000; Expected collections during January 2006: $30,000; Estimated to be uncollectible: $20,000; Total levy: $1,000,000. What is the maximum amount Western Oaks can report for 2004 property tax revenues, using accrual accounting, in the government-wide statements?
    $980,000
  76. Items 5 and 6 are based on the following information relating to property taxes levied by Western Oaks Village for the calendar year 2004: Collections during 2004: $800,000; Expected collections during the first 60 days of 2005: $100,000; Expected collections during the balance of 2005: $50,000; Expected collections during January 2006: $30,000; Estimated to be uncollectible: $20,000; Total levy: $1,000,000. What is the maximum amount Western Oaks can report for 2004 property tax revenues, using modified accrual accounting, in the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances?
    $900,000
  77. West Bend County created a special revenue fund, the Summer Employment Grant Fund, to account for the proceeds of a federal grant for summer youth employment. During the year ended June 30, 2004, the County received an award for this reimbursement grant in the amount of $1,000,000. Grant expenditures were in June 2004, $300,000; in July 2004, $350,000; and in August 2004, $350,000. The cash was received from the federal government on August 31, 2004. How much revenue should be recognized in the special revenue fund for the year ended June 30, 2004?
    $300,000
  78. The Encumbrance Control account of a governmental unit is credited when:
    Goods are received
  79. A Budgetary Fund Balance - Reserved for Encumbrances (current year) in excess of a balance of Encumbrances Control indicates:
    A recording error.
  80. A municipality had the following preclosing account balances as of June 30, 2004: Revenues: $9,000,000; Expenditures: $8,300,000; Encumbrances: $400,000; Transfers in: $700,000; Transfers Out: $1,000,000. In the closing entries, the Fund Balance - Unreserved account would be:
    Unchanged

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