ACCY 161 Exam 3 (2009_2007).txt

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ACCY 161 Exam 3 (2009_2007).txt
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ACCY 161 Exam 2009 2007
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ACCY 161 Exam 3 (2009_2007).txt
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  1. 
    • An audit of a government, conducted in accordance with generally accepted governmental auditing standards (GAGAS), includes:
    • a. A determination of efficiency and effectiveness
    • b. An examination of financial statements guided by standards set by the AICPA
    • c. Test for compliance with laws and regulations
    • d. Both b and c
    • e. All of the above
    • d. Both b and c
  2. The single audit concept refers to:
    A. All audits of state and local government reporting entities
    B. Audits following the OMB circular A-133
    C. Financial and performance audits, and attestation engagements
    D. Audits to determine efficiency and economy
    e. All of the above
    B. Audits following the OMB Circular A-133
    (this multiple choice question has been scrambled)
  3. A typical objective of a performance audit is for the auditor to:
    A. Determine whether the financial statements fairly present the entity's operational results 
    B. Judge the appropriateness of an entity's program goals
    C. Make recommendations for improving performance
    D. Attest to whether the financial statements are prepared in accordance with generally accepted accounting principles
    C. Make recommendations for improving performance
    (this multiple choice question has been scrambled)
  4. In single audit, the federal government's representative is the:
    A. Cognizant agency
    B. IRS
    C. GAO
    D. OMB
    e. All of the above
    A. Cognizant agency
    (this multiple choice question has been scrambled)
  5. The Comptroller General of the United States is the head of the:
    A. Governmental Accountability Office
    B. OMB
    C. Congressional Budget Office
    D. Federal Accounting Standards Advisory Board
    A. Governmental Accountability Office
    (this multiple choice question has been scrambled)
  6. The first step in the flow of budgetary authority through the budgetary accounts of a federal agency is:
    A. appropriation
    B. apportionment
    C. obligation
    D. commitment
    E. allotment
    A. appropriation
    (this multiple choice question has been scrambled)
  7. Federal capital heritage assets possess _________ qualities:
    A. a and b and c
    B. strategic
    C. a and b
    D. educational
    E. cultural
    C. a and b
    (this multiple choice question has been scrambled)
  8. Which of thee following systems of cost allocate is most common in governmental accounting?
    A. Federal cost methods
    B. Direct costing
    C. Process costing
    D. Step-down method
    D. Step-down method
    (this multiple choice question has been scrambled)
  9. Responsibility for promulgating generally accepted accounting principles for nongovernmental, not-for-profit entities rests with the:
    A. IRS
    B. FASB
    C. GAO
    D. the state in which the entity is incorporated
    E. GASB
    B. FASB
    (this multiple choice question has been scrambled)
  10. Statement of Financial Accounting Standards (SFAS) No. 117 requires the following financial reporting perspective for not-for-profit organizations:
    A. Dual tracking
    B. Aggregate
    C. Fund
    D. Both a and c
    E. a and b and c
    B. Aggregate
    (this multiple choice question has been scrambled)
  11. A good reason for a not-for-profit organization to adopt fund accounting is that:
    A. The not-for-profit provides services for a fee
    B. The not-for-profit organization is multi-state
    C. The not-for-profit organization provides more than one type of program service
    D. Restrictions have been placed on the use of certain of its assets by donors
    e. All of the above
    D. Restrictions have been placed on the use of certain of its assets by donors
    (this multiple choice question has been scrambled)
  12. Charity service and bad debts in a public hospital that follows business-type accounting are reported:
    A. Differently, charity service is reported as a deduction from gross patient revenue and bad debts are reported as an expense
    B. Differently, charity service is merely disclosed in the notes to the financial statements, and bad debts are reported as a deduction from revenue
    C. The same, both as deductions from gross patient revenue in arriving at net patient revenue
    D. The same, both are reported as expenses
    B. Differently, charity service is merely disclosed in the notes to the financial statements, and bad debts are reported as a deduction from revenue
    (this multiple choice question has been scrambled)
  13. Fixed dollar amount of fees per person paid periodically by a third-party payor to a health care provider:
    A. Capitation fee
    B. DRG
    C. Fee-based payment
    D. Head-count fee
    e. None of the above
    A. Capitation fee
    (this multiple choice question has been scrambled)
  14. A case-mix classification scheme in the Medicare program to determine reimbursement for inpatient services:
    A. DRG fee
    B. Combined fee
    C. Capitation fee
    D. Contract fee
    e. None of the above
    A. DRG fee
    (this multiple choice question has been scrambled)
  15. The federal retirement plan (the pension plan):
    A. Is funded by only U.S. Treasury securities
    B. Is unfunded
    C. Funded with individual accounts
    D. Is funded by only state and federal securities
    E. a and c are correct
    B. Is unfunded
    (this multiple choice question has been scrambled)
  16. The Nonprofit Integrity Act of 2004 has a requirement(s) for:
    A. Annual financial audits
    B. Audit committees
    C. a and b and c
    D. Review of executive compensation
    E. Both a and c
    C. a and b and c
    (this multiple choice question has been scrambled)
  17. The cornerstone of accounting and financial reporting for not-for-profit organizations is:
    A. Visibility
    B. c and b
    C. a and b and c
    D. Accountability
    E. Reliability
    A. Visibility
    (this multiple choice question has been scrambled)
  18. The public generally has access to the following records of a tax-exempt not-for-profit organization:
    A. Tax returns
    B. a and b and c
    C. Only a and c
    D. Board minutes
    E. Articles of incorporation
    B. a and b and c
    (this multiple choice question has been scrambled)
  19. The value of the books in a college library is:
    A. Is to be valued at fair market value
    B. Both a and b are correct
    C. Not required to be included in the balance sheet of the college as a long-term asset
    D. Can be included in the footnotes
    B. Both a and b are correct
    (this multiple choice question has been scrambled)
  20. For colleges and universities, the expense categories, to be in compliance with accounting reporting standards, include:
    A. Academic support
    B. Capital improvements
    C. a and b
    D. a and b and c
    E. Instructional
    C. a and b
    (this multiple choice question has been scrambled)
  21. The state agency that monitors not-for-profit organizations is the:
    A. State Office of Audits
    B. Registry of Charitable Trusts
    C. FTB
    D. Secretary of State
    B. Registry of Charitable Trusts
    (this multiple choice question has been scrambled)
  22. GAGAS is ______ in scope than GAAS:
    A. Both b and c are correct
    B. Completely separate
    C. Narrower
    D. In conflict so they cannot be done at the same time
    E. Broader
    E. Broader
    (this multiple choice question has been scrambled)
  23. If a tax-exempt not-for-profit organization dissolves and goes out of business, it:
    A. Is free to distribute the net assets of the organization to any other tax-exempt organization
    B. Must return all funds to the state
    C. Must return all funds to the IRS
    D. Must distribute the net assets to similar organizations in its geographic area
    e. All the above are options
    D. Must distribute the net assets to similar organizations in its geographic area
    (this multiple choice question has been scrambled)
  24. Oversight of the tax-exempt organizations (NPOs) is done primarily by:
    A. SEC
    B. IRS
    C. State taxing authorities
    D. State attorney generals
    e. All the above participate in a combined effort
    D. State attorney generals
    (this multiple choice question has been scrambled)
  25. SFAS 117 requires a(an) ___________ of the nonprofit entity's finances:
    A. Economic focus
    B. Accrual accounting
    C. Aggregate view
    D. Current value approach
    e. All the above are required by SFAS 117
    C. Aggregate view
    (this multiple choice question has been scrambled)
  26. A budget in which each activity and the amounts of resources requested for each activity must be justified each year:
    A. Original budget
    B. Zero-based budget
    C. Rational budget
    D. Incremental budget
    E. Program budget
    B. Zero-based budget
    (this multiple choice question has been scrambled)
  27. The use of net assets by not-for-profit organizations is stipulated in:
    A. SFAS 116
    B. SFAS 117
    C. IRS Form 990
    D. SFAS 124
    B. SFAS 117
    (this multiple choice question has been scrambled)
  28. Revenue for a hospital is reported as:
    A. Net revenue
    B. On the modified accrual basis due to lags in the payments from the third-party payers
    C. There are multiple ways to report revenue but the method must be disclosed in the footnotes
    D. Gross revenue and its related deductions - broad
    A. Net revenue
    (this multiple choice question has been scrambled)
  29. The board of directors of a not-for-profit entity are elected by:
    A. Representative of the general community
    B. The out-going board members
    C. The current board of directors
    D. The members
    e. Any of the above as long as it is stipulated in the by-laws of the organization
    D. The members
    (this multiple choice question has been scrambled)
  30. Contractual allowances include:
    A. a and b
    B. Discounts to insurance companies
    C. Discounts to Medicare
    D. Discounts for bad debts
    E. a and b and c
    A. a and b
    (this multiple choice question has been scrambled)
  31. For the IRS, tax-exempt organizations need to pass:
    A. Both a and b
    B. An external support test
    C. An internal support test
    D. Net assets allocation test
    E. Both a and b and c
    A. Both a and b
    (this multiple choice question has been scrambled)
  32. Net assets for a not-for-profit include classification of:
    A. both b and c
    B. Endowment funds 
    C. a and b and c
    D. Unrestricted net assets
    E. Permanently restricted net assets
    A. both b and c
    (this multiple choice question has been scrambled)
  33. Fair value accounting for investment in not-for-profits is stipulated by:
    A. GASB
    B. Both b and d
    C. SFAS 117
    D. IRS
    E. SFAS 124
    E. SFAS 124
    (this multiple choice question has been scrambled)
  34. Service capacity includes:
    A. Financial assets
    B. a and b only
    C. a and b and c are all included
    D. Human resources
    E. Capital assets
    B. a and b only
    (this multiple choice question has been scrambled)
  35. The ________ performs the performance audits for the City and County of San Francisco:
    A. City Services Auditor
    B. Private consulting and accounting firms
    C. Various departments
    d. All of the above
    A. City Services Auditor
    (this multiple choice question has been scrambled)
  36. GAGAS is found in:
    A. AICPA audit guide
    B. The yellow book
    C. A number of professional publications
    D. The OMB GAGAS Guidelines
    B. The yellow book
    (this multiple choice question has been scrambled)
  37. The single audit is administered by:
    A. The various states
    B. The CPA firms doing the audit
    C. The GAO
    D. The OMB
    e. All the above participate in the administration of the single audit
    D. The OMB
    (this multiple choice question has been scrambled)
  38. The total package for the single audit includes:
    A. Financial audit, internal controls audit, program specific audit
    B. Program specific audit and the financial audit
    C. Performance audit, financial audit, program specific audit internal controls audit
    D. Performance audit, financial audit, program specific audit, internal controls audit
    A. Financial audit, internal controls audit, program specific audit
    (this multiple choice question has been scrambled)
  39. Which of the following best describes the relationship between generally accepted auditing standards (GAAS) and government auditing standards (GAS)?
    A. GAAS apply to independent CPA auditors; GAS apply to governmental auditors
    B. Audits of state and local governments always required that the audit be conducted in accordance with both GAAS and GAS
    C. Audits done in accordance with GAS must also be done in accordance with GAAS
    D. Audits conducted in conformity with the yellow book may also require the auditor to conform to GAAS
    D. Audits conducted in conformity with the yellow book may also require the auditor to conform to GAAS
    (this multiple choice question has been scrambled)
  40. Which of the following accounts used in state and local government accounting is most like the federal budgetary account "Undelivered Orders"?
    A. Appropriation
    B. Expenditure
    C. Reserve for Encumbrance
    D. Encumbrance
    D. Encumbrance
    (this multiple choice question has been scrambled)
  41. The Comptroller General of the United States is the head of the:
    A. Federal Accounting Standards Advisory Board
    B. Office of the Management and Budget
    C. Government Accountability Office
    D. Congressional Budget Office
    C. Government Accountability Office
    (this multiple choice question has been scrambled)
  42. Which of the following describes the usual flow of budgetary authority through the budgetary accounts of a federal agency?
    A. Apportionment, allotment, appropriation, commitment, obligation, expended appropriation, apportionment
    B. Appropriation, apportionment, allotment, commitment, obligation, expended appropriation
    C. Allotment, commitment, obligation, expended appropriation, apportionment
    D. Commitment, obligation, appropriation, apportionment, allotment, expended appropriation
    B. Appropriation, apportionment, allotment, commitment, obligation, expended appropriation
    (this multiple choice question has been scrambled)
  43. Depreciation expense in a not-for-profit organization should be:
    A. Allocated to program but not support functions
    B. Reported as a functional support expense under management and general
    C. Disclosed in the notes to the financial statements
    D. Allocated to the functions to which it relates
    D. Allocated to the functions to which it relates
    (this multiple choice question has been scrambled)
  44. A good reason for an NPO to adopt fund accounting even though FASB standards do not require it is that:
    A. The NPO provides more than one type of program service
    B. The NPO's donated services are significant
    C. Restrictions have been placed on the use of certain of its assets by donors
    D. The NPO's capital assets are significant
    C. Restrictions have been placed on the use of certain of its assets by donors
    (this multiple choice question has been scrambled)
  45. Accounting standards for NPOs require:
    A. Full accrual accounting
    B. Modified accrual accounting
    C. Capitalization of collections
    D. Fund accounting
    A. Full accrual accounting
    (this multiple choice question has been scrambled)
  46. The purpose of a statement of functional expenses is to:
    A. Report on the natural expenses (object-of-expense), as well as by program and support functions
    B. Report on the net income of each program compared to that of supporting the programs
    C. Report on program expenses and supporting expenses
    D. Report on the cash flows of each program and that of supporting the programs
    C. Report on program expenses and supporting expenses
    (this multiple choice question has been scrambled)
  47. Which of the following is a reason why an NPO might fail to qualify for tax-exempt status?
    A. Its officers are paid excessive wages
    B. Its primary purpose is to promote the passage of legislation favorable to institutions of higher education
    C. It has unrelated business income
    D. It is operated primarily for the benefit of its members
    A. Its officers are paid excessive wages
    (this multiple choice question has been scrambled)
  48. A good measure of whether the NPO is spending too much on overhead, such as general and administrative expenses, is:
    A. Percentage of unrestricted net assets to operating expenses
    B. Percentage of total expenses spent on the program function as opposed to supporting the programs
    C. Total revenues divided by total expenses
    D. Current ratio
    B. Percentage of total expenses spent on the program function as opposed to supporting the programs
    (this multiple choice question has been scrambled)
  49. Federal capital assets that possess educational, cultural, or natural characteristics are:
    A. Stewardship investments
    B. Heritage assets
    C. a and b and c are all correct
    D. Stewardship assets
    E. Governmental assets
    B. Heritage assets
    (this multiple choice question has been scrambled)
  50. Federal departments have their financial audits performed by:
    A. Do not have financial audits
    B. Either a or b
    C. Public accounting firms
    D. The GAO
    C. Public accounting firms
    (this multiple choice question has been scrambled)
  51. An internal control structure that is so weak that it does not reduce the risk of material noncompliance to an acceptably low level
    is called a(an): 
    A. Audit alert item
    B. Material weakness and reportable condition 
    C. System design deficiency 
    D. Unacceptable reportable condition
    B. Material weakness and reportable condition
    (this multiple choice question has been scrambled)
  52. An auditor would not render an opinion on a(an): 
    A. Financial audit of financial statements 
    B. Audit to determine whether the entity has adhered to specific compliance requirements applicable to a major program 
    C. Performance audit
    d. All of the above 
    C. Performance audit
    (this multiple choice question has been scrambled)
  53. The GASB "Budgeting Principle" states that an annual budget should be adopted by (for) every:
    A. Government
    B. Governmental fund type except capital projects funds
    C. Fund of a government 
    D. Governmental fund type
    A. Government
    (this multiple choice question has been scrambled)
  54. Which of the following might appropriately be termed an outcome indicator for a police department that reports service efforts and accomplishments (SEA) indicators? 
    A. Value of property lost due to crime 
    B. Number of personnel hours expended
    C. Hours of patrol 
    D. Number of crimes investigated   
    A. Value of property lost due to crime
    (this multiple choice question has been scrambled)
  55. A cost that can be identified specifically with a particular cost objective is termed a(an): 
    A. Direct cost
    B. Indirect cost
    C. Common cost 
    D. Sunk cost
    A. Direct cost
    (this multiple choice question has been scrambled)
  56. A budget that is derived form the current year budget by multiplying a factor across all line-items:
    A. Object budgeting
    B. Zero-based budgeting
    C. Incremental budgeting
    D. Planning-programming-budgeting system
    E. Program budgeting
    C. Incremental budgeting
    (this multiple choice question has been scrambled)
  57. A budgeting approach popular in the 1960s that integrates various elements of the activity:
    A. Incremental budgeting
    B. Zero-based budgeting
    C. Program budgeting
    D. Object budgeting
    E. Planning-programming-budgeting system
    C. Program budgeting
    (this multiple choice question has been scrambled)
  58. Statement of Financial Accounting Standards (SFAS) No. 116 on contributions received and contributions made describes measurement and reporting rules for: 
    A. Gains and losses on investment income                                             
    B. Nonexchange transactions, such as unrestricted and restricted gifts
    C. Exchange transactions, such as membership dues and charges for services 
    d. All of the above
    B. Nonexchange transactions, such as unrestricted and restricted gifts
    (this multiple choice question has been scrambled)
  59. Which of the following is a not a true statement about tax-exempt organizations? 
    A. They must be organized to serve the charitable needs of the public at large 
    B. They must first become a not-for-profit corporation or charitable trust
    C. They are permitted to do some political lobbying if guidelines are met
    D. Their unrelated business income is taxed at corporate income tax rates 
    A. They must be organized to serve the charitable needs of the public at large
    (this multiple choice question has been scrambled)
  60. The income most likely to be considered unrelated business income of a human service organization that provides immunizations to
    children in the community is: 
    a. Rental of extra space in the building 
    b. Regular sale of sweatshirts with the organization's logo on it at a price considerably above cost – THESE ARE DEENED DONATIONS
    c. Interest and dividend income on investments 
    d. Gain on the sale of equipment no longer needed by the organization
    a. Rental of extra space in the building
  61. The incorporating documents that have an external focus and describe the purpose of
    the organization without being too restrictive are called: 
    A. By-laws
    B. Articles of incorporation
    C. IRS Form 990
    D. Minutes of the Board meetings 
    B. Articles of incorporation
    (this multiple choice question has been scrambled)
  62. A single audit would be done by:
    A. a and c
    B. Only certain governmental entities that meet certain criteria
    C. Nonprofit entities that meet certain criteria
    D. All governmental entities
    E. b and c
    E. b and c
    (this multiple choice question has been scrambled)
  63. Which of the following statements is true regarding generally accepted accounting principles (GAAP) for colleges and universities? 
    A. Public and private colleges and universities must comply with the AICPA Audit and Accounting Guide 
    B. The GASB is responsible for establishing GAAP for public colleges and universities
    C. The FASB has set standards for private colleges and universities 
    D. The National Association of Colleges and University Business Officers set the standards with the approval of the GASB and the FASB
    C. The FASB has set standards for private colleges and universities
    (this multiple choice question has been scrambled)
  64. Are public and private colleges and universities required to report depreciation expense in their financial statements?
    A. Public: Yes; Private: Yes
    B. Public: No; Private: No
    C. Public: Yes; Private: No
    D. Public: No; Private: Yes 
    A. Public: Yes; Private: Yes
    (this multiple choice question has been scrambled)
  65. Which of the following is a typical classification of a functional expense in a college or university? 
    A. Recreation and culture 
    B. Public safety
    C. Depreciation
    D. Academic support
    D. Academic support
    (this multiple choice question has been scrambled)
  66. Contractual adjustments are properly characterized as:
    A. A liability
    B. A deduction from revenues
    C. An other financing use
    D. An expense
    B. A deduction from revenues
    (this multiple choice question has been scrambled)
  67. The difference between the gross patient service revenue and the negotiated payment by third-party payors in arriving at net patient service revenue is:
    A. Per member fee
    B. Contractual discount
    C. Member fee
    D. Bad debt expense
    e. None of the above
    B. Contractual discount
    (this multiple choice question has been scrambled)
  68. The tax exempt status for a not-for-profit organization means that:
    A. It could be exempt from state sales taxes
    B. a and c are correct
    C. It is exempt from federal income tax only
    D. b and c are correct
    E. It is exempt from both federal and state income taxes
    D. b and c are correct
    (this multiple choice question has been scrambled)
  69. The majority of the federal taxes comes from:
    A. Individual taxes
    B. There is no one source of tax revenue that is a majority source of revenue for the federal government
    C. Corporate taxes
    A. Individual taxes
    (this multiple choice question has been scrambled)

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