1. Government Funds
special revenue funds
2. Proprietary Funds
applies to enterprise and internal service funds only
3. Fiduciary funds applies to
private party trust, investment trust, pension trust, and agency funds
4. GASB doesn't set standards for
non-governmental not for profit hospitals
5. Every general-purpose government must have a
GENERAL FUND
6. Proprietary Fund
Internal service
7. Not a fiduciary fund
permanent fund
a. Fiduciary funds include agency, pension trust and private-purpose trust.
...
8. Governmental fund
special revenue
9. Not an objective of Federal Financial reporting
financial reporting should enable evaluation of the success rate of programs
a. Does include: financial reporting should enable evaluation of the service efforts, costs and accomplishments of reporting entity, financial reporting should reveal whether financial systems and controls are adequate, and financial reporting should demo
...
10. FASAB has authority to establish standards for
federal government
11. FASB has authority to establish standards for
Private not-for-profit
12. GASB has authority to establish standards for
State governments
13. In order for a fund to exist, there must be
a fiscal entity (assets set aside for specific purpose) and a double entry accounting entity
14. Governmental
fund category that must change from Modified to accrual basis when preparing government-wide financial statements
15. Governmental Fund Statements
use current financial resources measurement focus
16. Amount of funds a government should use
as many as necessary to fulfill legal requirements and sound financial administration
17. Not included in FASB Statement of Financial accounting concepts #4
format and content of financial statements.
18. GASB has authority to establish accounting and financial standards for
state and local government entities, and governmentally related utilities, authorities, hospitals and colleges/universities.
19. Receipt of Grant Money from a state or local government for the purpose of providing services to the public
characteristic NOT defining an organization as governmental
20. Level "A" GAAP for public university would be established by
GASB
21. Under modified accrual basis of accounting, expenditures should be recognized when
the fund liability is incurred.
22. Fiduciary funds use
economic resources measurement focus and accrual basis of accounting
23. Proprietary funds use
economic resources measurement focus and accrual basis of accounting
24. Governmental Funds use
current financial resources measurement focus and modified accrual basis of accounting.
25. Government-Wide Statements use the
economic resources measurement focus and accrual basis of accounting.
26. Governmental funds don't include
agency funds
a. They include: special revenue, debt service, and general funds
...
27. FASAB
has authority to establish accounting and financial reporting standards for the federal government.
28. Correct with regard to Management's Discussion and Analysis
both state and local governments and federal agencies are required to provide an MD&A
29. GASB Concept Statement No. 3 states that
disclosure in the notes is not an adequate substitute for recognition in the financial statements.
30. According to GASB, capital assets
must be reported in government wide statements and proprietary fund financial statements
31. Long term debt of a gov't unit would be reported in the
government wide financial statements and proprietary fund financial statements.
32. Capital Projects Fund
local sales taxes legally restricted to pay for construction of new court house.
33. Special revenue fund
city gov't collects taxes to pay for hiring of teachers for hearing impaired school children
34. Enterprise fund
city gov't makes semiannual payment on interest on revenue bonds issued to pay for construction of additional transit stations
35. General fund
city gov't sells police cars no longer in use, with no restrictions on proceeds.
36. Under GASB, accrual accounting is used for
gov't wide, proprietary fund and fiduciary fund financial statements only
37. Under GASB, modified accrual accounting would be found in
governmental fund financial statements
38. Not a fiduciary fund
expendable trust
a. Includes: agency, private purpose trust and investment trust.
...
39. Level "A" GAAP for public hospital would be established by
GASB
40. Private institution has level A GAAP est. by
FASB
41. Long term debt to be paid from proprietary funds is reported as liability in
both the proprietary fund statement of net assets (position) and government wide statement of net assets (position)
42. Governmental Funds
General, special revenue, debt service, capital projects and permanent
43. Increase tax payer awareness
not an objective of financial reporting
a. Objectives include
budgetary integrity, stewardship, and operating performance.
44. Not included in proprietary funds for gov't entity
statement of revenues, expenditures, and changes in fund balances
a. Included
statement of cash flows and net position
45. Proprietary fund
capitalized fixed assets are reported to this fund basis statement
46. Capital Project
uses modified accrual accounting
47. Investment trust
type uses accrual accounting
48. Permanent fund classified under government funds
accounts for resources that are legally restricted so only earnings, not principal, may be expended and for purposes to benefit the govt and its citizenry
49. General fund classified under governmental funds
accounts for most of the basic services provided by gov't unit
50. Capital projects fund classified under governmental funds
accounts for and reports financial resources that are restricted, committed or assigned to expenditure for capital projects.
51. Permanent fund
not a fiduciary fund
a. Fiduciary fund includes investment trust, private purpose trust and pension funds
...
52. The GASB sets the accounting and financial reporting standards for both state and local gov't and public not for profits
...
53. The comprehensive annual financial report is the gov't official annual report prepared and published as a matter of public record.
...
54. State and local gov't funds are organized into three categories
governmental, proprietary and fiduciary
55. The GENERAL FUND accounts for all resources other than those required to be accounted for in other funds.
...
56. The special revenue fund accounts for and reports the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purpose other than debt service or capital projects.
...
57. The enterprise funds are used when resources are provided primarily through the use of sales and service charges to parties external to the gov't and it is the intent of the gov't to measure revenues, expenses and changes in net position
...
58. The agency funds are used to account for situations in which the gov't is acting as a collecting/distributing agent
...
59. Enterprise funds use
accrual basis of accounting
60. Enterprise funds are used
to account for resources provided primarily through the use of sales and service charges to parties external to the gov't.
61. Environmental difference between gov'ts and for-profit business enterprises
relationship with stakeholders.
62. Government have only had one general fund
...
63. FASB is the standard setting organization for
private not for profits and investor owned businesses.
a. (both A & C)
...
64. Fund basis statement for gov't funds are presented using the
current financial resources measurement focus and the modified accrual basis of accounting.
65. Enterprise funds
used when resources are provided mainly through business-like transactions to parties external to the gov't
66. Financial reports for state and local gov't are not well suited
measuring the effectiveness of gov't services such as police and fire protection
67. Debt service fund
fund used to account payment of principal and interest of general long-term debt of a government.
68. GASB is under the oversight of
FAF
69. GASB Concepts Statements
non-authorities' sources that a gov't may use if the gov't if the accounting treatment of a transactions is not addressed in one of the authoritative sources
70. GASB Statements (and Interpretations)
A category A sources of authoritative GAAP for state and local gov't
71. Assessing cash flow and entity's ability to make current payments
not information needed by the users of non-business financial statements in FASB's Statement of Fin. accounting concepts No. 4
a. Consist of
making decisions about allocation of resources to those organizations, assessing the services that a nonbusiness organization provides and its ability to continue to provide those services, and evaluating an organization's economic resources, obligations
72. CAFR
Comprehensive Annual Financial Report
73. False statement
CAFR is not required for entities with only a general fund
74. True regarding fund accounting
while a business will typically have a single general ledger, the activities of gov'ts are broken down into accounting subunits called funds
75. Governmental funds
do not use economic resources
a. Fiduciary, proprietary and government-wide funds do.
...
76. Not true with respect to a transaction that is nonexchange in nature
they are activities where benefits received are in direct proportion to the fees charged for goods or services
77. GASB standards provide accounting systems that gov't fund are designed to measure
the receipt and expenditure of resources. These resources are generally restricted to current assets and liabilities.
78. Revenues are generally recognized when measurable and available to finance the expenditures of the current period
attribute of modified accrual accounting
79. Government wide statements
prepared using the accrual basis of accounting, including the recording of fixed assets and long-term debt.
80. Governmental funds
debt service and capital project.
Chapter 2
...
1. Proprietary fund financial statements
statements include the statement of net position, statement of revenues, expenses, and changes in fund net position, and statement of cash flows
2. Fiduciary fund financial statements
include the statement of fiduciary net position and statement of changes in fiduciary net position.
3. Notes to the financial statements
not considered required supplementary information (RSI)
4. Gov't type funds label the excess of assets over liabilities on the balance sheet as
fund balance
5. True about Comprehensive annual financial report (CAFR)
CAFR has three main sections: introductory, financial and statistical; RSI includes a budgetary comparison schedule for the general fund and all major special revenue funds that have a legally adopted annual budget (both)
6. Government-wide statements
include a statement of net position and a statement of activities.
7. Government Wide Statement of Net position
discretely presented component units are included in a separate column
8. General fund
always considered to be a major fund when preparing fund basis financial statements
9. Governmental funds other than the general fund are considered to be major when
(1) with respect to fund basis financial statements, gov't funds are considered to be a major fund when total assets, liabilities, revenues, or expenditures of that individual gov't fund constitutes 105 of the total for the gov't fund category and (2) Wit
10. governmental funds other than the General fund are considered to be major when
neither 25% or 15% of total gov't funds and enterprise categories combined.
11. When preparing fund basis financial statements, any funds not reported separately are reported by function
is false.
12. Governmental fund statements are prepared using
current financial resources measurement focus and modified accrual basis of accounting.
13. The total fund balances presented in Governmental Funds Statements are different from the total Net Position on the government-wide Statement of Net Position. Which of the following is not a reason for this difference
accrued w/p at year end are reported on the statement of net position but are not reported in the fund statements.
14. Financial reporting entity of a state or local gov't
many component units are discretely presented, rather than blended.
15. False regarding the financial reporting entity of a state or local gov't
only a primary gov't is reported in the gov't wide statements.
16. Composition of CAFR
include both blended and discretely presented component units.
17. Management's Discussion and analysis (MD&A)
should present an analysis of significant variations between the original and final budget.
18. Under GASB rules for the financial reporting entity
component units are included if the primary gov't is financially accountable for their operations.
19. Government wide statement of net position
reflects capital assets, net of accumulated depreciation, for both gov't and business type activities.
20. Government wide statement of activities
reflects taxes as general revenues.
21. Government wide statement of activities
includes depreciation expense
22. Budgetary comparison schedule
compares actual results to both the original budget and the final budget but display of variances is optional; must be prepared for general fund and each major special revenue fund that has a legally adopted budget. (both A and C)
23. CARF
the basic financial statements consist of the gov't wide, the governmental fund, proprietary fund and the fiduciary fund financial statements (and the notes to the F.S.)
24. Proprietary fund financial statements
include net position, statement of rev, expenses, and changes in fund net position and the statement of cash flows.
25. Public safety
example of an expenditure classification by function for a governmental fund.
26. Capital outlay
not an appropriate category for direct expenses are required to be reported by function in gov't wide statements
27. Financial reporting of Governmental Funds
governmental funds include general fund, special rev funds, capital projects funds, debt service funds and permanent funds
28. Component units
may be reported discreetly in the gov't wide statements or may be blended as a fund in the fund financial statements (and thus also included in the gov't wide financial statements)
29. True regarding the government wide financial statements
a government wide financial statements include the statement of net position and the statement of activities.
30. True regarding proprietary fund statements
F.S. include a statement of net position, statement of rev. Exp, and change in fund net position, and statement of cash flows.
31. True regarding fiduciary fund statements
include statement of fiduciary net position and statement of changes in fiduciary net position.
32. True regarding fiduciary funds
reporting in the fiduciary fund financial statement but not in the government-wide financial statements.
33. Where in CAFR would one find long term liability for Revenue bonds?
gov't wide statement of net position and the proprietary funds statement of net position.
34. General Funds
require a budgetary comparison schedule.
35. Financial section of CAFR is considered RSI
Management's Discussion and Analysis.
36. True regarding gov't wide financial statements
statement of cash flows is not required for gov't wide statements.
37. Financial section
section of the CAFR that is audited
38. The statistical section typically presents 10 years of info in each table/schedule.
...
39. Three major sections of the CAFR
introductory, financial, and statistical
40. Statement required in the gov't wide financial statement (besides statement of net position)
statement of activities
41. Government-wide statement of activities
presented using the accrual basis of accounting.
42. Statement of cash flows is required for
Proprietary Funds
43. Modified approach for infrastructure requires schedules and disclosures to be included in
required supplementary info of CAFR
44. True about Combining financial statements
they are used whenever a non-major column is used in one of the fund financial statements.
45. Requires statement of cash flows
proprietary funds
46. Not one of the major sections of the CAFR
budgetary
47. Not correct with respect to major enterprise funds
General fund is not classified as a major fund if it does not meet the 10% and 5% tests for a major fund.
Chapter 3
...
1. Modified accrual basis is a distinct system of accounting that
records expenditures and fund balances
2. True with respect to rainy day funds
rainy day funds are classified as committed if they are created by a resolution or ordinance that identifies the specific circumstances under which the resources may be expended.
3. Transaction in which a gov't receives resources without directly giving equal value in exchange is known as
non exchange transaction
4. Not one of the four classes into which nonexchange transactions apply (GASB Statement no 33)
mandatory exchange transactions.
5. Imposed Nonexchange Transactions
Property taxes, special assessments, and fines and forfeits are these types
6. Not a non-exchange transaction for state government
sales of lottery tickets.
7. Derived tax revenues
sales taxes, income taxes, and motor fuel taxes are these classes of non exchange transactions
8. Not true regarding budgetary reporting by gov'ts
budgetary accounts are required to appear in the general purpose financial statements.
9. GL journal entry in the Gen. Fund to record the adoption of a budget would include
a debit to estimated revenues control.
10. GL entry in the Gen. Fund to record encumbrances for the issuance of purchase orders would
credit to budgetary fund balance-Reserve for encumbrances.
11. GL entry in the Gen. Fund to record actual expenditures and reversal of associated encumbrance would include
credit to encumbrance control.
12. Governmental funds fund balance is displayed in
Nonspendable, restricted, committed, assigned, unassigned.
13. According to GASB, ___ is correct regarding committed funds
committed funds are those that are designated as committed through ordinance or resolution by the gov'ts highest level of authority.
14. According to GASB, following statements not true regarding assigned funds
this is the only fund balance that can be negative.
15. According to GASB, an unassigned fund balance is
the residual category for the general fund
16. GASB standards require that each governmental reporting entity display only one general fund in its general purpose financial statements.
...
17. Assume estimated revenues exceed appropriations. When the budget for the general fund is recorded, the journal entry will include
credit to budgetary fund balance.
18. Transfers from other funds
not commonly used major revenue source classes.
19. First step a gov't takes in acquiring goods/services through the general fund
appropriation
20. Regular salaries
not typically need an encumbrance
21. Revenues of governmental fund types should be recognized when
measurable and available
22. Wages that have been earned by employees of a governmental unit, but not paid at year end, should be recorded in the general fund by a debit to
Expenditures
23. Revenues account of a gov't is credited when
property taxes are levied.
24. Example of expenditure classification by object would be
salaries
25. In a budgetary entry, if estimated revenues control exceeds appropriations control, the excess would be
credited to budgetary fund balance
26. A budgetary comparison schedule
required for the general fund, and for special revenue funds, for which an annual budget has been adopted.
27. When a computer which to be used by an activity accounted for by the General Fund of a governmental unit is received, it should be reported in the general fund as an
expenditure
28. In a budgetary entry, if appropriations control exceeds estimated revenues control, the excess would be
debited to budgetary fund balance
29. When supplies ordered for use in an activity accounted for in the Gen. Fund of a gov't are received at an actual price which is less than the est. price on the purchase order, the encumbrance control account is
credited for the estimated price on the purchase order.
30. If BFB was debited in the process of recording a budget for the Gen. fund of a governmental unit, it can be assumed that
appropriations exceed estimated revenues.
31. BFB-RFE in excess of a balance of encumbrances control indicates
a recording error
32. Receive good previously ordered
results in an expenditure
33. Place a purchase order
results in an encumbrance
34. Appropriation
the legal authorization for the administrators of the governmental unit to incur liabilities during the budget period for purposes specifically in the appropriation statute or ordinance and not to exceed the amount specified for each purpose.
35. Revenues in governmental fund accounting
are recognized in the fiscal year they are available for expenditure
36. The purpose of an encumbrance is to prevent gov'ts from
spending in excess of the amounts authorized
37. Under modified accrual accounting, budgetary authority expires at year end and the balances of revenues and expenditures are closed to
Fund Balance
38. Appropriations process
Revenues are raised to finance gov't activities, but revenues may be expended only for purposes and in amounts approved by legislative branch in compliance with laws of competent jurisdiction.
39. When liabilities authorized by an appropriation have been incurred, the appropriation is said to be
expended
40. Expenditure classifications by function includes all of the following except
debt service.
41. An expenditure is the actual amount of an authorized liability and encumbrances are estimates.
point where the General fund account "BFB-RFE" is debited.
42. Difference in an expenditure and an encumbrance
expenditure is the actual amount of an authorized liability while an encumbrance is an estimate.
43. To record the budget for the Gen. Fund
estimated rev. Control is debited
44. True regarding the final appropriations budget
it is legal and binding
45. Expenditures
results in a decrease in fund balance on a gov't fund balance sheet
46. At year end, balance of expenditures, revenues, and other financing sources and uses accounts are closed to
fund balance
47. When a liability is incurred as authorized by an appropriation, the appropriation is said to be
expended
48. TRUE
the modified accrual basis is a distinct system of accounting that contains financial statement elements that appear nowhere else. Among these are expenditures and fund balances
49. False
fund balance is analogous to the capital of an investor-owned entity
Chapter 4
...
1. True in respect to special revenue funds
special revenue funds are used when it is desirable to provide separate reporting of resources that are restricted or committed as the expenditure for purposes other than debt service or capital projects.
2. True regarding special revenue fund
special revenue funds may only be used when a substantial portion of the resources are provided by restricted or committed revenue sources.
3. Interfund transaction
interfund services provided and used, interfund transfers, and interfund loans (all of the above)
4. The journal entry to record the budget of a special revenue fund would include
a debit to estimated revenues control
5. The journal entry to record the re-establishment of encumbrances that were outstanding at the close of the prior period would include
a credit to BFB-RFE
6. The journal entry to record the prior year's deferred inflows: property taxes (those expected to be collected more than 60 days beyond year-end) as revenue in the current year would include
debit to deferred inflows and credit to revenues control
7. The journal entry to record an encumbrance would include
credit to BFB-RFE
8. Journal entry to record the property tax levy for municipality would include
credit to estimated uncollectible taxes.
9. The journal entry to write off an uncollectible property tax receivable for a municipality would include
a credit to tax receivable
10. Reciprocal interfund activity
includes interfund transfers
11. Nonreciprocal interfund activity
includes interfund transfers and reimbursements
12. Under the MA basis of accounting, property taxes rev. Recognition prove that rev should not be recognized
more than 60 days after fiscal year end
13. True regarding modified accrual accounting
revenues are recognized in the period in which they become available and measurable, and expenditures are recognized at the time a liability in incurred, except for principal and interest on long term debt.
14. When payrolls and other liabilities are incurred and must be paid before substantial amounts of cash will be collected, this short term note is desirable and secured by a gov't power to tax
tax anticipation note payable
15. Expenditures are generally recorded, and fund liabilities are recognized
when goods and services are received, regardless of whether or not resources are available in the fund.
16. When would a special rev. Fund be deemed to have satisfied the eligibility requirement of a reimbursement type federal grand, under GASB statement 33?
only as qualified expenditures are incurred
17. The entry to re-establish encumbrances related to purchase orders from the prior year would include
a debit to encumbrance control.
18. Not likely to be recorded in a special revenue fund
sales taxes restricted to courthouse additions.
19. Short terms loans which are backed by the taxing power of the gov't unit and used to meet working capital requirements are called
tax anticipation notes
20. Under modified accrual accounting, revenues are recognized when measurable and
available
21. When accounting for the Gen. Fund, the encumbrances control account is credit when
a purchase order is filled or canceled
22. What is the effect on the general fund's fund balance when capital assets are purchased during a year from General Fund revenues?
fund balance is decreased
23. The initial transfer of cash from the Gen. Fund to establish a motor pool internal service fund would require the gen fund to credit cash and debit
other financing uses transfers out control
24. When supplies order by a gov't unit are received at an actual price which is less than the estimated price on the purchase order, the encumbrance control account is
credited for the original price of the supplies
25. Budgetary Fund balance -reserve for encumbrances
accounts of a gov't unit general fund is debited when supplies previously ordered are received.
26. The expenditure control account in the gen. Fund is debited when
equipment previously ordered is received
27. BFB-RFE
in the gen. Fund, credited when a purchase order is approved.
28. Transfer should be reported in the operating statement of general fund as an
other financing source or use
29. The asset, equipment, used by a department accounted for by the general fund of a gov't unit should be reported in the
gov't wide statement
30. Liabilities incurred such as accrued payroll but still unpaid at year end should be recorded in the gen fund by a debit to
expenditures control
31. When recording property taxes, the estimated uncollectable amount of property taxes
is recognized as a reduction of revenue
32. Interfund services purchased by the gen fund are
expenditures
33. A December 20XX year-end gov't should record
salaries payable due Jan 20, XX ? as an expenditure
34. When delinquent taxes are written off
fund balance will be unaffected
35. Debt service expenditures for interest are
recorded when due but may be accrued at year end if the debt service due date is less than 30 days after year end.
36. When closing out the gen fund and special rev fund of a state/local gov't unit, the balance of the operating statement accounts are closed too
fund balance
37. When the materials and supplies are received and the invoice is more than the related purchase order, this entry should be made
debit expenditures control for the amount of the invoice.
38. The term special item is defined as
unusual or infrequent but within mgt's control
39. Under which type would you debit expenditure when land is acquired?
governmental
40. Which account would be debited when the city of Corfu issued purchase orders for materials and supplies?
encumbrances control
41. Expenditures account = amount of supplies purchased during period under which of the following inventory methods?
purchases
42. Gov't funds fin. Statements are to be prepared on
modified accrual basis of accounting
43. Moving cash from Gen Fund to a debt service fund for payment of debt service is an example of
interfund transfer
44. Which of the following Gen Fund accounts would be closed at year end?
special items - proceeds from sale of land
45. Interfund transfers occur between individuals funds in the same gov't system w/out the requirement of repayment. If the gen fund transferred money to the debt service fund, how would the gen fund account for the transaction
use of funds on the activities statement.
46. City of Canadaigua receives proceeds from sale of land, the transaction is considered to be special item. Where are the proceeds reported on the statements of REV, expenditures, and changes in fund balance?
separately after other financing sources and uses
47. Which of to following occurs when uncollectible delinquent taxes are written off
net receivables remain unchanged
Interfund transfers are flows of cash or other assets that
do not require repayment
True with respect to interfund loans
interfund loans receivables and payables are separately reported on the balance sheets of the affected funds
True with respect to the use of budgetary funds
GASB does not requires gov't to record budgets
Difference between an extraordinary item and special item according to GASB ?
extraordinary items are significant transactions or events that are unusal and infrequent that are outside mgt's control while a special item is significant transaction that is unusual but within mgt's control
With respect to reimbursment grant accounting, which of the following is true
under GASB, revenues are recorded at the same time that expenditures are incurred.
False regarding two methods for recording inventories in gov't funds
purchases method is preferable since it requres no adjustment to supplies expense when preparing the gov't wide statements.