Test bank of Accounting for governmental and nonprofit entities, 14e chapter 1 to chapter3

Ch1-3 Student: _ General purpose governments provide a wide range of services to their residents, such as public safety, road maintenance, and health and welfare True Examples of special purpose governments include public schools, libraries, and water supply plants that receive tax revenue to finance the services they provide True False The two government-wide financial statements required by GASBS 34 are the statement of net assets and the statement of activities True False The FASB, GASB, and FASAB all base their standards on both internal and external financial reporting True False Interperiod equity refers to the concept that current-year revenues are sufficient to pay for services provided that year, so that future taxpayers will not be required to assume the burden for services previously provided True False The Federal Accounting Standards Advisory Board (FASAB) recommends accounting principles and standards for the federal government and its agencies and state governments True False A characteristic common to governmental and not-for-profit organizations is the absence of defined ownership interests that can be sold, transferred, or redeemed, or that convey entitlement to a share of a residual distribution of resources in the event of liquidation of the organization True False The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all governmental and not-for-profit organizations True False False The government-wide financial statements are intended to report on fiscal accountability True False 10 The minimum requirements for general purpose external financial reporting are (1) management's discussion and analysis (MD&A), (2) the basic financial statements, including the notes to the financial statements, and (3) required supplementary information (RSI, other than the MD&A) True False 11 The Governmental Accounting Standards Board has the responsibility for setting accounting and financial reporting standards for A State and local government entities and governmentally-related units and agencies, such as utilities, authorities, hospitals, and colleges and universities B Governments; such as federal agencies, states, cities, counties, villages, and townships C Not-for-profit organizations D All of the above 12 The Financial Accounting Standards Board has the responsibility for setting accounting and financial reporting standards for A All federal and state organizations B All not-for-profit organizations that are nongovernmental and business entities C All not-for-profit organizations D Both B) and C) are correct 13 The body that has been established to recommend accounting and financial reporting standards for the federal government is the A Financial Accounting Standards Board (FASB) B Governmental Accounting Standards Board (GASB) C Cost Accounting Standards Board (CASB) D Federal Accounting Standards Advisory Board (FASAB) 14 The GASB has identified which of the following as the "cornerstone" of all financial reporting in government? A Understandability B Representational faithfulness C Accountability D Interperiod equity 15 Which of the following distinguishes governments from nongovernmental not-for-profit organizations? A Absence of profit motive B The power to enact and enforce a tax levy C Resource providers not expect benefits proportional to the resources provided D Absence of a defined ownership interest that can be sold, transferred, or redeemed 16 Which of the following is not an objective of financial reporting by state and local governments? A To assist financial report users in comparing actual financial results with the legally adopted budget B To assist users in assessing financial condition and results of operations C To assist users in assessing the adequacy of systems and controls D None of the above; that is, all of the above are objectives of state and local government financial reporting 17 The minimum requirements for general purpose external financial reporting include: A Management's discussion and analysis (MD&A) B Government-wide and fund basic financial statements, including the notes thereto C Required supplementary information (other than the MD&A) D All of the above 18 The three sections recommended by GASB for inclusion in the Comprehensive Annual Financial Report (CAFR) are: A Introductory, financial, and statistical B Letter of transmittal, MD&A, and financial C Introductory, MD&A, and financial D Letter of transmittal, financial, and supplementary 19 Which of the following would be included in a properly prepared comprehensive annual financial report (CAFR) but not in the minimum requirements for general purpose financial reporting specified by GASBS 34? A Management Discussion and Analysis (MD&A) B Statistical information C Notes to the financial statements D Fund financial statements 20 Combining financial statements of a governmental entity should be included in A A comprehensive annual financial report (CAFR) B The basic financial statements C The notes to the financial statements D Any of the above is acceptable under GAAP 21 Which of the following would not be included in the introductory section of a comprehensive annual financial report? A Title and contents page B Letter of transmittal C Management discussion and analysis D Reference to other sections of the CAFR so readers desiring detailed information can find it conveniently 22 Which of the following is information that should be included in the financial section of a comprehensive annual financial report? A The auditor's report B The basic financial statements C Notes to the financial statements D All of these should be included 23 The section of the comprehensive annual financial report that presents tables and charts showing social and economic data in addition to financial trends and the fiscal capacity of the government is the: A Introductory section B Statistical section C Management discussion and analysis section D Financial section 24 On what should the government-wide financial statements report? A Net assets and results of financial operations of the government as a whole B Operational accountability C The cost of government services D All of the above 25 The fund financial statements for governmental funds should include a A Balance sheet for governmental funds B Statement of revenues, expenses, and changes in fund net assets C Statement of cash flows D All of the above 26 On what should the fund financial statements report? A Net assets and results of financial operations of the government as a whole B Fiscal accountability C Cost of government services D All of the above 27 Which of the following groups normally would not be considered a primary user of a state or local government's general-purpose external financial statements? A Citizens B Managers C Investors and creditors D None of the above; that is, all these groups are considered primary users 28 Which of the following reconciliations is required in the basic financial statements of a state or local government? A Total fund balances on the balance sheet governmental funds to total governmental activities net assets on the government-wide statement of net assets B Total net assets on the statement of net assets proprietary funds to total business-type activities net assets on the government-wide statement of net assets C Total net assets on the statement of fiduciary net assets to total fiduciary activities net assets on the government-wide statement of net assets D All of the above 29 Members of the Governmental Accounting Standards Board are appointed by the: A Financial Accounting Standards Board B Governmental Accounting Standards Board C American Institute of Certified Public Accountants D Financial Accounting Foundation 30 Which of the following organizations designated the FASAB as the authoritative standard setting body for the federal government and its agencies? A Financial Accounting Foundation B American Institute of Certified Public Accountants C Government Finance Officers Association D Securities and Exchange Commission 31 Which of the following is always subject to GASB jurisdiction? A A hospital B A college or university C A public school district D All of the above 32 Recognizing revenues when measurable and available for paying current obligations and expenditures when incurred describes which basis of accounting? A Accrual B Modified accrual C Modified cash D Budgetary 33 Enterprise funds are primarily distinguished from internal service funds by the: A Type of customers they serve B Different basis of accounting they use C Different kinds of financial statements used to present their financial information D All of the above 34 Governmental funds are identical to governmental activities, proprietary funds are identical to business-type activities, and fiduciary funds are identical to fiduciary activities of a government True False 35 Major funds are those that are relatively large or significant with respect to other funds True False 36 Economic resources are cash or items expected to be converted into cash during the current period, or soon enough thereafter to pay current period liabilities True False 37 A fund is an accounting and a fiscal entity True False 38 The types of funds that may be used in governmental accounting are classified into three categories of activities performed by governments: governmental, business-type, and fiduciary True False 39 All short-term liabilities of the government should be accounted for in the General Fund True False 40 Governments can demonstrate fiscal accountability by adopting an annual budget, using the accounting system to provide for budgetary control, and presenting budgetary comparisons to actual results in the appropriate financial statements True False 41 The primary purpose of an accounting system for a state or a local governmental unit is to make it possible for financial statements to demonstrate compliance with finance-related legal and contractual provisions True False 42 Because budgetary accounts are used by governments, their financial statements can never be said to be in accord with generally accepted accounting principles True False 43 Capital assets of a government should always be reported on the same basis as a business depreciated historical cost True False 44 The accounting system used by a state or local government must make it possible A To prepare consolidated accrual basis statements for the government as a whole B To prepare financial statements as required by the Financial Accounting Standards Board C To present fairly the financial position and results of financial operations of the government as a whole, as well as fund financial activity in conformity with GAAP, and to demonstrate compliance with finance-related legal and contractual provisions D All of the above 45 Which of the following is not a characteristic of a fund as defined by GASB standards? A An accounting entity B A segregated quantity of cash and other financial resources on deposit with a designated trustee C A fiscal entity D A self-balancing set of accounts 46 The accrual basis of accounting applicable to proprietary fund types requires that revenues be recognized when A Earned B Authorized by the budget ordinance C Collected in cash D Measurable and available 47 The modified accrual basis of accounting applicable to governmental fund types requires that revenues be recognized when A Earned B Authorized by the budget ordinance C Measurable and available D Collected in cash 48 According to the "Measurement Focus and Basis of Accounting in the Basic Financial Statements" principle, transfers should be recognized A When earned B In the period the interfund receivable and payable arise C When authorized by the budget ordinance D When collected in cash 49 Comparisons of budgeted versus actual revenues and expenditures are A Optional under GASB standards for all funds B Required by GAAP for internal management reports only; not permitted for external financial reporting C Required by GAAP for all governmental fund types D Required by GAAP for the General Fund and major special revenue funds for which an annual budget has been legally adopted 50 In accounting for state and local governments the modified accrual basis is recommended for A Proprietary and fiduciary funds B Proprietary funds only C Governmental funds only D All funds 51 An example of a proprietary fund is a (an) A Special revenue fund B Investment trust fund C Internal service fund D Debt service fund 52 An example of a "fiduciary" fund is a (an) A Special revenue fund B Investment trust fund C Debt service fund D Enterprise fund 53 In order for the accounting system of a local government to be in conformity with generally accepted accounting principles A Only governmental funds, and proprietary funds should be provided B Only those funds required by law, GASB standards, and sound financial administration should be provided C Only those funds required by law should be provided D All categories of funds must be provided 54 Which of the following funds is a governmental fund-type? A Private-purpose trust fund B Internal service fund C Permanent fund D Enterprise fund 55 Which of the following funds is a proprietary fund-type? A Private-purpose trust fund B Enterprise C Permanent fund D Capital projects fund 56 In which of the following funds would it not be appropriate to record depreciation of capital assets? A Special revenue fund B Enterprise C Internal service D Pension trust 57 Capital assets used by departments accounted for by the General Fund of a governmental unit should be accounted for in A The General Fund B The governmental activities journal C The business-type activities journal D The general capital assets fund 58 Financial reporting by fund type A Means that all assets and all liabilities of each government must be accounted for by one of the fund types set forth in the GASB Codification B Is optional under GAAP, but is generally required by state laws for governments C Is the same kind of accounting used by business organizations D Is required by generally accepted accounting principles for state and local governments 59 A fund that is used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governments, on a cost-reimbursement basis is properly classified as a (an) A Enterprise fund B Proprietary fund C Internal service fund D Both B and C are correct 60 Capital assets of an enterprise fund should be accounted for in the A Enterprise fund and depreciation on the capital assets should be recorded B Business-type activities journal but no depreciation on the capital assets should be recorded C Governmental activities journal and depreciation on the capital assets should be recorded D Enterprise fund but no depreciation on the capital assets should be recorded 61 Which of the following funds are proprietary funds? A Enterprise funds, investment trust funds, pension trust funds, and the General Fund B Enterprise funds and internal service funds C Internal service funds, special revenue funds, and enterprise funds D None of the above funds; proprietary funds are not used in governmental accounting 62 Which of the following funds are governmental funds? A General Fund, special revenue funds, capital projects funds, debt service funds, and private-purpose trust funds B General Fund, special revenue funds, capital projects funds, debt service funds, and permanent funds C General Fund and special revenue funds, private-purpose trust funds D General Fund, special revenue funds, capital projects funds, debt service funds, and internal service funds 63 The activities of a water utility department, which offers its services to the general public on a user charge basis, should be accounted for in A An enterprise fund B A special revenue fund C The General Fund D An internal service fund 64 The measurement focus and basis of accounting for fiduciary funds are most similar to A Governmental funds B Permanent funds C Proprietary funds D None of the above 65 Which of the following organizations should be included as part of the governmental reporting entity? A A primary government B Other legally separate organizations for which the primary government is financially accountable C Other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete D All of the above 66 Under GASB reporting entity standards, a component unit is A Organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete B A legally separate organization that is financially independent of a primary government and on which the primary government cannot impose its will C A large department of a primary government D Both A and B are component units 67 The measurement focus that should be used in preparing fund financial statements is: A Item A B Item B C Item C D Item D 68 The basis of accounting that should be used in preparing fund financial statements is: A Item A B Item B C Item C D Item D 69 Program revenues and general revenues are distinguished on the government-wide statement of activities under GASBS 34 True False 70 Fund equity of the General Fund is reported as net assets in the balance sheets for governmental funds True False 71 Interfund transfers and debt issue proceeds received by the General Fund would be recorded as other financing sources True False 72 All purchases of goods and services by a General Fund and all interfund transfers are recorded as Expenditures True False 73 GASBS 34 requires that a combined statement of revenues, expenditures, and changes in fund balances budget and actual be presented and that the statement include the General Fund, and major special revenue funds for which annual budgets have been legally adopted True False 74 All decreases in fund financial resources, other than for repayment of fund liabilities, are termed "expenditures." True False 75 Budgetary accounts used in the General Fund include Estimated Revenues, Revenues, Appropriations, Encumbrances, and Expenditures True False 76 An encumbrance represents a liability incurred pursuant to authority given in an appropriation True False 77 Government-wide financial statements include funds True False 78 Revenues and expenditures reported in the budgetary comparison schedule must be reported on the budget basis in the "budget" column and on the GAAP basis in the "actual" column True False 79 The amounts reported for revenues and expenditures in the "Actual" column of the budgetary comparison schedule or statement must not differ from those reported in the statement of revenues, expenditures, and changes in fund balance prepared on a GAAP basis True False 80 Governmental funds have always been reported on the economic resources measurement focus True False 81 Which of the following is a budgetary account? A Encumbrances B Reserve for Encumbrances C Expenditures D Revenues 10 61 Which of the following funds are proprietary funds? A B C D Enterprise funds, investment trust funds, pension trust funds, and the General Fund Enterprise funds and internal service funds Internal service funds, special revenue funds, and enterprise funds None of the above funds; proprietary funds are not used in governmental accounting Content: Concept Level: Easy Wilson - Chapter 02 #28 62 Which of the following funds are governmental funds? A General Fund, special revenue funds, capital projects funds, debt service funds, and private-purpose trust funds B General Fund, special revenue funds, capital projects funds, debt service funds, and permanent funds C General Fund and special revenue funds, private-purpose trust funds D General Fund, special revenue funds, capital projects funds, debt service funds, and internal service funds Content: Concept Level: Medium Wilson - Chapter 02 #29 63 The activities of a water utility department, which offers its services to the general public on a user charge basis, should be accounted for in A B C D An enterprise fund A special revenue fund The General Fund An internal service fund Content: Concept Level: Easy Wilson - Chapter 02 #30 64 The measurement focus and basis of accounting for fiduciary funds are most similar to A B C D Governmental funds Permanent funds Proprietary funds None of the above Content: Concept Level: Easy Wilson - Chapter 02 #31 65 Which of the following organizations should be included as part of the governmental reporting entity? A A primary government B Other legally separate organizations for which the primary government is financially accountable C Other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete D All of the above Content: Concept Level: Medium Wilson - Chapter 02 #32 14 66 Under GASB reporting entity standards, a component unit is A Organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete B A legally separate organization that is financially independent of a primary government and on which the primary government cannot impose its will C A large department of a primary government D Both A and B are component units Content: Concept Level: Medium Wilson - Chapter 02 #33 67 The measurement focus that should be used in preparing fund financial statements is: A B C D Item A Item B Item C Item D Content: Concept Level: Medium Wilson - Chapter 02 #34 68 The basis of accounting that should be used in preparing fund financial statements is: A B C D Item A Item B Item C Item D Content: Concept Level: Medium Wilson - Chapter 02 #35 15 69 Program revenues and general revenues are distinguished on the government-wide statement of activities under GASBS 34 TRUE Program revenues appear on the top half of the statement of activities and are subtracted from expenses of each function in arriving at the net cost of operations for governmental services General revenues, on the other hand, appear on the lower half of the statement of activities and are in one column as a subtraction from the net cost of government services in arriving at the change in net assets for the fiscal year Content: Concept Level: Medium Wilson - Chapter 03 #1 70 Fund equity of the General Fund is reported as net assets in the balance sheets for governmental funds FALSE Although in a generic sense, the difference between assets and liabilities is net assets for any kind of entity, the term used in governmental funds financial statements is fund balances Net assets is the term used for the difference between assets and liabilities for proprietary and fiduciary funds, as well as governmental and business-type activities at the government-wide level Content: Concept Level: Medium Wilson - Chapter 03 #2 71 Interfund transfers and debt issue proceeds received by the General Fund would be recorded as other financing sources TRUE GASB standards specifically classify these items as other financing sources Revenue is simply defined as increases in a fund's financial resources other than from interfund transfers and debt proceeds Content: Concept Level: Easy Wilson - Chapter 03 #3 72 All purchases of goods and services by a General Fund and all interfund transfers are recorded as Expenditures FALSE All purchases of goods and services by the General Fund are classified as expenditures, but interfund transfers out are "other financing uses," not expenditures Content: Concept Level: Easy Wilson - Chapter 03 #4 16 73 GASBS 34 requires that a combined statement of revenues, expenditures, and changes in fund balances budget and actual be presented and that the statement include the General Fund, and major special revenue funds for which annual budgets have been legally adopted FALSE A budgetary comparison schedule is required supplementary information for the General Fund and major special revenue funds that have legally adopted budgets and should be placed immediately after the notes to the financial statements This schedule may optionally take the form of the statement of revenues, expenditures, and changes in fund balances budget and actual and be included with the basic financial statements Content: Concept Level: Medium Wilson - Chapter 03 #5 74 All decreases in fund financial resources, other than for repayment of fund liabilities, are termed "expenditures." FALSE Expenditure is defined as all decreases in fund financial resources other than through interfund transfers Content: Concept Level: Easy Wilson - Chapter 03 #6 75 Budgetary accounts used in the General Fund include Estimated Revenues, Revenues, Appropriations, Encumbrances, and Expenditures FALSE Of the accounts listed only Estimated Revenues, Appropriations, and Encumbrances are budgetary accounts; Revenues and Expenditures are temporary accounts that also will be closed out to Fund Balance at the end of a fiscal period, but they are not budgetary accounts Content: Concept Level: Medium Wilson - Chapter 03 #7 76 An encumbrance represents a liability incurred pursuant to authority given in an appropriation FALSE That is the definition of an expenditure An encumbrance is the estimated liability for goods placed on order Content: Concept Level: Easy Wilson - Chapter 03 #8 17 77 Government-wide financial statements include funds FALSE Government-wide financial statements report on the governmental and business-type activities of the government, and not on the funds Governmental-type, proprietary-type, and fiduciary-type funds are reported on in the funds financial statements Content: Concept Level: Easy Wilson - Chapter 03 #9 78 Revenues and expenditures reported in the budgetary comparison schedule must be reported on the budget basis in the "budget" column and on the GAAP basis in the "actual" column FALSE The budgetary basis must be used both for the budget and actual columns to facilitate meaningful comparison Content: Concept Level: Medium Wilson - Chapter 03 #10 79 The amounts reported for revenues and expenditures in the "Actual" column of the budgetary comparison schedule or statement must not differ from those reported in the statement of revenues, expenditures, and changes in fund balance prepared on a GAAP basis FALSE As explained in Chapter 3, timing, entity, or perspective differences may cause the amounts reported in the "Actual" column of the budget and actual operating statement to differ from those reported in the GAAP basis operating statement The reason for the difference is that the amounts reported in the "Actual" column of the budget and actual statement are on a budget basis whereas those in the other statement are on a GAAP basis Differences between the amounts reported in these two statements must be reconciled either on the face of the statements or in the notes to the financial statements Content: Concept Level: Medium Wilson - Chapter 03 #11 80 Governmental funds have always been reported on the economic resources measurement focus FALSE Governmental funds continue to be reported using the current financial resources measurement focus as they had prior to GASBS 34 Content: Concept Level: Medium Wilson - Chapter 03 #12 18 81 Which of the following is a budgetary account? A B C D Encumbrances Reserve for Encumbrances Expenditures Revenues Content: Concept Level: Easy Wilson - Chapter 03 #13 82 When the budget for the General Fund is recorded, the required journal entry will include A B C D A credit to Estimated Revenues A debit to Encumbrances A credit to Appropriations Both A and C Content: Journal Entry Level: Easy Wilson - Chapter 03 #14 83 When the budget of a government is recorded and Appropriations exceeds Estimated Revenues, the Fund Balance account is A B C D Credited at the beginning of the year and debited at the end of the year Credited at the beginning of the year and no entry is made at the end of the year Debited at the beginning of the year and no entry is made at the end of the year Debited at the beginning of the year and credited at the end of the year Content: Journal Entry Level: Medium Wilson - Chapter 03 #15 84 Which of the following accounts is not a budgetary account of a governmental fund? A B C D Reserve for Inventory of Supplies Encumbrances Estimated Revenues Estimated Other Financing Sources Content: Concept Wilson - Chapter 03 #16 85 The estimated revenues control account of a government is credited when A B C D The budgetary accounts are closed: Yes; Revenues are recorded: No The budgetary accounts are closed: No; Revenues are recorded: No The budgetary accounts are closed: No; Revenues are recorded: Yes The budgetary accounts are closed: Yes; Revenues are recorded: Yes Content: Journal Entry Level: Medium Wilson - Chapter 03 #17 86 When is it appropriate to use a fund other than the General Fund? A B C D When generally accepted accounting principles (GAAP) require the use of some other fund When sound financial administration supports the use of some other fund When the use of some other fund is legally required All of the above Content: Concept Level: Easy Wilson - Chapter 03 #18 19 87 The Expenditures control account of a government is debited when A B C D The budget is recorded Supplies previously encumbered are received Supplies are ordered The invoice is paid Content: Journal Entry Level: Easy Wilson - Chapter 03 #19 88 Which of the following accounts of a government is credited when a purchase order is approved? A B C D Reserve for Encumbrances Encumbrances Vouchers Payable Appropriations Content: Journal Entry Level: Easy Wilson - Chapter 03 #20 89 Which of the following best describes the purpose behind the other financial sources/uses category? A The category is used to distinguish interfund activity from transactions and events involving parties outside the financial reporting entity B The category is used to distinguish program revenues from general revenues C The category is used to isolate certain nonroutine inflows and outflows that might otherwise distort revenue and expenditure trend analysis D Other financial sources are equivalent to gains and other financing uses are equivalent to losses Content: Concept Level: Medium Wilson - Chapter 03 #21 90 Under which basis of accounting for a government should revenues be recognized in the accounting period in which they are measurable and available? A B C D Accrual basis: No; Modified accrual basis: No Accrual basis: Yes; Modified accrual basis: No Accrual basis: Yes; Modified accrual basis: Yes Accrual basis: No; Modified accrual basis: Yes Content: Concept Level: Easy Wilson - Chapter 03 #22 91 The expenditure classification "Public Safety" is an example of which of the following types of classifications? A B C D Activity Object Character Function Content: Concept Level: Easy Wilson - Chapter 03 #23 20 92 When supplies ordered for use in an activity accounted for in the General Fund of a government are received at an actual price that is more than the estimated price on the purchase order, the Encumbrance account is A B C D Debited for the estimated price on the purchase order Credited for the estimated price on the purchase order Debited for the actual price for the supplies received Credited for the actual price for the supplies received Content: Journal Entry Level: Medium Wilson - Chapter 03 #24 93 A statement of revenues, expenditures, and changes in fund balances budget and actual is A Required by GAAP for the General Fund, special revenue funds, and all other governmental fund types for which an annual budget has been adopted B Required by GAAP for internal management reports only; not permitted for external financial reporting C Required by GAAP for all governmental fund types D Optional under GASBS 34, as long as a budgetary comparison schedule is presented Content: Concept Level: Medium Wilson - Chapter 03 #25 94 The account "Interfund Transfers In" would be classified in a General Fund statement of revenues, expenditures, and changes in fund balance as a (an) A B C D Revenue Other financing use Other financing source Current liability Content: Concept Level: Easy Wilson - Chapter 03 #26 95 The expenditure classification "Capital Outlays" is an example of which of the following types of classification? A B C D Function Character Object Both B and C are correct Content: Concept Level: Easy Wilson - Chapter 03 #27 96 When the budget of a government is adopted and Estimated Revenues exceed Appropriations, the excess is A B C D Credited to Fund Balance Debited to Fund Balance Debited to Reserve for Encumbrances Credited to Reserve for Encumbrances Content: Journal Entry Level: Easy Wilson - Chapter 03 #28 21 97 Which of the following steps in the acquisition of goods and services by an activity accounted for by the General Fund occurs first? A B C D Disbursement Appropriation Encumbrance Expenditure Content: Concept Level: Easy Wilson - Chapter 03 #29 98 When equipment that is to be used by an activity accounted for by the General Fund of a government is received, it should be recorded in the General Fund as a (an) A B C D Capital Asset Appropriation Encumbrances Expenditure Content: Concept Level: Easy Wilson - Chapter 03 #30 The County Commission of Brook County adopted its General Fund budget for the year ending June 30, comprising estimated revenues of $3,200,000 and appropriations of $2,900,000 Brook County utilizes the budgetary accounts required by GASB standards Wilson - Chapter 03 99 The journal entry to record budgeted revenues will include A B C D A debit to Revenues Receivable, $3,200,000 A credit to Estimated Revenues, $3,200,000 A debit to Estimated Revenues, $3,200,000 None of the above; only a memorandum entry is necessary Content: Journal Entry Level: Medium Wilson - Chapter 03 #31 100 The journal entry to record budgeted appropriations will include A B C D A credit to Appropriations, $2,900,000 A credit to Encumbrances, $2,900,000 A debit to Estimated Expenditures, $2,900,000 None of the above; only a memorandum entry is necessary Content: Journal Entry Level: Medium Wilson - Chapter 03 #32 101 The budgeted excess of estimated revenues over appropriations will be recorded as A B C D A credit to Surplus Revenues, $300,000 A debit to Estimated Excess Revenues, $300,000 A credit to Fund Balance, $300,000 A memorandum entry only Content: Journal Entry Level: Medium Wilson - Chapter 03 #33 22 102 Expenditures for supplies ordered by a special revenue fund were inadvertently recorded in the accounts of the General Fund in the amount of $100 Upon reimbursement of the $100, later the same month, the journal entry for the General Fund would include A B C D A credit to Encumbrances A credit to Expenditures A credit to Interfund Transfers In A credit to Fund Balance Content: Journal Entry Level: Medium Wilson - Chapter 03 #34 103 What adjustments are needed before data from the governmental fund financial statements can be incorporated into the government-wide financial statements? A Conversion from the current financial resources measurement focus to the economic resources measurement focus B Conversion from the modified accrual basis of accounting to the accrual basis of accounting C Aggregation of funds into activities D All of the above Content: Concept Level: Hard Wilson - Chapter 03 #35 104 Which of the following statements is false about expenses that are directly related to a government function or program? A They are reported in the government-wide statement of activities at the government-wide level B They not include interest on general long-term liabilities C They are reported in the statement of activities at the government-wide level to the right of program revenue in order to arrive at a net cost of the function or program D They include depreciation expense on capital assets that are clearly identified with a function or program Content: Concept Level: Hard Wilson - Chapter 03 #36 105 Which of the following are reported in the functions/programs section of the statement of activities at the government-wide level where they reduce the net expense of each function or program to produce a net revenue? A B C D General revenues Program revenues Indirect revenues None of the above Content: Concept Level: Medium Wilson - Chapter 03 #37 106 Extraordinary items and special items are reported A B C D With normal recurring general revenues As separate line items in the Function/Programs section of the statement of activities As separate line items below General Revenue in the statement of activities Before General Revenues Content: Concept Level: Medium Wilson - Chapter 03 #38 23 107 Which of the following assets could appear in the governmental fund balance sheet? A B C D Taxes receivable Capital assets Deferred charge for issuance of bonds costs Infrastructure assets Content: Concept Level: Easy Wilson - Chapter 03 #39 108 Program revenues A B C D Reduce the net cost of the program or function May originate from parties outside the government's constituency May originate directly from the program or functional category itself All of the above Content: Concept Level: Medium Wilson - Chapter 03 #40 109 When the budget for the General Fund is recorded, the required journal entry will include A B C D A credit to Estimated Revenues A debit to Encumbrances A credit to Appropriations Both A and C Content: Concept Level: Easy Wilson - Chapter 03 #41 110 The Reserve for Encumbrances account is properly termed a A B C D Long-term liability Budgetary account Current liability if paid within a year; otherwise a long-term debt Reservation of fund equity Content: Concept Level: Easy Wilson - Chapter 03 #42 111 The expenditure classification "Current Expenditures" is an example of which of the following types of classifications? A B C D Activity Object Function Character Content: Concept Level: Medium Wilson - Chapter 03 #43 24 112 Comparisons of budgeted versus actual revenues and expenditures are A Required by GAAP for the General Fund and major special revenue funds for which an annual budget has been legally adopted B Required by GAAP for all governmental fund types C Required by generally accepted accounting principles (GAAP) for internal management reports only; not permitted for external financial reporting D Optional under GASB standards for all funds Content: Concept Level: Medium Wilson - Chapter 03 #44 113 Which of the following statements is true regarding the required disclosure of budgetary information? A All budgetary disclosures should be presented in the notes to the financial statements B There is one specific format for presenting the budgetary comparison statement C The budgetary reconciliation must focus on the operating statement, but not the statement of position D Budgetary comparisons are required supplementary information (RSI) Content: Concept Level: Medium Wilson - Chapter 03 #45 114 The encumbrances control account of a city is decreased when A B C D Goods are ordered: No; Goods are received: No Goods are ordered: Yes; Goods are received: No Goods are ordered: Yes; Goods are received: Yes Goods are ordered: No; Goods are received: Yes Content: Concept Level: Medium Wilson - Chapter 03 #46 115 Which of the following fund types uses the current financial resources measurement focus and modified accrual basis of accounting? A B C D Enterprise fund Special revenue fund Investment trust fund Pension trust fund Content: Concept Level: Easy Wilson - Chapter 03 #47 116 Encumbrances outstanding at year-end in a city's General Fund should be reported as a A B C D Fund balance designation in the General Fund Liability in the General Fund Reserve of fund balance in the General Fund Liability in the governmental activities column on the government-wide statement of net assets Content: Concept Level: Medium Wilson - Chapter 03 #48 25 117 Which of the following will decrease the fund balance of a government at the end of the fiscal year? A B C D Appropriations are more than expenditures and reserve for encumbrances Appropriations are more than expenditures and encumbrances Appropriations are less than estimated revenues Appropriations are less than expenditures and encumbrances Content: Concept Level: Medium Wilson - Chapter 03 #49 118 Which of the following fund types is most likely to have a legally adopted annual budget? A B C D Permanent fund General fund Pension trust fund Capital projects fund Content: Concept Level: Easy Wilson - Chapter 03 #50 119 A liability is recorded in governmental funds when the: A B C D Goods or services are ordered Goods or services are received Vouchers are approved for payment Invoices are paid Content: Concept Level: Easy Wilson - Chapter 03 #51 120 Which of the following terms refers to an actual cost rather than an estimate? A B C D Budget Encumbrance Expenditure Appropriation Content: Concept Level: Easy Wilson - Chapter 03 #52 121 For what funds budgetary comparisons need to be presented in connection with the basic financial statements? A B C D General Fund General Fund and major funds All governmental funds with legally adopted annual budgets General Fund and major special revenue funds for which a budget is legally adopted Content: Concept Level: Medium Wilson - Chapter 03 #53 122 When computers are ordered by the mayor's office, the purchase order should be recorded in the General Fund as a debit to: A B C D Encumbrance Equipment Expenditures Appropriations Content: Journal Entry Level: Medium Wilson - Chapter 03 #54 26 123 The appropriations account of a governmental fund is credited when A B C D The budgetary accounts are closed The budget is recorded Supplies are purchased Expenditures are recorded Content: Journal Entry Level: Medium Wilson - Chapter 03 #55 124 The Expenditures control account of a government is credited when: A B C D Supplies are ordered Supplies previously encumbered are received The budget is recorded Temporary accounts are closed out at the end of the year Content: Concept Level: Medium Wilson - Chapter 03 #56 125 If a state law requires that local governments prepare General Fund and special revenue fund budgets on a basis that differs from the basis of accounting required by generally accepted accounting principles (GAAP) A The actual amounts in the budgetary comparison schedule should be reported using the government's budgetary basis B A reconciliation of required budgetary basis to GAAP basis should be included C Column headings in the budgetary comparison schedule should indicate if the government uses a non-GAAP budgetary basis D All of the above statements are true Content: Concept Level: Medium Wilson - Chapter 03 #57 27 Ch1-3 Summary Category # of Questions Content: Concept 112 Content: Journal Entry 13 Level: Easy 62 Level: Hard Level: Medium 59 Wilson - Chapter 01 33 Wilson - Chapter 02 35 Wilson - Chapter 03 58 .. .11 The Governmental Accounting Standards Board has the responsibility for setting accounting and financial reporting standards for A State and local government entities and governmentally-related... villages, and townships C Not -for- profit organizations D All of the above Content: Concept Level: Medium Wilson - Chapter 01 #11 12 The Financial Accounting Standards Board has the responsibility for. .. Wilson - Chapter 01 #14 15 Which of the following distinguishes governments from nongovernmental not -for- profit organizations? A B C D Absence of profit motive The power to enact and enforce a