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Government Accounting MCQs (set of 40)

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Question;Answers tpo AA. The measurement focus and basis of accounting that are most unlike those used by business entities are those used by (Points: 2) Governmental funds. Fiduciary funds. Proprietary funds. Contribution funds.2. Under the dual-track accounting approach used in the text, which of the following transactions or events would be recorded in the general journal for governmental activities at the government-wide level? (Points: 2) Recording the annual budget, property tax levy, and payroll. Recording the property tax levy, issuance of tax anticipation notes, and accrual of interest on long-term debt at year-end. Recording the property tax levy, payroll, and encumbrances for purchase orders. Recording the property tax levy, encumbrances for purchase orders, and payment of interest on long-term debt.3. Which of the following would result in the amortization of a bond discount or premium? (Points: 2) Bonds are issued: No, Bonds are held as investments: No Bonds are issued: No, Bonds are held as investments: Yes Bonds are issued: Yes, Bonds are held as investments: No Bonds are issued: Yes, Bonds are held as investments: Yes4. Which of the following funds are governmental funds? (Points: 2) General Fund, special revenue funds, capital projects funds, debt service funds, and private-purpose trust funds. General Fund, special revenue funds, private-purpose trust funds. General Fund, special revenue funds, debt service funds, capital projects funds, and permanent funds. General Fund, special revenue funds, capital projects funds, debt service funds, and internal service funds.5. When the budget of a government is adopted and Estimated Revenues exceed Appropriations, the excess is (Points: 2) Credited to Budgetary Fund Balance. Debited to Budgetary Fund Balance. Debited to Reserve for Encumbrances. Credited to Reserve for Encumbrances.6. The Financial Accounting Standards Board has the responsibility for setting accounting and financial reporting standards for (Points: 2) All not-for-profit organizations that are nongovernmental and business entities. All special purpose governments. All not-for-profit organizations. All federal government agencies.7. On the due date for bond interest, the debt service fund journal entry (or entries) will include a debit to (Points: 2) Expenditures-Bond Interest. Interfund Transfers In. Appropriations. Interest Expense.8. Which of the following is a proprietary fund? (Points: 2) Special revenue fund. Investment trust fund. Debt service fund. Internal service fund.9. Which of the following distinguishes governments from nongovernmental not-for-profit organizations? (Points: 2) Absence of profit motive. The power to enact and enforce a tax levy. Resource providers do not expect benefits proportional to the resources provided. Absence of a defined ownership interest that can be sold, transferred, or redeemed.10. Generally accepted accounting principles applicable to state and local governments require that (Points: 2) Only governmental funds and proprietary funds should be provided. Only those funds required by law, GASB standards, and sound financial administration should be provided. Only those funds required by law should be provided. All categories of funds must be provided.11. In late June, the Everready Construction Co. submitted a $600,000 progress billing on a construction contract. On July 2, the bill was approved for payment, subject to a five percent retention, as provided by the contract. Construction expenditures should be debited when (Points: 2) The bill is approved for payment. The bill is received. The bill is paid (except for the five percent retention). The final five percent of the bill is paid.12. Which of the following information should be included in the financial section of a comprehensive annual financial report? (Points: 2) Transmittal letter. The basic financial statements, including notes thereto. Tables and charts showing demographic and economic data. A description of the government.13. The city of Milan was notified that it had been approved for a state government grant in the amount of $1,000,000 to help finance its new city jail. The money from the grant will be received later in the current fiscal year. The journal entry to record this transaction will include (Points: 2) A credit to Other Financing Sources upon notification. A credit to Revenues when all eligibility requirements are met. A credit to Revenues upon receipt of the money from the state. A credit to Other Financing Sources upon receipt of the money from the state.14. Extraordinary items and special items are reported (Points: 2) 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 Revenues in the statement of activities. As separate line items above General Revenues.15. The General Fund received $200,000 in lieu of taxes from the city owned water utility, an enterprise fund. This is an example of a(an) (Points: 2) Interfund transfer. Interfund loan. Internal exchange transaction. Reimbursement.16. When the budget of a government is recorded and Appropriations exceeds Estimated Revenues, the Budgetary Fund Balance account is (Points: 2) 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.17. The expenditure classification "Public Safety" is an example of which of the following types of classifications? (Points: 2) Activity. Function. Character. Object.18. Which of the following statements is always true concerning the reporting of debt service funds? (Points: 2) Debt service funds are reported in a separate column in the governmental fund financial statements. Debt service funds are reported in a separate column in the government-wide financial statements. Debt service funds are reported in the Other Governmental Funds column in the governmental fund financial statements. Debt service funds are reported in the Governmental Activities column in the government-wide financial statements.19. Which of the following would be considered an internal exchange transaction? (Points: 2) The General Fund transfers $200,000 to establish a Central Supplies Fund, this amount will not be repaid. The General Fund transfers $125,000 to the Debt Service Fund for payment of currently due bond interest payments. The General Fund orders and receives supplies from the Central Supplies Fund in the amount of $9,000. The Capital Projects Fund completes a library building project and transfers the remaining cash to the Debt Service Fund.20. Which of the following is identified by the GASB as the "cornerstone" of all financial reporting in government? (Points: 2) Understandability. Representational faithfulness. Accountability. Interperiod equity.21. Five trucks were leased by Pleasantville under terms qualifying as a capital lease. These trucks are to be used by the fire department. Where would the capital lease transaction be recorded? (Points: 2) Internal service fund. Special revenue fund. Plant and equipment fund. Governmental activities.22. On June 1, 2012, Brooktown levied special assessments in the amount of $500,000, payable in 10 equal annual installments beginning on June 30, 2012. The assessment installments are intended to pay principal and interest on special assessment bonds for which the town has pledged its full faith and credit should assessments be insufficient. Assuming no allowance for uncollectible receivables, the journal entry in the debt service fund on June 1, 2012 would include: (Points: 2) A debit to Assessments Receivable-Current for $500,000. A debit to Assessments Receivable-Current for $50,000. A credit to Revenues for $500,000. No journal entry is made in the debt service fund because special assessments are used.23. In 2011, Weaver City signed a contract in the amount of $6,000,000 for the construction of a new city hall. Expenditures were $4,000,000 in 2011 and $2,050,000 in 2012, which included a change to the original construction design in the amount of $50,000. What amount should be added to net capital assets in the governmental activities accounts in 2012? (Points: 2) $6,000,000 $6,050,000 $2,050,000 $2,000,000.24. The accrual basis of accounting applicable to proprietary fund types requires that exchange revenues be recognized when (Points: 2) Earned. Collected in cash. Authorized by the budget ordinance. Measurable and available.25. The expenditure classification "City Attorney" is an example of which of the following types of classification? (Points: 2) Function. Organization unit. Character. Program.26. On what should the government-wide financial statements report? (Points: 2) Net assets and results of financial operations of the government as a whole. Fiscal accountability. The cost of government services. Budgetary compliance.27. Which of the following is true for debt service funds? (Points: 2) A legally required budget should be recorded in the accounts. A combining balance sheet may not be prepared for a comprehensive annual financial report (CAFR) when more than one debt service fund exists. Encumbrance accounting is often used. GAAP requires that a separate debt service fund be established for each bond issue.28. Which of the following budgetary accounts is typically used by a debt service fund? (Points: 2) Encumbrances. Appropriations. Estimated Uncollectible Accounts. Reserve for Encumbrances.29. Which of the following is not a budgetary account? (Points: 2) Encumbrances. Reserve for Encumbrances. Estimated Revenues. Appropriations.30. When bonds are sold at a premium for a capital project, the premium amount generally (Points: 2) Increases the cash available to the capital projects fund. Is transferred to the debt service fund. Is transferred to the General Fund. Is ignored by both the capital projects fund and any other fund.31. With regard to depreciation of general capital assets, which of the following statements is correct? (Points: 2) Depreciation expense should be recorded in the appropriate governmental funds, and recorded in the governmental activities accounts. Depreciation expense must be recorded in the governmental fund, but no depreciation expense is recorded in the governmental activities accounts. No depreciation can be recorded in any governmental fund, but depreciation expense must be recorded in the governmental activities accounts. No depreciation can be recorded in any governmental fund, nor is it permissible to record depreciation expense in the governmental activities accounts.32. The account "Interfund Transfers In" would be classified in a General Fund statement of revenues, expenditures, and changes in fund balance as a(an) (Points: 2) Revenue. Other financing use. Other financing source. Current liability33. Which of the following steps in the acquisition of goods and services by an activity accounted for by the General Fund generally occurs first? (Points: 2) Disbursement. Appropriation. Encumbrance. Expenditure.34. Which of the following is true regarding capital projects funds? (Points: 2) Encumbrances accounting is employed. Encumbrances accounting is not normally employed, but Estimated Revenues and Appropriations accounts are used. No budgetary accounts are ever used. All budgetary accounts are employed in the same manner as for the General Fund and special revenue funds.35. The body that has been established to recommend accounting and financial reporting standards for the federal government is the (Points: 2) Financial Accounting Standards Board (FASB). Governmental Accounting Standards Board (GASB). Cost Accounting Standards Board (CASB). Federal Accounting Standards Advisory Board (FASAB).36. The Town of Ashland levied property taxes in the amount of $800,000. The town estimates that 1 percent will be uncollectible. The journal entry to record the tax levy will include (Points: 2) A debit to cash for $792,000. A credit to revenues for $792,000. A debit to estimated uncollectible current taxes for $8,000. A debit to estimated revenues for $800,000.37. Which of the following is a fiduciary fund? (Points: 2) Investment trust fund. Special revenue fund. Debt service fund. Enterprise fund.38. Which of the following should not be reported as a liability of the General Fund? (Points: 2) General obligation bonds payable (due in 10 years). Vouchers payable. Tax anticipation notes payable. Due to federal government.39. A capital projects fund might be used to account for which of the following activities? (Points: 2) Maintaining roads and bridges. Building a parking garage. Providing water and sewer services. Servicing long-term debt.40. The fund financial statements for governmental funds should include a (Points: 2) Statement of cash flows. Statement of revenues, expenses, and changes in fund net assets. Balance sheet. Statement of activities.

 

Paper#45251 | Written in 18-Jul-2015

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