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| 1.
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The Financial Accounting Standards Board serves as the standard setting body for |
| | A) | State and local governments |
| | B) | Private not-for-profit organizations |
| | C) | Public not-for-profit organizations |
| | D) | The federal government |
| | E) | Both B and C |
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| 2.
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Governments differ from business organizations in which one of the following ways: |
| | A) | Governments are subject to formal and restrictive budgets |
| | B) | Governments receive resources that are restricted to being used for a particular purpose |
| | C) | Governments engage in nonexchange transactions |
| | D) | Governments lack residual ownership claims |
| | E) | All of the above |
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| 3.
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In accounting for a state or local government, a fund represents |
| | A) | Resources that were expended during the current accounting period |
| | B) | Tax revenues resulting from a nonexchange transaction |
| | C) | A budget restriction imposed by the government's legislative body |
| | D) | A part of the activities of the government that is separated from other activities in the accounting records |
| | E) | None of the above |
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| 4.
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How is the budget for a state or local government different from budgets prepared by businesses? |
| | A) | The budgets for a business are often made available to the public, while budgets for governmental entities are not |
| | B) | The budgets of governments often carry the authority of law |
| | C) | The financial reports of a government include a required report comparing budgeted and actual amounts |
| | D) | Both B and C |
| | E) | None of the above |
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| 5.
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Which of the following represents a similarity between the environment of not-for-profit organizations and the environment of governmental organizations? |
| | A) | Not-for-profit organizations do not have residual owners |
| | B) | The excess of revenues over expenses is not an effective performance measure for the organization |
| | C) | The accounting practices closely resemble those of commercial businesses |
| | D) | Not-for-profit organizations often receive resources with donor-imposed restrictions |
| | E) | A, B, and D are all correct |
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| 6.
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Which of the following may object to accounting and financial reporting standards for the federal government recommended by the Federal Accounting Standards Advisory Board: |
| | A) | U. S. Department of the Treasury |
| | B) | U. S. Office of Management and Budget |
| | C) | U. S. General Accounting Office |
| | D) | All of the above |
| | E) | None of the above |
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| 7.
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Accounting and financial reporting standards for state and local governments in the United States are set by the following: |
| | A) | Financial Accounting Standards Board (FASB) |
| | B) | Governmental Accounting Standards Board (GASB) |
| | C) | Federal Accounting Standards Advisory Board (FASAB) |
| | D) | Financial Accounting Foundation (FAF) |
| | E) | None of the above |
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| 8.
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As stated in the AICPA Audit and Accounting Guide: Not-for-Profit Organizations, which of the following defines an organization other than a public corporation or a body corporate and politic as a government? |
| | A) | Popular election of officers or appointment (or approval) of a controlling majority of the members of the organization's governing body by officials of one or more state or local governments |
| | B) | The potential for unilateral dissolution by a government with the net assets reverting to a government |
| | C) | The power to enact and enforce a tax levy |
| | D) | One or more of the above |
| | E) | None of the above |
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| 9.
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The highest level of the GAAP hierarchy for a state or local government includes |
| | A) | FASAB Statements and Interpretations |
| | B) | FASB Technical Bulletins |
| | C) | Consensus positions of the GASB Emerging Issues Task Force |
| | D) | GASB Statements and Interpretations |
| | E) | None of the above |
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| 10.
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The Comprehensive Annual Financial Report for a state or local government includes all of the following except: |
| | A) | the auditor's report |
| | B) | responses to specific questions submitted by taxpayers and residents |
| | C) | certain required supplementary information |
| | D) | statistical tables |
| | E) | all of the above |
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| 11.
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Which of the following is NOT a primary use of the financial reports of state and local governments? |
| | A) | Assist in evaluating efficiency and effectiveness |
| | B) | Assess financial condition and results of operations |
| | C) | Encourage governments to experiment with reporting more complete information about performance than can be displayed in traditional financial statements |
| | D) | Compare actual financial results with the legally adopted budget |
| | E) | Assist in determining compliance with finance-related laws, rules and regulations |
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| 12.
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In Concepts Statement No. 3, the Governmental Accounting Standards Board established a disclosure hierarchy for presenting information in a government's financial reports. Which of the following was not part of that hierarchy? |
| | A) | Disclosure directly to the government's auditor, with the potential that the auditor may modify the report to be issued |
| | B) | Presentation as supplementary information |
| | C) | Recognition in the basic financial statements |
| | D) | Disclosure in the notes to the financial statements |
| | E) | Presentation as required supplementary information |
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| 13.
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According to GASB Concepts Statements, accounting and reporting standards for state and local governments should meet the financial information needs of which of the following groups: |
| | A) | Investors and creditors |
| | B) | Legislative and oversight officials |
| | C) | Citizens groups |
| | D) | All of the above |
| | E) | None of the above |
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| 14.
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What measurement focus and basis of accounting is used in the government-wide financial statements? |
| | A) | Current financial resources measurement focus and modified accrual basis of accounting |
| | B) | Economic resources measurement focus and accrual basis of accounting |
| | C) | Economic resources measurement focus and modified accrual basis of accounting |
| | D) | Current financial resources measurement focus and accrual basis of accounting |
| | E) | None of the above |
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| 15.
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Which measurement focus and basis of accounting is used in the governmental fund financial statements? |
| | A) | Current financial resources measurement focus and modified accrual basis of accounting |
| | B) | Economic resources measurement focus and accrual basis of accounting |
| | C) | Economic resources measurement focus and modified accrual basis of accounting |
| | D) | Current financial resources measurement focus and accrual basis of accounting |
| | E) | None of the above |
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| 16.
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Which of the following is a level of governmental financial statement reporting? |
| | A) | Activity-based reporting |
| | B) | Fund-basis financial statements |
| | C) | Segment-level financial reports |
| | D) | Government-wide financial statements |
| | E) | Both B and D |
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| 17.
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Which of the following is NOT a governmental fund type? |
| | A) | Debt Service fund |
| | B) | Permanent fund |
| | C) | Capital Projects fund |
| | D) | Investment Trust fund |
| | E) | General fund |
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| 18.
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Which of the following is a proprietary fund type? |
| | A) | Pension trust fund |
| | B) | Enterprise fund |
| | C) | Permanent fund |
| | D) | Capital Projects fund |
| | E) | None of the above |
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| 19.
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Which of the following is NOT a fiduciary fund type? |
| | A) | Internal Service fund |
| | B) | Agency fund |
| | C) | Private-purpose Trust fund |
| | D) | Investment Trust fund |
| | E) | None of the above |
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| 20.
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Which of the following funds account for resources for which the government acts as a collecting/disbursing agent or as a trustee? |
| | A) | Special revenue funds |
| | B) | Fiduciary funds |
| | C) | Proprietary funds |
| | D) | Governmental funds |
| | E) | None of the above |
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| 21.
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Which of the following is NOT a component of the three-part budgetary principle that are a part of GASB standards? |
| | A) | Budgetary comparisons should be included in the appropriate financial statements and schedules for governmental funds for which an annual budget has been adopted |
| | B) | An annual budget(s) should be adopted by every governmental unit |
| | C) | The accounting system should provide the basis for appropriate budgetary control |
| | D) | The budgetary comparison statement is included in the basic financial statements in the Comprehensive Annual Financial Report |
| | E) | None of the above |
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| 22.
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Which of the following statements is true? |
| | A) | The measurement focus refers to what items are reported in financial statements, while the basis of accounting indicates when events are recognized in the accounting records. |
| | B) | Accrual accounting and the current financial resources measurement focus are used in preparing fund-basis financial statements. |
| | C) | A balance sheet prepared on the current financial resources measurement focus includes fixed assets and long-term liabilities. |
| | D) | The modified accrual basis for accounting recognizes revenues when they are earned and expected to be realized. |
| | E) | All of the above are true. |
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| 23.
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In the government-wide financial statements, |
| | A) | Enterprise funds are displayed as business-type activities, and internal service funds are not reported. |
| | B) | Enterprise funds and internal service funds are combined with the fiduciary funds for reporting purposes. |
| | C) | Internal service funds are usually included with governmental-type activities, and enterprise funds are displayed as business-type activities. |
| | D) | Each individual fund is reported as a separate column on the financial statements. |
| | E) | None of the above |
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| 24.
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For a state or local government, capital assets include |
| | A) | Land and improvements to land |
| | B) | Buildings, equipment, and vehicles |
| | C) | Infrastructure |
| | D) | All of the above |
| | E) | Both A and B |
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| 25.
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Which of the following statements about infrastructure is true? |
| | A) | Infrastructure includes land improvements, and infrastructure assets are not subject to depreciation. |
| | B) | Infrastructure includes immovable assets such as bridges and streets, and they must be depreciated unless the government chooses to use the modified approach. |
| | C) | Under the modified approach, a government can choose not to capitalize its infrastructure, but if the infrastructure is capitalized, it must be depreciated. |
| | D) | A government is not required to capitalize its infrastructure assets, but it must provide extensive disclosure about the nature and age of the assets. |
| | E) | Infrastructure assets are various intangible assets that have been developed by a state or local government. |
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| 26.
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Which of the following statements about long-term debt is true? |
| | A) | Reporting of long-term debt is not consistent with the current financial resources measurement focus, so this debt is not reported in any of the financial statements of the government. |
| | B) | Long-term debt, including bonds and leases payable, is reported on the government-wide Statement of Net Assets. |
| | C) | The current financial resources measurement focus requires a governmental fund to report its long-term liabilities, but not its fixed assets, on the fund-based financial statements. |
| | D) | Both B and C |
| | E) | None of the above |
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