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| 1.
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A state or local government unit would NOT use a fiduciary fund to account for assets it holds as a trustee or agent for which of the following? |
| | A) | Individuals not associated with the governmental unit |
| | B) | A department of the state or local government |
| | C) | Outside organizations |
| | D) | Other governmental units |
| | E) | None of the above |
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| 2.
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Which of the following is NOT a type of fiduciary fund, according to authoritative pronouncements? |
| | A) | Investment trust fund |
| | B) | Pension (or other employee benefit) trust fund |
| | C) | Nonexpendable trust fund |
| | D) | Agency fund |
| | E) | None of the above |
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| 3.
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Which of the following is NOT true of fiduciary funds? |
| | A) | Fiduciary funds use the current financial resources measurement focus and modified accrual basis of accounting |
| | B) | "Additions" and "deductions" are used in reporting trust fund activity instead of "revenues" and "expenses |
| | C) | Agency funds do not report revenues, expenses or net assets |
| | D) | Certain liabilities of some types of pension trust funds are recognized as required by GASB Statements 25 and 26 |
| | E) | None of the above |
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| 4.
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Which type of fiduciary fund would be used to account for assets contributed to a government, subject to a trust agreement that requires income (or principal) to be used to benefit certain individuals? |
| | A) | agency fund |
| | B) | private-purpose trust fund |
| | C) | investment trust fund |
| | D) | pension trust fund |
| | E) | none of these |
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| 5.
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Which type of fiduciary fund would be used to account for assets held temporarily for individuals, organizations, or other governments? |
| | A) | agency fund |
| | B) | private-purpose trust fund |
| | C) | investment trust fund |
| | D) | pension trust fund |
| | E) | none of these |
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| 6.
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Which of the following statements is true about the financial reporting for an agency fund? |
| | A) | Agency funds are included in the Statement of Fiduciary Net Assets but not in the Statement of Changes in Fiduciary Net Assets. |
| | B) | Agency funds are included in neither the Statement of Fiduciary Net Assets nor in the Statement of Changes in Fiduciary Net Assets. |
| | C) | Agency funds are not included in the Statement of Fiduciary Net Assets but they are included in the Statement of Changes in Fiduciary Net Assets. |
| | D) | Agency funds are included in both the Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets. |
| | E) | Agency funds are reported as a separate column in the government-wide Statement of Net Assets. |
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| 7.
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Which of the following statements about agency funds is NOT true? |
| | A) | In an agency fund, there is no fund equity. |
| | B) | An agency relationship may be accounted for within a governmental fund but not in a proprietary fund. |
| | C) | GASB requires an agency fund to be used to account for special assessment debt if the government has no responsibility for the debt payments. |
| | D) | Agency fund liabilities are recognized at the time the government becomes responsible for the assets recorded in the fund. |
| | E) | All of the above statements are true. |
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| 8.
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The Hall County tax collector is responsible for collecting property taxes of the county, the city of Hallville, and the Hallville school district. The county established a Tax Agency Fund to account for property taxes. For 2007, the property taxes levied by the county were $3,000,000; property taxes levied by Hallville were $1,400,000; and those levied by the school district were $3,900,000. Each entity expects that 3% of the property taxes will not be collected. What entry should be recorded in the Tax Agency Fund related to the tax levies? |
| | A) | debit Taxes Receivable — Current for $8,300,000; credit Due to Other Governments for $5,300,000 and Due to General Fund for $3,000,000 |
| | B) | Debit Taxes Receivable for Other Governments — Current for $5,141,000 and credit Due to Other Governments for $5,141,000 |
| | C) | Debit Taxes Receivable for Other Governments — Current for $5,300,000 and credit Due to Other Governments for $5,300,000 |
| | D) | Debit Taxes Receivable — Current for $8,051,000; credit Due to Other Governments for $5,141,000 and Due to General Fund for $2,910,000 |
| | E) | None of the above |
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| 9.
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Which of the following is NOT true of an agency fund? |
| | A) | Assets accounted for in an agency fund belong to the party or parties for which the government acts as agent |
| | B) | Agency fund assets and liabilities are recognized at the time the government becomes responsible for the assets |
| | C) | Additions and deductions are not recognized in the accounts of agency funds |
| | D) | Agency funds report fund equity |
| | E) | All of the above are true |
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| 10.
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Assume that the treasurer of County of C is responsible for collecting and distributing all tax revenues for all governmental units, such as school districts, within the county. The treasurer uses a Tax Agency Fund to account for all property tax collection activities. During the current fiscal year, the treasurer has amounts of $4,000,000 and $1,500,000 certified to her by a school district and a town within the county, respectively. The treasurer is responsible for collecting and distributing the taxes. The Tax Agency Fund's entry to record the certified levy amounts for the other governments would be: |
| | A) | Debit Taxes Receivable for Other Governments - Current, credit Due to Other Governments for $4,000,000 |
| | B) | Debit Taxes Receivable for Other Governments - Current, credit Due to Other Governments for $5,500,000 |
| | C) | Debit Taxes Receivable for Other Governments - Current, credit Revenues Control for $4,000,000 |
| | D) | Debit Taxes Receivable for Other Governments - Current, credit Revenues Control for $5,500,000 |
| | E) | None of the above |
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| 11.
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Assume that the treasurer of County of C is responsible for collecting and distributing all tax revenues for all governmental units, such as school districts, within the county. The treasurer uses a Tax Agency Fund to account for all property tax collection activities. During the current fiscal year, the treasurer has amounts of $4,000,000 and $1,500,000 certified to her by a school district and a town within the county, respectively, which the treasurer will be responsible for collecting and distributing. In the month of January, 40 percent of the levies for the school district and the town were collected. What entry in the Tax Agency Fund would be required to record these collections? |
| | A) | Debit Cash, credit Taxes Receivable for Other Governments - Current for $1,600,000 |
| | B) | Debit Cash, credit Taxes Receivable for Other Governments - Current for $600,000 |
| | C) | Debit Cash, credit Taxes Receivable for Other Governments - Current for $2,200,000 |
| | D) | Debit Cash, credit Revenues Control for $2,200,000 |
| | E) | None of the above |
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| 12.
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Assume that the treasurer of County of C is responsible for collecting and distributing all tax revenues for all governmental units, such as school districts, within the county. The treasurer uses a Tax Agency Fund to account for all property tax collection activities. During the current fiscal year, the treasurer has amounts of $4,000,000 and $1,500,000 certified to her by a school district and a town within the county, respectively, which the treasurer will be responsible for collecting and distributing. As compensation for the cost of operating the Tax Agency Fund, the County of C charges a collection fee equal to 1 percent of all collections, which is distributed to the County General Fund. This amount is calculated at the time cash is collected, although the cash is not transferred to the town and school district immediately. Assume that the Tax Agency Fund collected 40 percent of the levies for the school district and the town. What journal entry would be required to record the specific liabilities to the town, school district, and County General Fund? |
| | A) | Debit: Due to Other Governments $2,200,000 Credit: Due to County General Fund $22,000 Credit: Due to School District $1,584,000 Credit: Due to Town $594,000 |
| | B) | Debit: Due from Other Governments $2,200,000 Credit: Cash $2,200,000 |
| | C) | Debit: Due to Other Governments $2,200,000 Credit: Cash $2,200,000 |
| | D) | Debit: Due to Other Governments $2,200,000 Credit: Due to School District $1,600,000 Credit: Due to Town $600,000 |
| | E) | None of the above |
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| 13.
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Which of the following is NOT true of a private-purpose trust fund? |
| | A) | It is intended to account for a trust agreement in which the principal and/or income benefits individuals, private organizations or other governments |
| | B) | The trust agreement may be the result of a contribution of resources by an individual or organization, which specified that others will benefit from the gift |
| | C) | The trust agreement may specify that principal is nonexpendable, creating an endowment |
| | D) | Benefits from the trust are limited to specific private purposes |
| | E) | All of the above are true |
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| 14.
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GASB Statement 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, applies to which of the following? |
| | A) | External investment pools |
| | B) | Interest-earning investment contracts and open-end mutual funds |
| | C) | Debt and equity securities that have readily determinable fair values |
| | D) | All of the above |
| | E) | None of the above |
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| 15.
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In 2007, a wealthy philanthropist contributed $1,000,000 to the City of P. She signed a trust agreement, specifying that the principal amount was to be invested and never expended. The income is to be used to provide selected graduates from the City's high schools with scholarships to the colleges of their choice. City of P established a private-purpose trust fund to account for the activities of the trust agreement. The entry to record the contribution would be: |
| | A) | Debit Cash, credit Revenues Control for $1,000,000 |
| | B) | Debit Cash, credit Additions - Contributions for $1,000,000 |
| | C) | Debit Accounts Receivable, credit Revenues Control for $1,000,000 |
| | D) | Debit Accounts Receivable, credit Additions - Contributions for $1,000,000 |
| | E) | None of the above |
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| 16.
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In 2007, a wealthy philanthropist contributed $1,000,000 to the City of P. She signed a trust agreement specifying that the principal amount was to be invested and never expended. The income is to be used to provide selected graduates from the City's high schools with scholarships to the colleges of their choice. City of P established a private-purpose trust fund to account for the activities of the trust agreement. On April 1, 2007, the City's management bought ABC Company's 8% bonds as an investment, for $500,000 plus accrued interest. The amount of accrued interest was $10,000. The entry to record the purchase of the investment would be: |
| | A) | Debit: Investment in ABC Bonds $510,000 Credit: Cash $510,000 |
| | B) | Debit: Investment in ABC Bonds $500,000 Credit: Cash $500,000 |
| | C) | Debit: Investment in ABC Bonds $500,000 Debit: Accrued Interest Receivable $10,000 Credit: Cash $510,000 |
| | D) | Debit: Investment in ABC Bonds $500,000 Debit: Accrued Interest Receivable $40,000 Credit: Cash $540,000 |
| | E) | None of the above |
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| 17.
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In 2007, a wealthy philanthropist contributed $1,000,000 to the City of P. She signed a trust agreement specifying that the principal amount was to be invested and never expended. The income is to be used to provide selected graduates from the City's high schools with scholarships to the colleges of their choice. City of P established a private-purpose trust fund to account for the activities of the trust agreement. In July 2007, $10,000 in scholarships were awarded; the cash was disbursed immediately. The entry to record this transaction would be: |
| | A) | Debit Deductions - Scholarship Awards, credit Cash for $10,000 |
| | B) | Debit Scholarship Awards Expense, credit Cash for $10,000 |
| | C) | Debit Deductions - Scholarship Awards, credit Accounts Payable for $10,000 |
| | D) | Debit Scholarship Awards Expense, credit Accounts Payable for $10,000 |
| | E) | None of the above |
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| 18.
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In 2007, a wealthy philanthropist contributed $1,000,000 to the City of P. She signed a trust agreement specifying that the principal amount was to be invested and never expended. The income is to be used to provide selected graduates from the City's high schools with scholarships to the colleges of their choice. City of P established a private-purpose trust fund to account for the activities of the trust agreement. On April 1, 2007, the city's management purchased ABC Company bonds as an investment for $500,000. The bonds pay interest at 8% on July 1 and January 1. On December 31, 2007, what journal entry would be required to accrue interest for July through December? |
| | A) | Debit Accrued Interest Receivable, credit Interest Revenue for $20,000 |
| | B) | Debit Accrued Interest Receivable, credit Additions - Investment Earnings - Interest for $40,000 |
| | C) | Debit Accrued Interest Receivable, credit Interest Revenue for $40,000 |
| | D) | Debit Accrued Interest Receivable, credit Additions - Investment Earnings - Interest for $20,000 |
| | E) | None of the above |
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| 19.
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If property is abandoned or if the legal owners cannot be found, the property is turned over to state governments until the legal owners can be found. What is the term for this type of property? |
| | A) | Abandoned property |
| | B) | Escheat property |
| | C) | Government property |
| | D) | Deserted property |
| | E) | None of the above |
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| 20.
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Investment trust funds are used to account for which of the following? |
| | A) | Internal investment pools |
| | B) | External investment pools |
| | C) | The external portion of a multigovernment investment pool |
| | D) | The internal portion of a multigovernment investment pool |
| | E) | None of the above |
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| 21.
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Which of the following statements about investment trust funds is NOT true? |
| | A) | If a government has an internal investment pool, the pool should be distributed among the funds providing the resources when financial statements are prepared. |
| | B) | Investment trust funds are accounted for using the current financial resources measurement focus and the accrual basis of accounting. |
| | C) | If a government participates in a multi-government investment pool, the internal portion is to be spread out among the funds providing the resources. |
| | D) | Both B and C are not true |
| | E) | A, B, and C are not true |
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| 22.
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A local government participates in a pension plan that is administered by the state. It does not have its own separate account within the pension plan, and unfunded actuarial liabilities are made up on a statewide basis. The plan described is which of the following? |
| | A) | Multiemployer cost-sharing plan |
| | B) | Single employer plan |
| | C) | Multiemployer agency plan |
| | D) | All of the above |
| | E) | None of the above |
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| 23.
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A local government maintains a pension plan for its own employees. Under this plan, it is required to pay out 2 percent times the average salary over the last four years worked times the number of years worked to each employee upon retirement, regardless of the amount available in the plan. The type of plan described is: |
| | A) | Defined contribution |
| | B) | Contributory |
| | C) | Noncontributory |
| | D) | Defined benefit |
| | E) | None of the above |
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| 24.
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Which of the following is NOT one of the financial reporting requirements for stand-alone pension plans? |
| | A) | Schedule of Funding Progress |
| | B) | Statement of Changes in Plan Net Assets |
| | C) | Schedule of Employer Contributions |
| | D) | Statement of Plan Net Assets |
| | E) | All of the above are required |
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| 25.
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County of L maintains a pension plan for its employees, accounted for in a pension trust fund. During the fiscal year ended December 31, 2007, member contributions amounted to $250,000 and employer contributions amounted to $250,000. The entry to record this activity would be: |
| | A) | Debit: Cash $500,000 Credit: Additions - Contributions $500,000 |
| | B) | Debit: Cash $500,000 Credit: Additions - Contributions - Plan Members $250,000 Credit: Additions - Contributions - Employer $250,000 |
| | C) | Debit: Cash $500,000 Credit: Contributions Revenue $500,000 |
| | D) | Debit: Cash $500,000 Credit: Contributions Revenue - Plan Members $250,000 Credit: Contributions Revenue - Employer $250,000 |
| | E) | None of the above |
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| 26.
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County of L maintains a pension plan for its employees, accounted for in a pension trust fund. Annuity benefits of $150,000 were recorded as liabilities. The entry to record this transaction would be: |
| | A) | Debit Annuity Benefits Expense, credit Cash for $150,000 |
| | B) | Debit Deductions - Annuity Benefits, credit Cash for $150,000 |
| | C) | Debit Deduction - Annuity Benefits, credit Accounts Payable for $150,000 |
| | D) | Debit Annuity Benefits Expense, credit Accounts Payable for $150,000 |
| | E) | None of the above |
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| 27.
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County of L maintains a pension plan for its employees, accounted for in a pension trust fund. Terminated employees whose benefits were not yet vested were refunded $75,000 in cash. The entry to record this transaction would be: |
| | A) | Debit Deductions - Refunds to Terminated Employees, credit Cash for $75,000 |
| | B) | Debit Deductions - Refunds to Terminated Employees, credit Accounts Payable for $75,000 |
| | C) | Debit Refunds Expense, credit Cash for $75,000 |
| | D) | Debit Refunds Expense, credit Accounts Payable for $75,000 |
| | E) | None of the above |
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| 28.
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County of L maintains a pension plan for its employees, accounted for in a pension trust fund. An investment with a carrying cost of $250,000 matured, and cash in that amount was received. The entry to record this transaction would be: |
| | A) | Debit Interest Receivable, credit Investments for $250,000 |
| | B) | Debit Cash, credit Interest Receivable for $250,000 |
| | C) | Debit Investments, credit Cash for $250,000 |
| | D) | Debit Cash, credit Investments for $250,000 |
| | E) | None of the above |
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| 29.
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Which of the following is NOT required to be presented for a Schedule of Funding Progress for a defined benefit pension plan? |
| | A) | The actuarial value of plan assets for at least the past six fiscal years |
| | B) | The actuarial liability for at least the past six fiscal years |
| | C) | The total unfunded actuarial liability for at least the past six fiscal years |
| | D) | The annual covered payroll for at least the past six fiscal years |
| | E) | All of the above are required |
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| 30.
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Which of the following is required to be included in the three-year schedules in the notes to the financial statements for all defined benefit plans? |
| | A) | Annual pension cost |
| | B) | Percentage of annual pension cost contributed |
| | C) | Net pension obligation at the end of the year |
| | D) | All of the above |
| | E) | None of the above |
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| 31.
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What financial statements must be prepared for other postemployment benefits? |
| | A) | a Statement of Plan Net Assets |
| | B) | a Statement of Changes in Plan Net Assets |
| | C) | A Statement of Funding Progress |
| | D) | both A and B |
| | E) | A, B, and C |
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| 32.
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How would GASB Statements No. 25, 27, 43, and 45 be correctly described? |
| | A) | GASB Statements No. 25 and 43 specify reporting for pension plans and other post-employment benefit (OPEB) plans, respectively; Statements No. 27 and 45 specify employer reporting for pension plans and OPEB plans, respectively |
| | B) | GASB Statements No. 25 and 27 specify accounting standards for single-employer pension plans, while Statements No. 43 and 45 were written for multiple-employer plans |
| | C) | GASB Statements No. 25 and 27 specify the nature of financial statements for pension plans and OPEB plans, while Statements No. 43 and 45 specify disclosure requirements |
| | D) | All four of the Statements were written for pension plans; Statements No. 43 and 45 supercede 25 and 27 |
| | E) | None of the above |
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| 33.
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A loan made by the General Fund to an internal service fund was short-term in nature. This transaction is an example of which of the following? |
| | A) | Reciprocal interfund activity - Interfund Loan |
| | B) | Nonreciprocal interfund activity - Interfund Transfer |
| | C) | Reciprocal interfund activity - Interfund Service Provided and Used |
| | D) | Nonreciprocal interfund activity - Interfund Reimbursements |
| | E) | None of the above |
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| 34.
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An internal service fund issues supplies to the General Fund. This transaction is an example of which of the following? |
| | A) | Reciprocal interfund activity - Interfund Loan |
| | B) | Nonreciprocal interfund activity - Interfund Transfer |
| | C) | Reciprocal interfund activity - Interfund Service Provided and Used |
| | D) | Nonreciprocal interfund activity - Interfund Reimbursements |
| | E) | None of the above |
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| 35.
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The General Fund transfers an amount annually to the Debt Service Fund for repayment of outstanding general obligation debt. This transaction is an example of which of the following? |
| | A) | Reciprocal interfund activity - Interfund Service Provided and Used |
| | B) | Nonreciprocal interfund activity - Interfund Reimbursements |
| | C) | Reciprocal interfund activity - Interfund Loan |
| | D) | Nonreciprocal interfund activity - Interfund Transfer |
| | E) | None of the above |
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| 36.
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A special revenue fund transfers an amount to the General Fund for an expenditure which should initially have been charged to the special revenue fund. This transaction is an example of which of the following? |
| | A) | Reciprocal interfund activity - Interfund Service Provided and Used |
| | B) | Nonreciprocal interfund activity - Interfund Reimbursements |
| | C) | Reciprocal interfund activity - Interfund Loan |
| | D) | Nonreciprocal interfund activity - Interfund Transfer |
| | E) | None of the above |
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