Accounting for Governmental & Nonprofit Entities Jacqueline Reck 18th – Test Bank
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Sample Test
Accounting for Governmental and Nonprofit Entities, 18e (Reck)
Chapter 3 Governmental Operating Statement Accounts;
Budgetary Accounting
1) The government-wide statement of net position displays the
net expense or revenue for each function or program of the government.
Answer: FALSE
Difficulty: 1 Easy
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the
government-wide statement of activities.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
2) Program revenues are distinguished from general revenues on
the government-wide statement of activities under GASB standards.
Answer: TRUE
Difficulty: 1 Easy
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the
government-wide statement of activities.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
3) Three categories of program revenues are reported in the statement
of activities: charges for services, operating grants and contributions, and
capital grants and contributions.
Answer: TRUE
Difficulty: 1 Easy
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the
government-wide statement of activities.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
4) All purchases of goods and services and all interfund
transfers of the General Fund are recorded as Expenditures.
Answer: FALSE
Difficulty: 1 Easy
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
5) Interfund transfers are shown as general revenues on the
government-wide statement of activities.
Answer: FALSE
Difficulty: 1 Easy
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the
government-wide statement of activities.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
6) Contributions to permanent funds are shown on a separate line
below the general revenues on the government-wide statement of activities.
Answer: TRUE
Difficulty: 1 Easy
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the
government-wide statement of activities.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
7) On the government-wide statement of activities, depreciation
expense for assets that essentially benefit all functions, such as the city
hall, may be reported as a separate line item or on the same line as the
General Government or similar function.
Answer: TRUE
Difficulty: 1 Easy
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the
government-wide statement of activities.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
8) Other financing sources and uses are disclosed in a separate
section below expenditures on the statement of revenues, expenditures, and
changes in fund balances.
Answer: TRUE
Difficulty: 1 Easy
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
9) Expenses represent the costs to purchase goods or services,
whereas expenditures represent the costs of goods or services consumed or
expired during the period.
Answer: FALSE
Difficulty: 1 Easy
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
10) Other financing sources increase fund balance in the same
manner as revenues.
Answer: TRUE
Difficulty: 1 Easy
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
11) Budgetary accounts used in the General Fund include
Estimated Revenues, Estimated Other Financing Sources, Appropriations,
Estimated Other Financing Uses, and Encumbrances.
Answer: TRUE
Difficulty: 1 Easy
Topic: Reporting budgeted and actual results
Learning Objective: 03-03 Discuss budgetary reporting.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
12) All encumbrances must be closed at year-end.
Answer: FALSE
Difficulty: 1 Easy
Topic: Reporting budgeted and actual results
Learning Objective: 03-03 Discuss budgetary reporting.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
13) An encumbrance represents the estimated future liability for
goods or services resulting from placing a purchase order or signing a
contract.
Answer: TRUE
Difficulty: 1 Easy
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
14) GASB standards require that all state and local governments
present a statement of revenues, expenditures, and changes in fund balances—budget
and actual for the General Fund and major special revenue funds for which
annual budgets have been legally adopted.
Answer: FALSE
Difficulty: 2 Medium
Topic: Reporting budgeted and actual results
Learning Objective: 03-03 Discuss budgetary reporting.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
15) Available means
that a revenue or other financing source is expected to be collected during the
current fiscal period or within one month of the fiscal year end.
Answer: FALSE
Difficulty: 1 Easy
Topic: Terminology and classification for budgetary and
operating statement accounts
Learning Objective: 03-04 Explain how budgetary and
operating statement accounts are classified in the governmental funds.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
16) The legal level of budgetary control represents the
administrative level at which expenditures may not exceed appropriations
without a formal budgetary amendment.
Answer: TRUE
Difficulty: 1 Easy
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
17) “Available appropriation” is calculated as the difference
between appropriations and the sum of expenditures and encumbrances.
Answer: TRUE
Difficulty: 1 Easy
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
18) When goods for which an encumbrance has been recorded are
received at an invoiced amount that varies from the amount encumbered, the
encumbrance is reversed in the amount of the actual invoiced cost of the goods.
Answer: FALSE
Difficulty: 1 Easy
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
19) An allotment may be described as an internal allocation of
funds on a periodic basis usually agreed upon by the department heads and the
chief executive.
Answer: TRUE
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
20) In the GASB reporting model, extraordinary items and special
items must be reported as separate line items below General Revenues in the
statement of activities to distinguish these nonrecurring items from normal
recurring general revenues.
Answer: TRUE
Difficulty: 1 Easy
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the
government-wide statement of activities.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
21) The numerical difference between (1) current assets and
deferred outflows and (2) current liabilities and deferred inflows recorded in
governmental funds is denoted as net position.
Answer: FALSE
Difficulty: 1 Easy
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
22) Encumbrance accounting is required in the accounting for
payroll of governmental funds.
Answer: FALSE
Difficulty: 1 Easy
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
23) When an activity accounted for by the General Fund results
in issuance of purchase orders or contracts for goods or services a record must
be kept, but no journal entries in the General Fund are necessary.
Answer: FALSE
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
24) Any balance in Encumbrances Outstanding that remains at the
end of the fiscal year is reported as a line item under Fund Balances on the
governmental funds balance sheet.
Answer: FALSE
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
25) At the end of the fiscal year Encumbrances is closed to
Budgetary Fund Balance with a credit.
Answer: FALSE
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
26) Public school systems tend to follow the revenue and
expenditure classifications of the National Center for Education Statistics
rather than the GASB classifications.
Answer: TRUE
Difficulty: 1 Easy
Topic: Accounting for public school systems
Learning Objective: 03-06 Explain the classification of
revenues and expenditures of a public school system.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
27) The fund classification system used by public schools
follows the GASB standards.
Answer: TRUE
Difficulty: 1 Easy
Topic: Accounting for public school systems
Learning Objective: 03-06 Explain the classification of
revenues and expenditures of a public school system.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
28) Public school systems prepare their financial reports in
accordance with the requirements of the National Center for Education
Statistics.
Answer: FALSE
Difficulty: 1 Easy
Topic: Accounting for public school systems
Learning Objective: 03-06 Explain the classification of
revenues and expenditures of a public school system.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
29) Which of the following best describes the recommended format
for the government-wide statement of activities?
1. A)
Program revenues minus expenses minus other revenues and expenses equals change
in net position.
2. B)
Program revenues plus general revenues minus expenses equals change in net
position.
3. C)
Program revenues minus expenses plus general revenues equals change in net
position.
4. D)
Expenses minus program revenues plus general revenues equals change in net
position.
Answer: D
Difficulty: 1 Easy
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the
government-wide statement of activities.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
30) Which of the following statements is not a true statement
about expenses that are directly related to a government function or program?
1. A)
They are reported in the government-wide statement of activities at the
government-wide level.
2. B)
They include expenses that are specifically associated with a function or
program.
3. C)
They include interest on general long-term liabilities.
4. D)
They include depreciation expense on capital assets that are clearly identified
with a function or program.
Answer: C
Difficulty: 1 Easy
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the
government-wide statement of activities.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
31) Which of the following is not a category of program revenue
reported on the statement of activities at the government-wide level?
1. A)
General program revenues.
2. B)
Charges for services.
3. C)
Operating grants and contributions.
4. D)
Capital grants and contributions.
Answer: A
Difficulty: 1 Easy
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the
government-wide statement of activities.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
32) Extraordinary items and special items are reported on the
government-wide statement of activities.
1. A)
With normal recurring general revenues.
2. B) As
separate line items in the Function/Programs section of the statement of
activities.
3. C) As
separate line items below General Revenues in the statement of activities.
4. D) As
separate line items above General Revenues.
Answer: C
Difficulty: 2 Medium
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the
government-wide statement of activities.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
33) Which of the following items would not appear in a statement
of revenues, expenditures, and changes in fund balances prepared for a
governmental fund?
1. A)
Depreciation expense.
2. B)
Interfund transfers in.
3. C)
Revenues from property taxes.
4. D)
Expenditures for employee salaries.
Answer: A
Difficulty: 1 Easy
Topic: Structure and characteristics of the General Fund
and other governmental funds; Governmental Fund Revenues and Expenditures
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
34) Which of the following would always be classified as a
general revenue?
1. A)
Grant proceeds.
2. B)
Special assessment charges for snow removal.
3. C)
Library fines.
4. D)
Fuel taxes earmarked for maintenance of roads and bridges.
Answer: D
Difficulty: 2 Medium
Topic: Reporting of expenses and revenues at the
government-wide level
Learning Objective: 03-01 Describe how operating revenues
and expenses related to governmental activities are reported in the government-wide
statement of activities.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting
35) The cost to purchase a good or service is the definition of
an
1. A)
Expenditure.
2. B)
Expense.
3. C)
Other financing use.
4. D)
Interfund transfer out.
Answer: A
Difficulty: 1 Easy
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
36) Which of the following would not appear on a governmental
fund balance sheet?
1. A)
Accounts receivable.
2. B)
Inventory.
3. C)
Vouchers payable.
4. D)
Bonds payable.
Answer: D
Difficulty: 2 Medium
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
37) When the budget for the General Fund is recorded, the
required journal entry will include:
1. A) A
credit to Estimated Revenues.
2. B) A
debit to Encumbrances.
3. C) A
credit to Appropriations.
4. D) A
credit to Fund Balance.
Answer: C
Difficulty: 1 Easy
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting
38) When the budget of a government is recorded and
Appropriations exceeds Estimated Revenues, the Budgetary Fund Balance account
is:
1. A)
Credited at the beginning of the year and debited at the end of the year.
2. B)
Credited at the beginning of the year and no entry is made at the end of the
year.
3. C)
Debited at the beginning of the year and no entry is made at the end of the
year.
4. D)
Debited at the beginning of the year and credited at the end of the year.
Answer: D
Difficulty: 1 Easy
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
39) Which of the following accounts is a budgetary account of a
governmental fund?
1. A)
Encumbrances.
2. B)
Appropriations.
3. C)
Expenditures.
4. D)
Other Financing Sources.
Answer: B
Difficulty: 1 Easy
Topic: Reporting budgeted and actual results
Learning Objective: 03-03 Discuss budgetary reporting.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
40) The Estimated Revenues control account of a government is
credited when:
|
|
Budgetary accountsare closed |
Revenues arerecorded |
|
A) |
Yes |
No |
|
B) |
No |
No |
|
C) |
No |
Yes |
|
D) |
Yes |
Yes |
1. A)
Choice A.
2. B)
Choice B.
3. C)
Choice C.
4. D) Choice
D.
Answer: A
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting
41) Under the modified accrual basis of accounting used by the
General Fund, financial resources are considered available if the revenue or
other financing source is expected to be collected
1. A)
Within 60 days after year-end.
2. B)
Within 90 days after year-end.
3. C)
During the current fiscal period.
4. D)
During the current fiscal period or soon enough after year-end to pay current
period obligations.
Answer: D
Difficulty: 2 Medium
Topic: Terminology and classification for budgetary and
operating statement accounts
Learning Objective: 03-04 Explain how budgetary and
operating statement accounts are classified in the governmental funds.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
42) Which of the following accounts of a government is credited
when a purchase order is approved?
1. A)
Encumbrances.
2. B)
Encumbrances Outstanding.
3. C)
Vouchers Payable.
4. D)
Appropriations.
Answer: B
Difficulty: 1 Easy
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting
43) The Expenditures control account of a government is debited
when:
1. A)
The supplies budget is recorded.
2. B)
Supplies are ordered.
3. C)
Supplies previously encumbered are received.
4. D)
The invoice for supplies is paid.
Answer: C
Difficulty: 1 Easy
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting
44) Which of the following is true regarding other financing
sources and other financing uses?
1. A)
Both must be reported separately from revenues and expenditures in the
statement of revenues, expenditures, and changes in fund balances.
2. B)
These terms are used to distinguish program revenues or expenses from general
revenues or expenses.
3. C)
These terms are used for minor revenue or expenditure items that are peripheral
to the government’s mission.
4. D)
Other financing sources are equivalent to gains and other financing uses are
equivalent to losses.
Answer: A
Difficulty: 2 Medium
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
45) Under which basis of accounting for a government should
revenues be recognized in the period when they are measurable and available?
|
|
Accrual basis |
Modified accrual basis |
|
A) |
Yes |
No |
|
B) |
No |
No |
|
C) |
No |
Yes |
|
D) |
Yes |
Yes |
1. A)
Choice A.
2. B)
Choice B.
3. C)
Choice C.
4. D)
Choice D.
Answer: C
Difficulty: 1 Easy
Topic: Terminology and classification for budgetary and
operating statement accounts
Learning Objective: 03-04 Explain how budgetary and
operating statement accounts are classified in the governmental funds.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
46) The expenditure classification “Public Safety” is an example
of which of the following types of classifications?
1. A)
Activity.
2. B)
Function.
3. C)
Character.
4. D)
Object.
Answer: B
Difficulty: 1 Easy
Topic: Terminology and classification for budgetary and
operating statement accounts
Learning Objective: 03-04 Explain how budgetary and operating
statement accounts are classified in the governmental funds.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
47) When supplies ordered for use in an activity accounted for
in the General Fund are received at an actual price that is more than the
estimated price on the purchase order, the Encumbrance account is:
1. A)
Debited for the estimated price on the purchase order.
2. B)
Credited for the estimated price on the purchase order.
3. C)
Debited for the actual price for the supplies received.
4. D)
Credited for the actual price for the supplies received.
Answer: B
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
48) A statement of revenues, expenditures, and changes in fund
balances—budget and actual is:
1. 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.
2. B)
Required by GAAP for internal management reports only; not permitted for
external financial reporting.
3. C)
Required by GAAP for all governmental fund types.
4. D)
Optional under GAAP, as long as a budgetary comparison schedule is presented.
Answer: D
Difficulty: 3 Hard
Topic: Reporting budgeted and actual results
Learning Objective: 03-03 Discuss budgetary reporting.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
49) The account “Interfund Transfers In” would be classified in
a General Fund statement of revenues, expenditures, and changes in fund balance
as a(an):
1. A)
Revenue.
2. B)
Other financing use.
3. C)
Other financing source.
4. D)
Current liability.
Answer: C
Difficulty: 1 Easy
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
50) The expenditure classification “City Attorney” is an example
of which of the following types of classification?
1. A)
Function.
2. B)
Organization unit.
3. C)
Character.
4. D)
Program.
Answer: B
Difficulty: 2 Medium
Topic: Terminology and classification for budgetary and
operating statement accounts
Learning Objective: 03-04 Explain how budgetary and
operating statement accounts are classified in the governmental funds.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
51) When the budget of a government is adopted and Estimated
Revenues exceed Appropriations, the excess is:
1. A)
Credited to Budgetary Fund Balance.
2. B)
Debited to Budgetary Fund Balance.
3. C)
Debited to Encumbrances Outstanding.
4. D)
Credited to Encumbrances Outstanding.
Answer: A
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
52) Which of the following depict the typical order of steps in
the acquisition of goods and services by an activity accounted for by the
General Fund?
1. A)
Appropriation, disbursement, encumbrance, expenditure.
2. B)
Appropriation, encumbrance, expenditure, disbursement.
3. C) Encumbrance,
appropriation, expenditure, disbursement.
4. D)
Encumbrance, expenditure, appropriation, disbursement.
Answer: B
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting
53) When equipment that is to be used by the General Fund is
received, how should it be recorded?
1. A)
Capital Asset.
2. B)
Appropriation.
3. C)
Encumbrances.
4. D)
Expenditure.
Answer: D
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
54) The journal entry to record budgeted revenues will include:
1. A) A
debit to Estimated Revenues.
2. B) A
credit to Estimated Revenues.
3. C) A
debit to Revenues Receivable.
4. D)
Only a memorandum entry is necessary.
Answer: A
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
55) The County Commission of Seminole County adopted its General
Fund budget for the year ending June 30, comprising estimated revenues of
$13,200,000 and appropriations of $12,900,000. Seminole County utilizes the
budgetary accounts required by GASB standards. The journal entry to record
budgeted appropriations will include:
1. A) A
credit to Appropriations, $12,900,000.
2. B) A
credit to Encumbrances, $12,900,000.
3. C) A
debit to Estimated Expenditures, $12,900,000.
4. D) A
credit to Budgetary Fund Balance, $12,900,000.
Answer: A
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting
56) One characteristic that distinguishes other financing
sources from revenues is that other financing sources:
1. A)
Arise from debt issuances or interfund transfers in.
2. B)
Increase fund balances when they are closed at year-end.
3. C)
Provide financial resources for the recipient fund.
4. D)
Have a normal credit balance.
Answer: A
Difficulty: 3 Hard
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
57) The process by which a legal valuation is placed on taxable
property is called:
1. A) An
appropriation.
2. B) A
property tax levy.
3. C)
Property assessment.
4. D) Ad
valorem determination.
Answer: C
Difficulty: 2 Medium
Topic: Terminology and classification for budgetary and
operating statement accounts
Learning Objective: 03-04 Explain how budgetary and
operating statement accounts are classified in the governmental funds.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
58) The County Commission of Canyon County adopted its General
Fund budget for the year ending June 30, comprising estimated revenues of
$13,200,000 and appropriations of $12,900,000. The budgeted excess of estimated
revenues over appropriations will be recorded as:
1. A) A
credit to Surplus Revenues, $300,000.
2. B) A
debit to Estimated Excess Revenues, $300,000.
3. C) A
credit to Budgetary Fund Balance, $300,000.
4. D) A
memorandum entry only.
Answer: C
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting
59) When the budget for the General Fund is recorded, the
required journal entry will include:
1. A) A
credit to Estimated Revenues.
2. B) A
debit to Encumbrances.
3. C) A
debit to Appropriations.
4. D)
Either a debit or credit to Budgetary Fund Balance, as appropriate.
Answer: D
Difficulty: 1 Easy
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Apply
AACSB: Knowledge Application
AICPA: FN Reporting
60) Which of the following accounts is not closed at the
end of the reporting period?
1. A)
Deferred inflows of resources.
2. B)
Revenues.
3. C)
Expenditures.
4. D)
Other financing sources.
Answer: A
Difficulty: 3 Hard
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
61) The expenditure classification “Current Expenditures” is an
example of which of the following types of classifications?
1. A)
Activity.
2. B)
Character.
3. C)
Function.
4. D)
Object.
Answer: B
Difficulty: 2 Medium
Topic: Terminology and classification for budgetary and
operating statement accounts
Learning Objective: 03-04 Explain how budgetary and
operating statement accounts are classified in the governmental funds.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
62) Which of the following statements is true regarding the
required disclosure of budgetary information?
1. A)
All budgetary disclosures should be presented in the notes to the financial
statements.
2. B)
There is one specific format for presenting the budgetary comparison statement.
3. C)
Budgetary comparisons may be presented as a statement or as required
supplementary information (RSI).
4. D)
The budgetary reconciliation must focus on the operating statement, but not the
statement of position.
Answer: C
Difficulty: 2 Medium
Topic: Reporting budgeted and actual results
Learning Objective: 03-03 Discuss budgetary reporting.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
63) The Encumbrances control account of a city is decreased when
|
|
Goods are ordered |
Goods are received |
|
A) |
Yes |
No |
|
B) |
No |
No |
|
C) |
No |
Yes |
|
D) |
Yes |
Yes |
1. A)
Choice A.
2. B)
Choice B.
3. C)
Choice C.
4. D) Choice
D.
Answer: C
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
64) Under the modified accrual basis of accounting, expenditures
generally are not recognized until:
1. A)
They are paid in cash.
2. B) An
obligation is incurred that will be paid from currently available financial
resources.
3. C)
Goods or services are ordered.
4. D)
They are approved by the legislative body.
Answer: B
Difficulty: 2 Medium
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
65) Which of the following fund types uses the current financial
resources measurement focus and modified accrual basis of accounting?
1. A) Enterprise
fund.
2. B)
Special revenue fund.
3. C)
Investment trust fund.
4. D)
Pension trust fund.
Answer: B
Difficulty: 2 Medium
Topic: Structure and characteristics of the General Fund
and other governmental funds
Learning Objective: 03-02 Distinguish, in governmental
funds, between Revenues and Other Financing Sources and between Expenditures
and Other Financing Uses.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
66) Which of the following will increase the fund balance of a
government at the end of the fiscal year?
1. A)
The sum of revenues and other financing sources is more than the sum of
expenditures and other financing uses.
2. B)
Expenditures are more than the difference between revenues and the excess of
other financing sources over other financing uses.
3. C)
Revenues are less than the sum of expenditures, other financing sources, and
other financing uses.
4. D)
The sum of fund balance, revenues, and other financing sources is more than the
sum of expenditures and other financing uses.
Answer: A
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
67) A liability is recorded in governmental funds when:
1. A)
Goods or services are ordered.
2. B)
Goods or services are received and the invoice is vouchered.
3. C)
Invoices are paid.
4. D)
The appropriation is reduced.
Answer: B
Difficulty: 2 Medium
Topic: Terminology and classification for budgetary and
operating statement accounts
Learning Objective: 03-04 Explain how budgetary and
operating statement accounts are classified in the governmental funds.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
68) Which of the following terms refers to an actual cost rather
than an estimate?
1. A)
Budget.
2. B)
Encumbrance.
3. C)
Expenditure.
4. D)
Appropriation.
Answer: C
Difficulty: 2 Medium
Topic: Terminology and classification for budgetary and
operating statement accounts
Learning Objective: 03-04 Explain how budgetary and
operating statement accounts are classified in the governmental funds.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
69) For what funds do budgetary comparisons need to be presented
in connection with the basic financial statements?
1. A)
General Fund.
2. B)
General Fund and all major funds.
3. C)
All governmental funds with legally adopted annual budgets.
4. D)
General Fund and major special revenue funds for which a budget is legally
adopted.
Answer: D
Difficulty: 2 Medium
Topic: Reporting budgeted and actual results
Learning Objective: 03-03 Discuss budgetary reporting.
Bloom’s: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
70) When computers are ordered by the mayor’s office, the
purchase order should be recorded in the General Fund as a debit to:
1. A)
Encumbrances.
2. B)
Equipment.
3. C)
Expenditures.
4. D)
Appropriations.
Answer: A
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
71) If supplies that were ordered by a department financed by
the General Fund are received at an actual price that is less than the
estimated price on the purchase order, the department’s available balance of
appropriations for supplies will be:
1. A)
Decreased.
2. B)
Increased.
3. C)
Unaffected.
4. D)
Either a or b, depending on the department’s specific budgetary control
procedures.
Answer: B
Difficulty: 3 Hard
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
72) The Appropriations account of a governmental fund is
credited when:
1. A)
The budgetary accounts are closed.
2. B)
The budget is recorded.
3. C)
Supplies are purchased.
4. D)
Expenditures are recorded.
Answer: B
Difficulty: 2 Medium
Topic: Budgetary Accounting
Learning Objective: 03-05 Explain how budgetary accounting
contributes to achieving budgetary control over revenues and expenditures,
including such aspects as: recording and revising the annual budget; accounting
for revenues, encumbrances, and expenditures; closing budgetary accounts; and
accounting for allotments.
Bloom’s: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
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