Government and Non-Profit Accounting Multiple Choice

Multiple Choice

1. A primary characteristic that distinguishes not-for-profit entities from business entities is
a) The need to generate revenues equal to or in excess of expenditures/expenses
b) The importance of the budget in the governing process
c) The need to provide goods or services
d) The correlation between revenues generated and demand for goods or services

2. The primary standard-setting body for accounting and financial reporting by a state-supported college or university is:
a) GASB
b) FASB
c) AICPA
d) All of the above

3. Which if the following objectives is considered to be the cornerstone of financial reporting by a governmental entity?
a) Accountability
b) Budgetary Compliance
c) Interperiod Equity
d) Service efforts and accomplishments

4. Which of the following funds is a proprietary fund?
a) Internal Service fund
b) Special Revenue fund
c) Capital Project fund
d) Permanent fund

5. The state collects a gasoline tax that must be used to support highway construction and maintenance. The gasoline tax revenue should be accounted for in which of the following funds?
a) General fund
b) Special Revenue fund
c) Debt Service fund
d) Internal Service fund

6. Which of the following statements is not a required part of the basic financial statements of the City of Highland Hills?
a) Government-wide Statements of Net Assets
b) Statement of Revenue, Expenditures, and Changes in Fund Balances for all government funds
c) Statement of Revenues, Expenses, and Changes in Net Assets for all fiduciary funds
d) Statement of Cash Flows for all proprietary funds

7. Fund financial statements for fiduciary funds include which of the following:
a) Balance Sheet and Income Statement
b) Balance Sheet, Income Statement, and Statement of Cash Flows
c) Statement of Fiduciary Net Assets and a Statement of Changes in Fiduciary Net Assets
d) Statement of Fiduciary Net Assets, Statement of Changes in Fiduciary Net Assets, and Statement of Cash Flows

8. Which of the following is likely to be used by a bond rating agency to rate the general obligations bond of a governmental entity?
a) A review of the Basic Financial Statements
b) Consideration of economic statistics such as unemployment rates
c) Consideration of legal debt margin
d) All of the above

9. The work of bond rating agencies is important because
a) They insure that all principal and interest payments on bonds issued will be made
b) The rating they assign proves the quality of a particular debt instrument
c) They affect the debt's marketability and hence its interest rate
d) Bonds cannot be issued without them

10. During the year the City's Self-Insurance Internal Service Fund billed the General Fund $300,000 for "premiums," of which $30,000 was for catastrophic losses and the balances was the premium computed on an actuarially determined basis. During the year the City incurred $250,000 in claims losses. The total amount transferred to the Self-Insurance Fund by the General Fund was $310,000.

The amount the City Self-Insurance Fund can recognize as revenue is:
a) $310,000
b) $300,000
c) $270,000
d) $250,000