Professional Documents
Culture Documents
1) Answer Key
2. Which group of governmental financial statements reports all revenues and all
costs of providing services each year?
16-1
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3. Proprietary funds are
A. Funds used to account for the activities of a government that are carried out
primarily to provide services to citizens.
B. Funds used to account for a government's ongoing organizations and activities
that are similar to those operated by for-profit organizations.
C. Funds used to account for monies held by the government in a trustee capacity.
D. Funds used to account for all financial resources except those required to be
accounted for in another fund.
E. Funds used to account for revenues that have been legally restricted as to
expenditure.
A. Funds used to account for the activities of a government that are carried out
primarily to provide services to citizens.
B. Funds used to account for a government's ongoing organizations and activities
that are similar to those operated by for-profit organizations.
C. Funds used to account for monies held by the government in a trustee capacity.
D. Funds used to account for all financial resources except those required to be
accounted for in another fund.
E. Funds used to account for revenues that have been legally restricted as to
expenditure.
16-2
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5. Governmental funds are
A. Funds used to account for the activities of a government that are carried out
primarily to provide services to citizens.
B. Funds used to account for a government's ongoing organizations and activities
that are similar to those operated by for-profit organizations.
C. Funds used to account for monies held by the government in a trustee capacity.
D. Funds used to account for all financial resources except those required to be
accounted for in another fund.
E. Funds used to account for revenues that have been legally restricted as to
expenditure.
A. Funds used to account for the activities of a government that are carried out
primarily to provide services to citizens.
B. Funds used to account for a government's ongoing organizations and activities
that are similar to those operated by for-profit organizations.
C. Funds used to account for monies held by the government in a trustee capacity.
D. Funds used to account for all financial resources except those required to be
accounted for in another fund.
E. Funds used to account for revenues that have been legally restricted as to
expenditure.
16-3
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McGraw-Hill Education.
AICPA BB: Industry
AICPA FN: Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 16-02 Differentiate between the two sets of financial statements produced by state and
local governments.
8. What are the broad types or classifications of funds for a governmental entity such
as a city?
16-4
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McGraw-Hill Education.
10. Under modified accrual accounting, revenues should be recognized when they are
A. collected.
B. realizable.
C. reasonably estimable.
D. measurable and available.
E. earned.
12. Which of the following funds is most likely created with an endowed gift?
A. Enterprise Fund.
B. Internal Service Fund.
C. Debt Service Fund.
D. Capital Projects Fund.
E. Permanent Fund.
16-5
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13. Revenue from property taxes should be recorded in the General Fund
A. when received.
B. when there is an enforceable legal claim.
C. when they are available for recognition.
D. in the period for which they are required or permitted to be used.
E. in the period in which the tax bills are mailed.
14. Which type of fund is not included in the Government-Wide Financial Statements?
A. Governmental Funds
B. Proprietary Funds
C. Fiduciary Funds
D. Debt Service Funds
E. Special Revenue Funds
15. A city received a grant of $5,000,000 from a private agency. The money was to be
used to build a new city library. In which fund should the money be recorded for
the Fund Financial Statements?
16-6
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McGraw-Hill Education.
16. When a city received a federal grant for providing food and other assistance to the
homeless, the money should have been recorded in
17. Bay City received a federal grant to provide health care services to low income
mothers and children. When should the revenues be recognized?
18. Trapper City issued 30-year bonds for the purpose of building a new City Hall. The
proceeds of the bonds are deposited in the General Fund. For the Fund Financial
Statements, in what fund will Bonds Payable appear?
A. General Fund.
B. Capital Projects Fund.
C. Permanent Fund.
D. Debt Service Fund.
E. Bonds Payable do not appear in Fund Financial Statements.
16-7
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McGraw-Hill Education.
Difficulty: 2 Medium
Learning Objective: 16-09 Accounts for the issuance of long-term bonds and the reporting of special
assessment projects.
A. Enterprise fund.
B. Internal service fund.
C. Permanent fund.
D. Investment trust fund.
E. Agency fund.
21. According to GASB Concepts Statement No. 1, what are the three groups of
primary users of external state and local governmental financial reports?
16-8
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McGraw-Hill Education.
AICPA FN: Reporting
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 16-01 Explain the history of and the reasons for the unique characteristics of the financial
statements produced by state and local governments.
22. Which of the following statements is true regarding fund financial statements?
16-9
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McGraw-Hill Education.
local governments.
24. How do the balance sheet and statement of revenues, expenditures, and changes
in fund balances of governmental funds differ from the financial statement
presentation for the governmental activities in the government-wide statement of
net assets and statement of activities?
(1) Internal service funds are not included in the fund financial statements of
governmental funds but could be reported in the governmental activities of
government-wide financial statements.
(2) The economic resources measurement basis is used for fund financial
statements of governmental funds and the current financial resources
measurement basis is used for governmental activities in the government-wide
financial statements.
(3) Modified accrual accounting is used for fund financial statements of
governmental funds to time revenues and expenditures and accrual accounting is
used for governmental activities of government-wide financial statements.
(4) The financial statements of governmental funds for fund financial statements
are the same as governmental activities in government-wide financial statements
but with different titles of the financial statements.
A. 1 and 2.
B. 2, 3, and 4.
C. 1, 2, and 3.
D. 1 and 3.
E. 1, 2, 3, and 4.
16-10
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McGraw-Hill Education.
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 16-08 Determine the proper timing for the recognition of revenues from nonexchange
transactions.
26. GASB Codification Section N50.104 divides all eligibility requirements into four
general classifications including all of the following except:
16-11
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McGraw-Hill Education.
28. For governmental entities, the accrual basis of accounting is used for:
29. What account is debited in the general fund when equipment is received by a
governmental entity?
A. Expenditures.
B. Encumbrances.
C. Plant assets.
D. Accounts Payable.
E. Fund Balance-Reserve for Encumbrances.
AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 16-06 Record the passage of a budget as well as subsequent encumbrances and
expenditures.
30. Generally, annual budgets are recorded within the following funds:
16-12
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McGraw-Hill Education.
Difficulty: 1 Easy
Learning Objective: 16-06 Record the passage of a budget as well as subsequent encumbrances and
expenditures.
31. When a city received a federal grant for books to be purchased for a library, the
money should have been recorded in
32. When a city holds pension monies for city employees, the monies should be
recorded in
33. When a city received a private donation of $1,000,000 stipulating that the
principal donation would be preserved but allowing the interest income to be spent
on building a city park with access for disabled children, which fund should the
money be recorded in?
AACSB: Analytic
16-13
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McGraw-Hill Education.
AICPA BB: Industry
AICPA FN: Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 16-04 Identify the three fund types and the individual fund categories within each.
34. When a city collects fees from citizens who use the public swimming pool, the
money should be recorded in
35. A city operates a central data processing facility. The expenses of this facility
would be accounted for using
16-14
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McGraw-Hill Education.
36. What are the two proprietary fund types?
A. 1 and 2.
B. 2 and 3.
C. 1 and 3.
D. 2 and 4.
E. 1 and 4.
37. Salaries and wages that have been earned by governmental employees that have
not yet been paid are recorded in the general fund as:
A. An expenditure.
B. An encumbrance.
C. An appropriation.
D. An expense.
E. An investment.
AACSB: Analytic
AICPA BB: Industry
AICPA FN: Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 16-06 Record the passage of a budget as well as subsequent encumbrances and
expenditures.
38. The reporting of the fund balance of governmental funds will result in a maximum
of ___________ categories:
A. One
B. Two
C. Three
D. Four
E. Five
16-15
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McGraw-Hill Education.
AICPA BB: Industry
AICPA FN: Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 16-06 Record the passage of a budget as well as subsequent encumbrances and
expenditures.
39. Which classifications may be not used for the Fund Balance of governmental
funds?
A. Spendable
B. Non-Spendable
C. Assigned
D. Unassigned
E. Restricted
40. Which of the following statements is true about Fund Balance classifications for the
governmental funds?
A. A restricted fund balance is for monies the governing board has appropriated.
B. An assigned fund balance has been designated for a specific purpose and is
restricted to use for only that purpose.
C. An unassigned fund balance has no restriction for use of the money and is only
applicable to the General Fund.
D. A committed fund balance has been designated by an outside party for a
particular use.
E. A non-spendable fund balance is designated only for Permanent Fund balances.
16-16
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