ACCY 161 Spring 2009

Practice Exam #1 - KEY

1.

The responsibility of governments to justify that their actions in the current period have complied with public decisions concerning the raising and spending of public monies in the short-term is know as: A. Operational accountability. B. Fiduciary responsibility. C. Legal accountability. D. Fiscal accountability. With regard to depreciation of general capital assets A. Depreciation expense should be charged in the appropriate governmental funds, and reported in the governmental activities accounts. B. Depreciation expense must be recorded in the governmental fund, but no depreciation expense can be recorded in the governmental activities accounts. C. No depreciation can be recorded in any governmental fund, but depreciation expense must be reported in the governmental activities accounts. D. No depreciation can be recorded in any governmental fund, nor is it permissible to record depreciation expense in the governmental activities accounts. The basis of accounting that should be used in preparing fund financial statements is:

2.

3.

A. Item A B. Item B C. Item C D. Item D

4.

The measurement focus that should be used in preparing fund financial statements is:

A. Item A B. Item B C. Item C D. Item D

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5.

Practice Exam #1 - KEY

General capital assets used by departments accounted for by the General Fund of a governmental unit should be capitalized in A. The General Fund. B. The governmental activities journal. C. The business-type activities journal. D. The general capital assets fund. Which of the following funds is a governmental fund-type? A. Private-purpose trust fund. B. Internal service fund. C. Permanent fund. D. Enterprise fund. In accounting for state and local governments the modified accrual basis is recommended for A. Proprietary and fiduciary funds. B. Proprietary funds only. C. Governmental funds only. D. All funds. The modified accrual basis of accounting applicable to governmental fund types requires that revenues be recognized when A. Earned. B. Authorized by the budget ordinance. C. Measurable and available. D. Collected in cash. E. Both A. and C. Which of the following is not a characteristic of a fund as defined by GASB standards? A. An accounting entity. B. A segregated quantity of cash and other financial resources on deposit with a designated trustee. C. A fiscal entity. D. All are characteristics of a fund The correct term for the liabilities in a governmental fund statement would be? A. Current liabilities. B. Fund liabilities. C. Legal liabilities. D. All are correct The accounting system used by a state or local government must make it possible A. To prepare consolidated accrual basis statements for the government as a whole. B. To prepare financial statements as required by the Financial Accounting Standards Board. C. To present fairly the financial position and results of financial operations of the government as a whole, as well as fund financial activity in conformity with GAAP, and to demonstrate compliance with finance-related legal and contractual provisions. D. All of the above.

6.

7.

8.

9.

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11.

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ACCY 161 Spring 2009

Practice Exam #1 - KEY

12.

On what should the government-wide financial statements report? A. Net assets and results of financial operations of the government as a whole. B. Operational accountability. C. The cost of government services. D. All of the above.

The fund financial statements for governmental funds should include a A. Balance sheet for governmental funds. B. Statement of revenues, expenses, and changes in fund net assets. C. Statement of cash flows. D. A schedule of fixed assets by class. 14. Fiscal accountability is found in: a. the governmental-wide financial statements b. the governmental fund financial statements c. all the fund financial statements d. both a. and b. e. both a. and c. 15. The modified accrual basis of accounting is used in: a. the governmental fund financial statements b. all the fund financial statements c. only in the general fund financial statements d. none of the above 16. The measurement focus that should be used in preparing fund financial statements is the a. fund accounting measurement focus b. current financial resources measurement focus c. economic financial resources measurement focus d. none of the above 17. Which of the following funds is a governmental fund-type? a. Private-purpose trust fund. b. Internal service fund. c. Permanent fund. d. Enterprise fund. 18. Which of the following is not a characteristic of a fund as defined by GASB standards? a. An accounting entity. b. A segregated quantity of cash and other financial resources on deposit with a designated trustee. c. A fiscal entity. d. All are characteristics of a fund 19. The correct term for the liabilities in a governmental fund statement would be? a. Current liabilities. b. Fund liabilities. c. Legal liabilities. d. All are correct 20. The accounting system used by a state or local government must make it possible a. To prepare consolidated accrual basis statements for the government as a whole. b. To prepare financial statements as required by the Financial Accounting Standards Board.
13.

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ACCY 161 Spring 2009

c.

Practice Exam #1 - KEY

To present fairly the financial position and results of financial operations of the government as a whole, as well as fund financial activity in conformity with GAAP, and to demonstrate compliance with finance-related legal and contractual provisions. d. All of the above. 21. The cornerstone of governmental accounting includes: a. reliability b. budgetary control c. accountability d. both b. and c. e. a. and b. and c. are all correct 22. Special purpose governments provide a wide range of services to their residents, such as: a. public safety b. cultural and recreation c. health and welfare d. all the above e. none of the above 23. Fiscal accountability includes: a. whether or not the government has raised and spend fund in accordance with a approved budget b. compliance with laws and regulations c. operational efficiency d. both whether or not the government has raised and spend fund in accordance with a approved budget and compliance with laws and regulations e. whether or not the government has raised and spend fund in accordance with a approved budget and compliance with laws and regulations and operational efficiency 24. For governmental accounting and reporting, the reporting entity consists of: a. the primary government only b. the primary government and component units c. the primary government and component units and other smaller units within the geographical boundaries of the primary government. d. as directed by the state legislation that established the primary government. e. none of the above describe the reporting entity. 25. The MD&A refers to: a. only the government-wide financial statements due to its long-term nature b. only the various fund financial statement c. both the fund financial statements and the government-wide financial statements d. more that just the fund financial statements and the government-wide financial statements 26. All unmatured long-term liabilities of the government should be accounted for in: a. the general fund b. the governmental fund financial statements c. the governmental-wide financial statements d. both the general fund and the governmental fund statements. e. the general fund, the governmental fund statements and the government-wide statement. 27. The accounting system used by a state or local governmental unit must make it possible a. to prepare consolidated accrual basis statements for the governmental unit as a whole. b. to prepare financial statements as required by the Financial Accounting Standards Board. c. to present fairly the financial position and results of financial operations of the government as a whole, as well as fund financial activity in conformity with GAAP, and to demonstrate compliance with finance-related legal and contractual provisions. d. all of the above.
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ACCY 161 Spring 2009

Practice Exam #1 - KEY

28. The measurement focus and basis of accounting of special revenue fund are most similar to a. governmental funds and the fiduciary fund b. proprietary funds. c. both the general fund and the permanent fund d. none of the above. Problem #1. The following transactions occurred for the Fire Department for the City of Harrison. The Fire Department is part of the general governmental fund. Complete the ledger as we did in class. Transactions 1. An appropriation for the current year was approved by the city council for $20,000. 2. A purchase order for equipment was issued for $2,000. 3. Of this amount in #2, (the $2,000) a partial shipment was received for $1,500 of the goods that had been ordered. The invoices for the partial shipment were for $1,700. To allow for the increase in the amount of the goods ordered a supplemental appropriation was approved.
4.

5. The invoices were paid 6. Payroll of $2,000 was paid. 7. Another purchase order for $500 was issued. 6. Goods were received from outstanding purchase orders for $300 and the invoice amount was also for $300. 7. The purchase order for $500 was reduced to $400 for an item that was cancelled. Fund Debit 20000 2000 2000 1500 1500 200 200 1700 1700 1700 1700 2000 2000 500 500 300 Credit 20000

# 1 2 3 4a 4b 5 6 7 8a

Use Appropriate Account Descriptions Fund Balance Appropriations Encumbrances Reserve for Encumbrances Reserve for Encumbrances Encumbrances Fund Balance Appropriations Expenditures Vouchers Payable Vouchers Payable Cash Expenditures - Payroll Cash (Payroll Payable would work too) Encumbrances Reserve for Encumbrances Reserve for Encumbrances
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ACCY 161 Spring 2009 # 8b

Practice Exam #1 - KEY Fund Debit 300 300 300 Credit

Use Appropriate Account Descriptions Encumbrances Expenditures Vouchers Payable

Required: Complete the Appropriations Expenditures Encumbrances Ledger below to reflect these transactions. Use the item numbers above as your reference in the Ref column. Ref 1 2 3 4 5 6a 7a 6b 7b Appropriations Expenditures Encumbrances Ledger: Fire Department Encumbrances Expenditures Appropriations Description Dr Cr Open Dr Balance Credit Available Budget 20,000 20,000 POs Goods recd Invoices/Budget Payment no entry payroll POs Good recd POs cancelled Open POs Expenditures Available Appro. Total Appro. 600 4,000 15,600 20,200 500 300 100 1,000 700 300 4,000 600 2,000 3,700 16,000 15,500 15,800 15,500 15,600 2,000 1,500 2,000 5,00 1,700 1,700 18,000 19,500 200 18,000

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