1. Which of the following distinguishes governments from nongovernmental not-for-profit organizations? A. Absence of profit motive.B. The power to enact and enforce a tax levy.C. Resource providers do not expect benefits proportional to the resources provided.D. Absence of a defined ownership interest that can be sold, transferred, or redeemed.2. On what should the government-wide financial statements report? A. Net assets and results of financial operations of the government as a whole.B. Fiscal accountability.C. The cost of government services.D. Budgetary compliance.3. The fund financial statements for governmental funds should include a A. Statement of cash flows.B. Statement of revenues, expenses, and changes in fund net assets.C. Balance sheet.D. Statement of activities. 4. Which of the following types of organizations may be subject to FASB jurisdiction? A. A state hospital.B. A college or university.C. A public school district.D. A public sanitation district.5. Which of the following funds would be most appropriate for accounting for an activity that provides goods or services to the public for a fee that is intended to make the activity self-supporting? A. Investment trust fund.B. Enterprise fund.C. Internal service fund.D. Special revenue fund. 6. Which of the following funds should be used if resources provided by a federal grant must be segregated and used for counseling of youthful offenders? A. Private-purpose trust fund.B. Enterprise fund.C. Internal service fund.D. Special revenue fund.7. Which of the following funds would be used to account for an activity that provides centralized purchasing and sales of goods or services to other departments or agencies of the governmental, or to other governments, on a cost-reimbursement basis? A. Enterprise fund.B. Fiduciary fund.C. Internal service fund.D. Permanent fund. 8. Budgetary comparison schedules presenting budgeted versus actual revenues and expenditures are A. Optional under GASB standards for all funds.B. Required by GAAP for internal management reports only; not permitted for external financial reporting.C. Required by GAAP for the General Fund and major special revenue funds for which an annual budget has been legally adopted.D. Required by GAAP for all governmental fund types. 9. Which of the following would be classified as a general revenue? A. Parking meter fees.B. Special assessment charges for snow removal.C. Library fines.D. Fuel taxes earmarked for maintenance of roads and bridges. 10. 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 A. Debited for the estimated price on the purchase order.B. Credited for the estimated price on the purchase order.C. Debited for the actual price for the supplies received.D. Credited for the actual price for the supplies received. 11. The County Commission of Benton County adopted its General Fund budget for the year ending June 30, comprising estimated revenues of $3,200,000 and appropriations of $2,900,000. Benton County utilizes the budgetary accounts required by GASB standards. The journal entry to record budgeted appropriations will include A. A credit to Appropriations, $2,900,000.B. A credit to Encumbrances, $2,900,000.C. A debit to Estimated Expenditures, $2,900,000.D. A credit to Budgetary Fund Balance, $2,900,000.12. The County Commission of Benton County adopted its General Fund budget for the year ending June 30, comprising estimated revenues of $3,200,000 and appropriations of $2,900,000. Benton County utilizes the budgetary accounts required by GASB standards. The budgeted excess of estimated revenues over appropriations will be recorded as A. A credit to Surplus Revenues, $300,000.B. A debit to Estimated Excess Revenues, $300,000.C. A credit to Budgetary Fund Balance, $300,000.D. A memorandum entry only. 13. Which of the following types of nonexchange transactions recognize revenue when all the eligibility requirements are met? A. Voluntary nonexchange transactions.B. Imposed nonexchange transactions.C. Derived tax revenues.D. Property tax revenues. 14. Proceeds from general obligation bonds for capital construction should generally be recorded in the A. Enterprise fund.B. General Fund.C. Capital projects funds.D. Debt service funds. 15. Revenues that are legally restricted to be expended for specified operating purposes should be accounted for in special revenue funds, including A. Endowment where the investment earnings are to be used for public purposes.B. Pension trust fund revenues.C. Accumulation of resources for payment of general long-term debt principal and interest.D. Gasoline taxes to finance road repairs. 16. Which of the following is properly reported as an other financing source by the General Fund? A. Sales taxes.B. Interfund transfers in.C. Parking fines.D. Sale of zoning maps. 17. The city of Romeo purchased a squad car for the police department. If the operations of the police department are financed by general revenues, which of the following is correct concerning where the purchase of the car would be recorded? A. General Fund: No; Governmental Activities: YesB. General Fund: No; Governmental Activities: NoC. General Fund: Yes; Governmental Activities: NoD. General Fund: Yes; Governmental Activities: Yes18. In late June, the Everready Construction Co. submitted a $600,000 progress billing on a construction contract. On July 2, the bill was approved for payment, subject to a five percent retention, as provided by the contract. Construction expenditures should be debited when A. The bill is approved for payment.B. The bill is received.C. The bill is paid (except for the five percent retention).D. The final five percent of the bill is paid. 19. In 2011, Weaver City signed a contract in the amount of $6,000,000 for the construction of a new city hall. Expenditures were $4,000,000 in 2011 and $2,050,000 in 2012, which included a change to the original construction design in the amount of $50,000. What amount should be added to net capital assets in the governmental activities accounts in 2012? A. $6,000,000B. $6,050,000C. $2,050,000D. $2,000,000. 20. The sale of revenue bonds by a water utility fund would be recorded A. In the governmental activities accounts as a liability.B. In an enterprise fund as “Proceeds of Bonds.”C. In an enterprise fund as a liability.D. In an enterprise fund as a revenue.21. The city of Superior’s fiscal year ends on December 31. On July 1, 2011 Superior issues $1,000,000 of 8%, 10-year term bonds with semi-annual interest payments due on July 1 and January 1 each year. The General Fund transferred $100,000 to the debt service fund on July 1, 2011 to pay for interest to bondholders for the year. The debt service fund invests the money at an annual rate of 10%. What is the amount of total assets in the debt service fund at the end of 2011? A. $65,000B. $105,000C. $965,000D. $1,005,000 22. The city of Sparr’s fiscal year ends on December 31. On July 1, 2011, the city issued $1,000,000 of 6%, 10-year term bonds with semi-annual interest payments due on July 1 and January 1 each year, beginning on January 1, 2012. What amount of expenditures should the city recognize in its debt service fund for the years 2011 and 2012? A. $30,000 in 2011; $60,000 in 2012.B. $60,000 in 2011; $60,000 in 2012.C. $3,000 in 2011; $6,000 in 2012.D. $0 in 2011; $60,000 in 2012.24. Under GASB standards, nonmajor funds are reported A. In the management’s discussion and analysis preceding the financial statements.B. In aggregate amounts in a single column in the fund financial statements.C. In a note disclosure following the financial statements.D. In the government-wide financial statements.25. Infrastructure assets and long-term liabilities issued to finance infrastructure should be reported in the A. Letter of transmittal.B. Fund financial statements.C. Management’s discussion and analysis.D. Government-wide financial statements.26. Which of the following kinds of information would not be provided by Management’s discussion and analysis (MD&A)? A. A narrative explanation of the contents of the CAFR.B. A description of the government’s financial condition.C. A forecast of revenues and expenditures for the next three fiscal years.D. A discussion of economic factors and the budget and tax rates approved for the next year. 27. A term that describes a government’s ongoing ability and willingness to raise revenues, incur debt, and meet its financial obligations as they become due is A. Financial condition.B. Fiscal capacity.C. Economic condition.D. Financial position. 28. A recognizable signal of fiscal stress is A. Total revenues from own sources increasing as a percent of total revenues for all sources.B. Increasing population.C. Declining property values.D. An increasing ratio of total revenues to total expenditures. 29. A measure of whether the government lived within its means in the measurement year, or was required to use prior year resources to fund a portion of current year costs, or shifted the funding of some current year costs to future periods, is A. Business-type activities revenues/business-type activities expenses.B. Unrestricted net assets/total revenues.C. Total revenues/total expenditures.D. Total net assets (governmental activities and business-type activities) less total net assets at the beginning of the year.30. In federal government accounting, recording the estimated amount of equipment prior to actually placing an order or entering into a contract is called a(an) A. Obligation.B. Apportionment.C. Commitment.D. Allotment.31. Which of the following accounts used in state and local government accounting is most like the federal budgetary account “Undelivered Orders”? A. Reserve for Encumbrance.B. Expenditures.C. Appropriations.D. Encumbrances. 32. A certain federal agency placed an order for office supplies at an estimated cost of $14,400. Later in the same fiscal year these supplies were received at an actual cost of $14,800. Assume commitment accounting is not used by this agency. When the order is received the required journal entry (or entries) will affect the accounts shown in what net amounts? A. Budgetary Accounts: $14,400; Proprietary Accounts: $14,400B. Budgetary Accounts: $14,400; Proprietary Accounts: $14,800C. Budgetary Accounts: $400; Proprietary Accounts: $14,800D. Budgetary Accounts: $0; Proprietary Accounts: $14,80033. Securities donated to an NPO should be recorded at the A. Donor’s recorded amount.B. Fair market value at the date of the gift, or the donor’s recorded amount, whichever is lower.C. Fair market value at the date of the gift, or the donor’s recorded amount, whichever is higher.D. Fair market value at the date of the gift.34. A local philanthropist pledged to make a donation of $100,000 to an NPO to be paid in five equal installments of $20,000 beginning in the next fiscal year. Under FASB standards the pledge would be recognized as A. Support of $20,000 in each of the following five years.B. Support of $20,000 in the year the pledge was made and $80,000 as deferred support.C. Deferred support of $100,000 in the year the pledge was made.D. Support of $100,000 in the year the pledge was made, discounted at an appropriate rate for future receipts. 35. Which of the following contributions would not have to be reported as an asset on the statement of financial position of a not-for-profit organization? A. Land was donated to the Friends of the Forest Society for conversion into a nature trail.B. The original courthouse was donated to the Historical Preservation Society that is converting the courthouse to a museum.C. An art collector donated a famous oil painting to a local nongovernmental art museum for display in its exhibit hall.D. A valuable coin collection was donated to the Youth for Conservation organization, which the organization plans to sell at current market prices.Chapter 1536. A tax-exempt organization that receives its support primarily from a large number of individuals or corporations and a relatively small amount from investment income is called a A. Public charity.B. Private foundation.C. Public foundation.D. Voluntary health and welfare organization.37. The income most likely to be considered unrelated business income of a human service organization that provides immunizations to children in the community is A. Rental of extra space in the building.B. Regular sale of sweatshirts with the organization’s logo on it at a price considerably above cost.C. Interest and dividend income on investments.D. Gain on the sale of equipment no longer needed by the organization.38. The Internal Revenue Service may impose intermediate sanctions on all of the following transactions between a not-for-profit organization and its executive officer except A. Excessive compensation.B. More than the fair rental value for property owned by the officer.C. A bargain on the sale of assets.D. Fringe benefits comparable to those given to all employees.