1. Which of the following is not a fiduciary fund?
A) Private-Purpose Trust Fund.
B) Investment Trust Fund.
C) Pension Trust Fund.
D) Permanent Fund.

2. Which is true regarding the basis of accounting for fiduciary funds?
A) All four fiduciary fund types are accounted for using the same basis of accounting and measurement focus as proprietary funds.
B) Agency funds are accounted for using the same basis of accounting and measurement focus as governmental funds, trust funds are accounted for using the same basis of accounting and measurement focus as proprietary funds.
C) Trust funds are accounted for using the same basis of accounting and measurement focus as governmental funds, and agency funds are accounted for using the same basis of accounting and measurement focus as proprietary funds.
D) All four fiduciary fund types are accounted for using the same basis of accounting and measurement focus as governmental funds.

3. How are Fiduciary Funds presented in the Government-wide Financial Statements?
A) Combined with Internal Service Funds.
B) Combined with Business activities.
C) Combined with governmental activities.
D) None of the Above.

4. Which of the following is true regarding fiduciary funds?
A) Fiduciary funds are included in the fund basis statements but not in the government-wide.
B) Fiduciary funds are reported by fund type, not as major funds.
C) Both of the above.
D) Neither of the above.

Which of the following is true regarding fiduciary funds?
A) Fiduciary funds use the economic resources measurement focus and accrual accounting.
B) Fiduciary funds include pension (and other employee benefit) trust, investment trust, agency, and permanent funds.
C) Both of the above.
D) Neither of the above.

6. Which of the following is true regarding fiduciary funds?
A) Fiduciary funds are not included in the government-wide financial statements.
B) Fiduciary funds include agency, pension (and other employee benefit) trust, private-purpose trust, and investment trust funds.
C) Both of the above.
D) Neither of the above.

7. ______ funds are created when individuals or organizations contribute resources with the agreement that principal and/or income will be used to benefit individuals or private organizations.
A) Agency
B) Investment trust
C) Private-purpose trust
D) Permanent

8. ______ funds are created when individuals or organizations contribute resources with the agreement that the income will be used to the citizenry or the government’s programs.
A) Agency
B) Investment trust
C) Private-purpose trust
D) Permanent

9. The terms used for classification of items on the Statement of Changes in Fiduciary Net Position are:
A) Revenues and Expenses.
B) Additions and Deductions.
C) Revenues and Expenditures.
D) Contributions and Expenses.

10. A fund that is used to account for assets held by a government temporarily acting as agent for one or more other governments units or for individuals or private organizations is a(n):
A) Agency fund
B) Private-Purpose Trust Fund
C) Investment Trust Fund
D) Pension Trust Fund

11. A fund that is the result of an agreement between a contributor and a government that the principal and/or income of trust assets is for the benefit of individuals, organizations, or other governments is a(n):
A) Agency fund
B) Private-Purpose Trust Fund
C) Investment Trust Fund
D) Pension Trust Fund

12. A fund that exists when the government is the sponsor of a multigovernment investment pool and accounts for the external portion of the trust assets is a(n):
A) Agency fund
B) Private-Purpose Trust Fund
C) Investment Trust Fund
D) Pension Trust Fund

13. A fund that exists when a government is the trustee for a defined benefit pension plan, or a defined contribution pension plan is a(n):
A) Agency fund
B) Private-Purpose Trust Fund
C) Investment Trust Fund
D) Pension Trust Fund

Which of the following is not an example of the function of an Agency Fund?
A) Payment of pension benefits to retired government employees
B) Collection of local government sales taxes by the state government
C) Collection of property taxes for the school district by an elected county government official.
D) Periodic distribution by the state government of county sales taxes

15. Which type of pension plan most commonly results in an unfunded actuarial liability?
A) Defined benefit plan.
B) Defined contribution.
C) Both A and B.
D) Neither A or B.

16. Which of the following statements is not correct with respect to Agency Funds?
A) Agency funds use modified accrual accounting
B) Assets accounted for in an agency fund belong to the party or parties for which the government acts as agent.
C) Assets are offset by an equal amount of liabilities.
D) Assets and liabilities are recognized at the time the government becomes responsible for the assets.

17. Which of the following is true regarding the financial statements of fiduciary funds?
A) Fiduciary funds' financial statements include the Statement of Fiduciary Net Position, the Statement of Changes in Fiduciary Net Position, and the Statement of Fiduciary Cash Flows.
B) Fiduciary funds are accounted for using the economic resources measurement focus and accrual basis of accounting.
C) Both of the above.
D) Neither of the above.

18. Which of the following is true regarding agency funds?
A) Agency funds report assets and liabilities, but not net position, revenues or expenses.
B) Agency funds are often used to account for property tax collections by county governments for other governments.
C) Both of the above.
D) Neither of the above.

19. Which of the following is true regarding fiduciary funds?
A) Investment trust funds account for the internal portion of an investment pool, when a government is trustee for that pool.
B) Private-purpose trust funds account for resources that are administered by a government for the benefit of others, such as a fund held to distribute resources to local not-for-profit charities.
C) Both of the above.
D) Neither of the above.

20. In an agency fund, assets are equal to:
A) Liabilities + Net Position
B) Net Position
C) Liabilities
D) There are no assets in an Agency Fund

21. Which of the following statements is not true regarding agency funds?
A) Agency funds use modified accrual accounting.
B) Agency funds report only assets and liabilities; no fund equities, revenues, or expenditures are recorded.
C) Agency funds are reported in the fiduciary funds Statement of Fiduciary Net Position.
D) None of the above; all are true.

22. The tax agency fund of Orange County collected $7,000,000 for a school district, $3,000,000 for the county General Fund, and $5,000,000 for a municipality located in the County. County General Fund employees handle the collections, and a 2.5 percent collection fee is charged all units except the county. The total amount of revenue recognized by the county General Fund would be:
A) $ 390,000.
B) $3,300,000.
C) $3,390,000.
D) $15,300,000.

23. Which of the following statements about agency funds is true?
A) An agency relationship that commonly results in the creation of an agency fund is the collection of taxes and other revenues by an official of one governmental unit for other governmental units.
B) GASB mandates that governments report special assessment resources in an agency fund only if the reporting government has no obligation to assume debt service on special assessment debt in the event property owners' default but merely perform the functions of billing and collecting the special assessments and paying interest and principal on the special assessment debt.
C) Both of the above.
D) Neither of the above.

24. The operations of agency funds will be included in which of the following statements?
A) The fiduciary funds Statement of Fiduciary Net Position
B) The Statement of Changes in Fiduciary Net Position
C) The Government-wide Financial Statements
D) All of the above

25. Agency fund assets and liabilities are to be recognized :
A) At the time the government becomes responsible for the assets.
B) When they are available and measurable.
C) Only in the government-wide financial statements.
D) When the earnings process is complete and collection is reasonably assured.

26. What is the correct journal entry for a Tax Agency Fund to record tax levies of other governments certified to it?
A) Taxes Receivable - Current
Revenues Control
B) Taxes Receivable - Current
Due from Other Governments
C) Taxes Receivable
Transfer Out
D) Taxes Receivable for Other Governments
Due to Other Governments

27. The tax agency fund of Eden County collected $2,000,000 for the Eden School District, $1,000,000 for the Village of Edenton, $1,200,000 for the Eden Park District, and $700,000 for Eden County. County General Fund employees handle the collections, and a 3 percent collection fee is charged all units except the county. The amount to be remitted to the county General Fund would be:
A) $126,000.
B) $147,000.
C) $747,000.
D) $826,000.

28. The City of Sycamore has investments in bonds. These bonds have an amortized cost of $1,996,000. At year end, the financial press reports a market value of $2,002,000 for these bonds. The original cost of the bonds was $1,992,000. The par value at maturity will be $2,000,000. The amount at which the investments would be reported is:
A) $2,002,000
B) $2,000,000
C) $1,996,000
D) $1,992,000

29. Which of the following is true regarding accounting for investments by state and local governmental units?
A) Investments in securities accounted for under the equity method are to be reported at fair value.
B) Realized gains and losses are to be reported separately from unrealized gains and losses in the Statement of Changes in Fiduciary Net Position.
C) Both of the above.
D) Neither A nor B above

30. The City of Springfield has three pension plans: a locally administered police plan for which it is trustee, a statewide cost sharing plan, and a statewide agency plan. The City would include in its CAFR pension trust fund financial statements for:
A) All three plans.
B) The locally administered plan plus the statewide agency plan.
C) Both statewide plans.
D) The locally administered plan only.

The City of DeKalb contributes to three pension plans: (1) a statewide pension plan for nonuniformed personnel, (2) a locally administered plan for police officers, and (3) a locally administered plan for firefighters. The City is trustee for the plans for police officers and firefighters. Which of the following is true?
A) The City would maintain trust funds for the police and fire plans but not the statewide plan.
B) When making contributions from General Fund resources to the police and fire plans, the General Fund would debit Other Financing Sources-Transfers Out and the Pension Trust Fund would credit Transfers In.
C) Both of the above.
D) Neither of the above.

Which of the following is true regarding fiduciary funds?
A) When a government provides employees a defined benefit pension plan, the government is required to present a ten year Schedule of Changes in Net Pension Liability and Related Ratios as required supplementary information
B) Governmental type funds report a net pension liability representing the unfunded pension obligation.
C) Both of the above.
D) Neither of the above.

33. Which of the following is true regarding pension (and other employee benefit) trust funds?
A) The actuarially computed Net Pension Liability is reported in the Statement of Fiduciary Net Position.
B) While full accrual accounting is used, the terms “additions” and “deductions” are used in the Statement of Changes in Fiduciary Net Position in lieu of “revenues” and “expenses.”
C) Both of the above.
D) Neither of the above.

34. Which of the following is true regarding pension accounting and reporting for state and local governments?
A) When the General Fund makes a contribution to a pension trust fund, the account “Expenditures” is debited.
B) The Statement of Changes in Fiduciary Net Position reports “additions” and “deductions,” computed on the accrual basis.
C) Both of the above.
D) Neither of the above.

35. When accounting for defined benefit pensions, the net pension liability for employees of governmental activities is:
A) Reported in the government-wide statements.
B) Reported in the governmental fund-basis statements.
C) Both A and B.
D) Neither A nor B.

36. When accounting for pension benefits, the net pension obligation for employees of proprietary activities is:
A) Reported in the government-wide statements.
B) Reported in the proprietary fund-basis statements.
C) Both A and B.
D) Neither A nor B.

37. Which of the following statements is not required for pension trust funds?
A) Statement of Fiduciary Net Position.
B) Statement of Changes in Fiduciary Net Position.
C) Statement of Fiduciary Cash Flows.
D) None of the above; all three statements should be prepared for pension-trust funds.

Pension trust fund financial statements would be found in the Comprehensive Annual Financial Report of a governmental reporting entity:
A) Only if the governmental unit desires to disclose the status of employee retirement plans to its employees.
B) In all cases when the governmental unit has an obligation to provide funding for employee retirement.
C) Only if the governmental unit is the trustee for the public employee retirement plan.
D) Whenever governmental employees have a retirement plan, whether or not the governmental unit is obligated to provide funding.

39. Which of the following is true regarding pension accounting and reporting?
A) Local governments include only the pension plans for which it is trustee in pension trust funds Statement of Fiduciary Net Position.
B) The pension trust fund Statement of Fiduciary Net Position reflects the net pension liability (the excess of the total benefit obligation over the net position available for benefits).
C) Both A and B.
D) Neither A nor B.

40. Where is the net pension liability shown in a Comprehensive Annual Financial Report for employees in governmental type activities?
A) The Statement of Fiduciary Net Position.
B) The government-wide Statement of Net Position
C) Both A and B.
D) Neither A nor B.

41. A pension plan that is required to pay out only the amount that has been accumulated for each employee is a ________?
A) Defined Benefit Plan.
B) Private-Purpose Plan.
C) Defined Withdrawal Plan.
D) Defined Contribution Plan.

42. Which type of pension plan is required to pay out a certain sum, generally based on a percentage of salary upon retirement and the number of years of service?
A) Defined Benefit
B) Defined Contribution
C) Contributory
D) Noncontributory

43. What account should be credited in a pension trust fund to record employee contributions?
A) Other Financing Sources
B) Net Position
C) Pension Benefit Obligation
D) Additions

44. Which of the following funds is used to account for the external portion of investment pools?
A) Special Revenue Fund
B) Investment Trust Fund
C) Enterprise Fund
D) Private-purpose Trust Fund

45. Churchville County is trustee for a multi-government investment pool and has established an investment trust fund. Included in the investment trust fund, for management purposes, are investments in the amount of $15 million from the County's General Fund, $3 million from the County's special revenue funds, and $112 million from other governments. Which of the following would be true?
A) The County would report $18 million in an investment trust fund.
B) The County would report the entire $130 million in an investment trust fund.
C) The County would report the $112 million in an investment trust fund, the $15 million in its General Fund, and the $3 million in special revenue funds.
D) The County would report the $112 million in an investment trust fund and the$18 million in a permanent fund.

46. Clinton County maintains an investment trust fund for the investments of governments within its borders. All the investments had determinable fair values. Which of the following is true regarding investment trust funds and investments in general?
A) Clinton County would report the investments of the other governments at fair value in the investment trust funds.
B) Clinton County would report its own investments at fair value in the investment trust funds.
C) Both of the above.
D) Neither of the above.

47. When a government is the sponsor of a multi-government investment pool, the government should report the external portion of those trust assets in a(n):
A) Pension Trust Fund.
B) Investment Trust Fund.
C) Private-Purpose Trust Fund.
D) Agency Fund

48. Escheat property is best described as which of the following?
A) Property possessed by a local government, but whose use is restricted by a
higher government.
B) Property a government obtains and holds for the rightful owner in the
absence of claimants or heirs.
C) Property gifted to the government by private citizens.
D) Property the government obtains via eminent domain.

49. Fund net position will not be found in…
A) Investment trust funds.
B) Pension trust funds.
C) Agency funds.
D) Private-purpose trust funds.

James McHughes gave the following to the City of Carnesville in order to establish a private-purpose trust:

o Land – cost, $400,000; fair market value as of the date of the gift, $500,000.
o Securities – cost, $1,600,000; fair market value as of the date of the gift, $1,800,000.

The amount to be recorded as additions for gifts by the private-purpose trust fund would be:
A) $2,000,000.
B) $2,100,000.
C) $2,200,000.
D) $2,300,000.

51. Which of the following is true regarding the reporting of investments by state and local governmental units?
A) Investments, for which a determinable fair value can be obtained, are to be reported at fair value.
B) Realized and unrealized gains and losses are to be combined in the relevant operating statement (for example, the Statement of Changes in Fiduciary Net Position).
C) Both of the above.
D) Neither of the above.

52. An endowment to support scholarships would most likely be accounted for in which of the following fund types?
A) Agency Fund.
B) Investment Trust Fund.
C) Private-Purpose Trust Fund.
D) None of the Above.

53. Investments of internal investment pools are to be reported in:
A) The funds providing the resources for the investments.
B) An investment trust fund.
C) An agency fund.
D) Either A and B.

54. Jasper City is trustee for the Henry J. Moooney Endowment Fund, created to provide scholarships for students. This is an example of which type of fund?
A) Permanent.
B) Pension trust.
C) Agency.
D) Private-purpose trust.

55. A county treasurer maintains an investment pool in which several different towns in the county hold investments. Where should the towns’ investments be recorded?
A) Investment Trust Fund.
B) Agency Fund.
C) Private-purpose Trust Fund.
D) None of the above.

56. An employee enrolls in a pension plan that will pay out 3% of the employee’s average salary for the last 3 years for each year of service that the employee worked. What type of pension plan does the employee have?
A) Defined Contribution Plan.
B) Normal Payout Plan.
C) Defined Benefit Plan.
D) None of the above.

57. The “external portion” of an investment trust fund relates to…
A) The portion of the investment that legally belongs to the sponsoring government.
B) The portion of the investment that is allocated among the sponsoring government’s funds.
C) The portion of the investment that belongs to other participating governments.
D) “External portion” relates only to agency funds, not investment trust funds.

58. Which of the following statements regarding employer reporting of pension trust funds is not correct?
A) Contributions by the governmental funds are recorded as expenditures in the General Fund.
B) The net pension liabilities are reported in the government-wide statements.
C) The net pension liabilities of proprietary fund employees are reported in the proprietary fund-basis statements
D) Governmental funds report net pension liabilities of governmental fund employees as a fund liability.

59. A government sponsoring a defined benefit pension plan changes an assumption underlying the measurement of the net pension liability. Assuming the estimated of this liability increases, how will this be reflected in the government-wide statements?
A) As an increase in the net pension liability and an expense.
B) As an increase in the net pension liability and a deferred outflow of resources.
C) As an increase in the net pension liability and an intangible asset.
D) None of the above, changes in estimated are not recorded.

60. Which of the Fiduciary Funds listed below is used to account for the assets held by a government acting as an agent for one or more other governmental units?
A) Private-purpose Trust Fund.
B) Permanent Fund.
C) Pension Fund.
D) Agency Fund.

61. A ___________ is used when a contributor and a government agree that the principal and/or income of trust assets are for the benefit of individuals.
A) Investment Trust.
B) Private-Purpose Trust.
C) Pension Trust.
D) Employee Benefit Trust.

62. A private-purpose trust fund where the principal is not expendable, normally it is called a/an:
A) Donation.
B) Endowment.
C) Gift.
D) Transfer.

63. Investment Trust Funds are restricted to:
A) External investment pools.
B) Open-end mutual funds.
C) Debt securities.
D) All the above.

64. When preparing financial statements, the internal portion of investment pools would be reported under which fund?
A) Investment trust fund.
B) Private purpose trust fund.
C) Permanent fund.
D) The fund(s) providing the resources.

65. Fiduciary Funds are not included in the Government-wide Financial Statements because:
A) These Funds use the modified accrual basis of accounting.
B) The resources are not available to the reporting unit.
C) The government doesn’t keep track of these types of funds.
D) These funds do not have a material effect on the financial statements.

66. Investments in a private-purpose trust fund should generally be reported using:
A) Cost Basis.
B) Fair Market Value.
C) Equity Method.
D) None of the above.

67. Which fund is used when a contributor specifies that the income of trust assets be used for the benefit of the general citizenry?
A) Private-purpose trust fund.
B) Agency fund.
C) Investment trust fund.
D) Permanent fund.

68. Which of the following statements is not correct with respect to GASB Statement No. 53 which establishes reporting requirements for governments entering into derivative instruments?
A) Derivatives include swaps, options, forward contracts and future contracts.
B) If a derivative is effective in reducing a government’s exposure to identifiable risks, the changes in the value of the derivative are reflected as investment gains or losses in the period that the value changes.
C) If a hedge derivative is deemed ineffective it is classified as investment purpose.
D) Statement No. 53 applies only to reporting at the government-wide level for derivatives held by governmental funds, not the fund-basis statements

69. Which of the following statements is correct with respect to GASB Statement No. 53 which establishes reporting requirements for governments entering into derivative instruments?
A) Changes in the value of hedge derivatives are deferred and reported in the Statement of Net Position.
B) If a derivative is an investment derivative, the changes in the value of the derivative are deferred and reported in the Statement of Net Position.
C) Statement No. 53 does not apply to proprietary funds.
D) Statement No. 53 applies to government financial statements prepared using the modified accrual basis of accounting.

70. GASB Statement No. 52 requires endowments with investment real estate to report those assets at:
A) Historical cost
B) Fair market value
C) Historical cost net of related debt
D) Market value net of related debt

47. Which of the following is false regarding government-wide financial statements?
A) Government-wide financial statements are prepared using the accrual method of accounting
B) General capital assets are required to be reported on the government-wide balance sheet.
C) GASB requires a reconciliation from fund financial statements to government-wide financial statements.
D) Worksheet entries are required to change the enterprise fund financial statements to the accrual basis of accounting.

48. With respect to government-wide statement, which of the following statements is correct?
A) GASB requires a reconciliation from proprietary fund financial statements to the government-wide statements business-activities columns from modified accrual accounting to accrual accounting.
B) General capital assets should not be reported as assets in governmental funds but should be reported in the governmental activities column of the government-wide Statement of Net Position.
C) In addition to the fund basis statement, GASB Statement 34 requires government-wide statements that are prepared on the modified accrual basis using the economic resources measurement focus.
D) Fiduciary activities are reported in the government-wide statements in a separate column.

49. Which of the following funds would not be included in the government-wide financial statements
A) Capital Project Fund.
B) Private Purpose Trust Fund.
C) Enterprise Fund.
D) Permanent Fund.

50. Which of the following would be included in the Equity section of the Statement of Net Position?
A) Retained Earnings.
B) Unassigned Fund Balance.
C) Net investment in capital assets.
D) Nonspendable fund balance.

In addition to a Statement of Net Position, which of the following are government-wide statements?
A) Statement of Revenues, Expenses, and Changes in Fund Net Position.
B) Statement of Cash Flows.
C) Both A and B.
D) Neither A nor B.

52. Which of the following is not a reconciliation required by GASB?
A) From governmental fund balance sheet to the Government-wide Statement of
Net Position.
B) From governmental fund Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Government-wide Statement of Activities.
C) From enterprise fund balance sheet to the Government-wide Statement of Net
Assets.
D) None of the above, all these reconciliations are required.

53. Which of the following is true regarding revenue recognition for sales taxes, when reporting in the government-wide statements?
A) Assets are recognized when the underlying exchange (retail sale) has occurred or when resources are received, whichever occurs first.
B) Revenues are recognized when the underlying exchange (retail sale) has occurred.
C) Neither of the above is true.
D) Both of the above are true.

54. Which of the following is true regarding revenue recognition for property taxes, when reporting in the government-wide statements?
A) Assets are recognized when an enforceable legal claim has arisen or when resources are received, whichever is first.
B) Revenues are recognized when measurable and available; that is, when collected during the current period or no more than 60 days after the end of the current period.
C) Both of the above are true.
D) Neither of the above is true.

55. When converting from fund basis reporting to government-wide reporting, which of the following would require an adjustment?
A) Property taxes expected to be collected 61-90 days after the end of the fiscal year.
B) A state grant received as reimbursement for a summer jobs program.
C) Sales tax collected for sales from the current year.
D) Receipt of advance funding on a grant.

56. Which of the following items are added to government-wide financial statements through worksheet journal entries?
A) General Capital Assets.
B) General Long Term Debt.
C) Internal Service Funds servicing governmental departments.
D) All of the above.

57. Governmental fund-basis statements are prepared using the________, and must be converted to the ________ to be incorporated in the government-wide statements.
A) Accrual basis, modified accrual basis.
B) Accrual basis, tax basis.
C) Cash basis, accrual basis.
D) Modified accrual basis, accrual basis.

58. The governmental funds follow __________ where the government-wide statements follow ___________.
A) Modified accrual accounting, accrual accounting.
B) Accrual accounting, modified accrual accounting.
C) Accrual accounting, accrual accounting.
D) None of the above.

59. The reconciliations required to be presented on the face of the governmental fund financial statements or in separate schedule immediately after the fund financial statements include:
A) Reconciliation from the governmental fund Balance Sheet to the Statement of Net Position.
B) Reconciliation from the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities.
C) Both A & B.
D) No reconciliations are required to be submitted.

60. When preparing government-wide financial statements, the modified accrual basis governmental funds are adjusted for all of the following events except?
A) Change in current assets and current liabilities from year to year
B) Long-term debt related events
C) Internal service fund activities
D) Interfund activities

61. When preparing government-wide financial statements, the modified accrual basis governmental funds are adjusted for which of the following events?

A) Capital asset related events
B) Long-term debt related events
C) Internal service fund activities
D) All of the above

62. Which of the following would not be an adjustment for long-term debt when preparing government-wide financial statements?
A) Changing Other Financing Sources - Proceeds of Bonds to Bonds Payable
B) Changing Expenditures – Bonds Principle to Bonds Payable
C) Recording the cash received from a debt issue
D) Amortizing bond premiums

63. Which of the following statements is not correct with respect to the preparation of government-wide statements?
A) A worksheet entry is required to record depreciation expense on capital assets of governmental activities
B) Enterprise funds are reported in the business-type activities column of the government-wide statements.
C) Worksheet entries must be made to eliminate operating profits earned by enterprise funds.
D) A worksheet entry is required to eliminate the charge to expenditures for capital outlay and record those expenditures as capital assets

A local government purchased a building and recorded the event by debiting Expenditures – Capital Outlay and crediting Cash. What would be the worksheet entry to prepare the government-wide statements?
A) Debit to Capital Assets and credit to Expenditures – Capital Outlay
B) Debit to Capital Assets and credit to Cash
C) Debit to Capital Assets and credit to Accumulated Depreciation-Capital Assets and Expenditures – Capital Outlay
D) Debit to Capital Assets for the book value of the asset and credit to Expenditures – Capital Outlay

65. A local government recorded the sale of a capital asset at a gain by recording a debit to cash and credit to proceeds of sale of capital asset. What is the worksheet entry when preparing the government-wide statements?
A) Debit to Proceeds of sale of capital asset and credit to Gain on sale of capital asset
B) Debit to Cash and credit to capital asset (net) and credit to Gain on sale of capital asset
C) Debit to Proceeds of sale of capital asset and credit to capital asset (net) and Gain on sale of capital asset
D) None of the above

A local government issued bonds and recorded the event by debiting Cash and crediting Other Financing Source - Proceeds of Bonds and Other Financing Source - Premium on Bonds. What is the worksheet entry when preparing the government-wide statements?
A) Debit Other Financing Sources – Proceeds of Bonds and Other Financing Sources – Premium on bonds and Credit Bonds Payable and Premium on Bonds
B) Debit Cash and Credit Bonds Payable and Premium on bonds
C) Debit Other Financing Sources – Proceeds of Bonds and Credit Bonds payable and Premium on Bonds
D) No adjustment is necessary

67. A local government recorded the payment of bond principal by debiting Expenditure: bond principal and crediting Cash. What is the worksheet entry when preparing the government-wide statements?
A) Debit Bonds Payable and credit Cash
B) Debit Cash and credit Expenditure: Bond Principal
C) Debit Bonds Payable and credit Expenditure: Bond Principal
D) None of the above

68. In its Statement of Net Position, a government reported:

• assets of $100 million, including $30 million in capital assets (net), and
• liabilities of $40 million, including long-term debt of $15 million, all related to capital asset acquisition.

The government also reported $10 million of net assets were restricted for payment of debt service. The government's Unrestricted Net Position would be reported as:

A) $15 million.
B) $25 million.
C) $30 million.
D) $35 million.

69. A governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances reported expenditures of $30 million, including capital outlay expenditures of $9 million. Capital assets for that government cost $90 million, including land of $10 million. Depreciable assets are amortized over 20 years, on average. The reconciliation from governmental changes in fund balances to governmental activities changes in would reflect a(an):
A) Decrease of $1 million.
B) Increase of $l million.
C) Increase of $5 million.
D) Decrease of $4 million.

70. The City of Charlotte reported property tax revenues in 2015 in the amount of $10 million. The deferred inflow - property taxes reported in the General Fund’s balance sheet was $ 300,000 on December 31, 2014 and was $ 375,000 on December 31, 2015. During 2015, $9,000,000 was collected. What amount should the city report for Property Tax Revenue in its year ended December 31, 2015 government-wide Statement of Activities?
A) $ 9,075,000
B) $ 9,975,000
C) $ 10,075,000
D) $ 10,375,000

A government's Statement of Revenues, Expenditures, and Changes in Fund Balances reflected proceeds of bonds in the amount of $1,000,000. That statement also reflected expenditures for debt service in the amount of $3,000,000, including $2,600,000 for principal payments. Assuming no other changes, the effect, when moving from the change in fund balances in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in Net Position for governmental activities in the Statement of Activities would be a:
A) $1,000,000 increase.
B) $1,000,000 decrease.
C) $1,600,000 increase.
D) $1,600,000 decrease.

72. A government had the following transfers reported in its governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances: (1) a transfer from the General Fund to a debt service fund in the amount of $l, 100,000; (2) a transfer from the General Fund to an internal service fund in the amount of $1,300,000; and (3) a transfer from the General Fund to a special revenue fund in the amount of $500,000. The amount that would be shown as a transfer out in the governmental activities column in the Statement of Activities would be:
A) $ 0.
B) $1,300,000.
C) $1,600,000.
D) $2,400,000.

73. Which of the following is true regarding the government-wide statements?
A) Balances from enterprise funds’ statements are entered in the business-type activities sections of the government-wide statements without adjustment.
B) Government-wide statements eliminate interfund transactions, within columns.
C) Both of the above.
D) Neither of the above.

A government reported an “other financing source” in the amount of $750,000, related to the sale of land in its governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. The land had a cost of $300,000. The adjustment in the reconciliation, when moving from the governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in net position for governmental activities in the Statement of Activities would be a(an):
A) Increase of $450,000.
B) Decrease of $450,000.
C) Decrease of $300,000.
D) Increase of $300,000.

75. A government incurred expenses for its infrastructure as follows: $20 million for general repairs; $15 million to extend the life for existing infrastructure; and $18 million for additions and betterments. The government chooses to use the modified approach to record infrastructure. The infrastructure has a basis of $400 million and would be depreciated over a 40 year life, if depreciation were charged. The amount that would be shown as expense in the Statement of Activities would be:
A) $33 million.
B) $35 million.
C) $38 million.
D) $53 million.

76. The total amount of indebtedness of specified kinds that is allowed by law to be outstanding at any time is known as:
A) Debt margin.
B) Debt limit.
C) Borrowing power.
D) Maximum debt

Which of the following is true regarding the reporting of general capital assets by state and local governments?
A) Capital assets are reported in the government-wide Statement of Net Position.
B) Capital assets are reported in the governmental funds Balance Sheet.
C) Both of the above.
D) Neither of the above.

78. A government incurred expenditures for its infrastructure as follows: $20 million for general repairs; $22 million to extend the life of existing infrastructure; $21 million for improvements and additions. If depreciation is to be charged, the amount would be $23 million. Which of the following would be true?
A) If the government chose to use the modified approach to record infrastructure, the amount to be charged as expense would be $42 million.
B) If the government chose not to use the modified approach to record infrastructure, the amount to be charged to expense would be $43 million.
C) Both A and B.
D) None of the above.

79. A government reported an other financing source in the amount of $900,000 related to the sale of land in its governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. The land had a cost of $400,000. The amount that would be reported in the government-wide Statement of Activities would be:
A) A gain of $1,300,000.
B) A gain of $ 900,000.
C) A gain of $ 500,000.
D) A gain of $ 400,000.

80. A government recorded transfers out of the General Fund to the debt service fund in the amount of $ 600,000 and to the enterprise fund in the amount of $ 300,000. The amount that would be shown as a transfer in the governmental activities column of the Statement of Activities would be:
A) $900,000.
B) $600,000.
C) $300,000.
D) $ 0.

The City of Casper levied property taxes for 2015 in the amount of $9,000,000. By the end of the year, $7,200,000 had been collected. It was estimated that $500,000 would be collected during the next 60 days of 2015 and that $240,000 would be collected after that and the remainder would be uncollectible. The City has a policy of recognizing the full amount possible for property taxes. Which of the following statements is true?
A) The amount reported for property tax revenue in the government-wide Statement of Activities would be $7,700,000.
B) The amount reported for property tax revenue in the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances would be $7,940,000.
C) Both A and B.
D) None of the above.

82. A government's Statement of Revenues, Expenditures, and Changes in Fund Balances reported proceeds of bonds in the amount of $1,800,000. It also reported expenditures for bond principal in the amount of $400,000. The last interest payment was on the last day of the fiscal year. The reconciliation from the governmental funds changes in fund balances to the governmental activities change in Net Position would reflect a(an):
A) Increase of $600,000.
B) Decrease of $600,000.
C) Increase of $1,400,000.
D) Decrease of $1,400,000.

83. A governmental fund’s Statement of Revenues, Expenditures, and Changes in Fund Balances reported expenditures for capital outlay in the amount of $5,000,000. Capital assets for that government cost $110,000,000, including $20,000,000 in land. Depreciable assets are amortized over 20 years, on average. The reconciliation from the governmental funds changes in fund balances to the governmental activities change in Net Position would reflect a(an):
A) Increase of $250,000.
B) Decrease of $250,000.
C) Increase of $500,000.
D) Decrease of $500,000.

Which of the following is true regarding the government-wide Statement of Net Position?
A) Discretely presented component units are reported separately.
B) Governmental and business-type activities are reported separately and are consolidated within columns.
C) Both of the above.
D) Neither of the above.

85. Which of the following is true regarding the government-wide Statement of Activities?
A) Program revenues include charges for services, operating grants and contracts, capital grants and contracts, and taxes levied for specific purposes.
B) The accrual basis of accounting is used to calculate revenues and expenses.
C) Both of the above.
D) Neither of the above

86. In its government-wide Statement of Net Position, a government reported assets of $165 million, including $50 million in capital assets (net of depreciation), and liabilities of $80 million, including long-term debt of $60 million, $40 million of which was issued to acquire capital assets. In addition, $30 million was restricted for debt service and other purposes. The government's Unrestricted Net Position would be reported as:
A) $85 million.
B) $55 million.
C) $45 million.
D) $35 million.

87. Which of the following would be considered a program revenue in the Statement of Activities of a local government?
A) A grant from the state to construct utility plant.
B) A motor fuel tax, restricted for road repairs.
C) Both of the above.
D) Neither of the above.

A government reported an Other Financing Source in the amount of $600,000 related to the sale of land in its governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. The land had a cost of $150,000. The adjustment in the reconciliation when moving from the changes in fund balances in the Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in Net Position in the Statement of Activities would be:
A) Increase of $150,000.
B) Decrease of $150,000.
C) Increase of $450,000.
D) Decrease of $450,000.

89. A government reported the following transfers in its governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances: (1) a transfer from the General Fund to a special revenue fund in the amount of $500,000; (2) a transfer from the General Fund to an enterprise fund in the amount of $400,000; (3) a transfer from the General Fund to a permanent fund in the amount of $100,000. The amount that would be shown as a transfer out in the governmental activities column in the Statement of Activities would be:
A) $0; no transfer would be shown.
B) $ 400,000.
C) $ 700,000.
D) $1,000,000.

90. A governmental fund’s Statement of Revenues, Expenditures, and Changes in Fund Balances reported expenditures of $40 million, including capital outlay expenditures of $12 million. Capital assets for that government cost $80 million, including land in the amount of $10 million. Depreciable assets are amortized over 10 years, on average. The reconciliation from governmental fund changes in fund balances to governmental activities change in Net Position would reflect a(an):
A) $4 million increase.
B) $5 million increase.
C) $5 million decrease.
D) $12 million decrease.

The City of Smithfield levied property taxes in and for 2015 in the amount of $300 million. It is estimated that 1% will be uncollectible. During 2015, $280 million was collected, and $12 million was collected during the next 60 days. Smithfield recognizes the maximum possible property taxes in its governmental funds. The adjustment, when moving from the governmental funds changes in fund balances to the governmental activities change in Net Position would be:
A) $2 million increase.
B) $2 million decrease.
C) $5 million increase.
D) $5 million decrease.

92. Which of the following is true regarding the government-wide Statement of Net Position?
A) A classified approach is required, reflecting current assets separately from noncurrent assets and current liabilities from noncurrent liabilities.
B) Major funds are reported for governmental and enterprise funds.
C) Both of the above.
D) Neither of the above.

93. A government's Statement of Revenues, Expenditures, and Changes in Fund Balances reflected expenditures for debt service in the amount of $12,000,000, including $7,000,000 for interest. It also reflected proceeds of bonds in the amount of $4,000,000. No interest accruals were involved. When moving from the changes in fund balances reported for the governmental funds to the change in Net Position for governmental activities, the net change would be:
A) $3,000,000 decrease
B) $1,000,000 decrease
C) $3,000,000 increase
D) $1,000,000 increase

94. Which of the following is true regarding the government-wide Statement of Activities?
A) Fiduciary activities are not reported.
B) Discretely presented component units are not reported.
C) Both of the above.
D) Neither of the above.

A government reported expenditures for infrastructure as follows: $18 million for improvements and additions; $20 million to extend the life of existing infrastructure; $17 million for general repairs. The cost of its infrastructure, excluding land, is $750 million, and the infrastructure has an estimated life of 50 years, on average. Which of the following would be the reported expense (in millions) under each of the following options?
A) Depreciation Approach: $15; Modified Approach: $37
B) Depreciation Approach: $15; Modified Approach: $32
C) Depreciation Approach: $32; Modified Approach: $37
D) Depreciation Approach: $32; Modified Approach: $32

96. Which of the following fund types is not included in the government-wide financial statements?
A) General Fund
B) Pension Trust Fund
C) Enterprise Fund
D) Internal Service Fund

97. Which of the following is not required to convert from the modified accrual basis to the accrual basis in preparing the government-wide statements?
A) Record general capital assets
B) Change expenditures for debt service principal to reduction of liabilities
C) Make adjustments to revenues deferred under the 60 day rule
D) Accrue interest on enterprise fund bonds

98. The following balances exist at year end within the governmental activities of a government unit:

Transfers In: 145,000
Transfers Out: 115,000

When compiling the government-wide financial statements, the journal entry to eliminate the transfer activity will include:
A) A debit of $115,000 to Transfers Out
B) A debit of $30,000 to Transfers In
C) A debit of $115,000 to Transfers In
D) None of the above

99. A donated collection is not required to be capitalized. If a government decides not to capitalize them, how will they be accounted for at the time of the donation?
A) Debit revenue, credit expense/expenditure
B) Debit collections, credit revenue
C) Debit expense/expenditure, credit revenue
D) Debit collections, credit cash

100. Which of the following situations would be unlikely to result in the recognition of an asset impairment?
A) A city warehouse is damaged by fire.
B) Recently purchased city-owned voting booths are rendered obsolete by a federal law requiring a new technology.
C) Ridership on city buses declines.
D) Construction on a municipal sports complex stops when the city’s major league baseball team moves to another city.

101. A government reported, in its government-wide Statement of Net Position:
• assets of $82 million, including $40 million in capital assets (cost), with $12 million in accumulated depreciation, and
• liabilities of $50 million, including long-term debt of $15 million related to capital asset acquisition.

In addition, $4 million of cash was restricted for payment of debt service. The government's Unrestricted Net Position would be reported as:
A) $20 million.
B) $19 million.
C) $15 million.
D) $ 4 million.

102. Which of the following adjustments would be made when moving from the governmental funds balance sheet to the governmental activities column in the government-wide Statement of Net Position?
A) Add balances of internal service fund assets and liabilities.
B) Add beginning capital assets, net of depreciation.
C) Both of the above.
D) Neither of the above.

103. Which of the following is true regarding the government-wide financial statements?
A) Government-wide statements include the Statement of Net Position, the Statement of Activities, and the Statement of Cash Flows.
B) Government-wide statements are prepared using the economic resources measurement focus and accrual basis of accounting.
C) Both of the above are true.
D) Neither of the above is true.

104. On April 1, 2015, a local government issued bonds in the amount of $2,000,000. The bonds were issued at par and carried an interest rate of 5%, payable October 1 and April 1. When moving from the change in fund balances in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the change in Net Position in the governmental funds column of the Statement of Activities, both for the fiscal year ended June 30, 2015, the effect for the interest accrual only would be:
A) A decrease of $25,000
B) An increase of $25,000
C) A decrease of $50,000
D) An increase of $50,000

105. Where in the basic financial statements, in most cases, would one find internal service activities reported?
A) In the proprietary funds statements and in the business-type activities column of the government-wide statements.
B) In the governmental funds statements and in the governmental activities column of the government-wide statements.
C) In the governmental funds statements and in the business-type activities column of the government-wide statements.
D) In the proprietary funds statements and in the governmental activities column of the government-wide statements.

106. Where in the basic financial statements would one find fiduciary activities reported?
A) In the fiduciary funds statements and in the governmental activities column of the government-wide statements.
B) In the fiduciary funds statements and in the business like activities column of the government-wide statements.
C) In the fiduciary funds statements only.
D) In the government-wide statements only.

The City of Charlestown levied property taxes in the amount of $10,000,000. It is estimated that 2% will not be collected. The taxes were levied July 1, 2014 for the fiscal year ended June 30, 2015. During the year ended June 30, 2015, $8,900,000 in property taxes were collected from this levy. It is estimated that $620,000 will be collected during the next 60 days, $300,000 will be collected more than 60 days after June 30, 2015, and $180,000 will never be collected.

When preparing the government-wide financial statements, how much property tax revenue should be recognized for the year ended June 30, 2015?
A) $ 8,900,000.
B) $ 9,800,000.
C) $ 9,820,000.
D) $10,000,000.

The City of Charlestown levied property taxes in the amount of $10,000,000. It is estimated that 2% will not be collected. The taxes were levied July 1, 2014 for the fiscal year ended June 30, 2015. During the year ended June 30, 2015, $8,900,000 in property taxes were collected from this levy. It is estimated that $620,000 will be collected during the next 60 days, $300,000 will be collected more than 60 days after June 30, 2015, and $180,000 will never be collected. 108. How much will the city report as Deferred Inflow - Property Taxes in its June 30, 2015 government-wide Statement of Net Position?
A) $ 0.
B) $ 180,000.
C) $ 300,000.
D) $ 620,000.

The City of Charlestown levied property taxes in the amount of $10,000,000. It is estimated that 2% will not be collected. The taxes were levied July 1, 2014 for the fiscal year ended June 30, 2015. During the year ended June 30, 2015, $8,900,000 in property taxes were collected from this levy. It is estimated that $620,000 will be collected during the next 60 days, $300,000 will be collected more than 60 days after June 30, 2015, and $180,000 will never be collected. 109. When preparing the General Fund financial statements, how much property tax revenue should be recognized from this levy for the year ended June 30, 2015?
A) $ 8,900,000.
B) $ 9,520,000.
C) $ 9,820,000.
D) $10,000,000.

110. The General Fund of the City of Plymouth purchased a police car in the amount of $28,000. Which of the following would be true?
A) The government-wide Statement of Activities would report an expense of $28,000.
B) The General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances would report an expenditure of $28,000.
C) Both of the above.
D) Neither of the above.

111. Which of the following is not true regarding infrastructure assets?
A) Governments can record depreciation in the same manner as for other depreciable fixed assets.
B) Because they have such long useful lives, infrastructure assets are never depreciated.
C) Governments can choose to expense expenditures that extend the life of infrastructure assets in lieu of depreciation.
D) Expenditures to add to or improve infrastructure assets must be capitalized.

112. For the depreciation of infrastructure…
A) Governments are required to record depreciation in the same manner as other depreciable fixed assets.
B) Governments are required to record depreciation using a modified approach.
C) Governments do not record depreciation for infrastructure.
D) Governments can choose to expense expenditures that extend the life of infrastructure assets in lieu of depreciation

113. The difference between assets and liabilities in the government-wide statements is called_________.
A) Fund Balance.
B) Net Position.
C) Net Equity.
D) Accrued Equity.

114. When using the modified approach to account for infrastructures, expenditures to extend the life of the infrastructure assets are:
A) Expensed.
B) Capitalized.
C) Either A or B.
D) Neither A nor B.

115. What would be the appropriate journal entry to adjust to the accrual basis of accounting for depreciation on general capital assets related to prior years?
A) Debit Depreciation expense, Credit Accumulated Depreciation.
B) Debit Net Position, Credit Accumulated Depreciation.
C) Debit Accumulated Depreciation, Credit Net Position.
D) Debit Machinery, Credit Accumulated Depreciation

116. The governmental funds report a total of $2,000,000 Transfers In and $1,500,000 Transfers Out. To consolidate governmental activities what amount will be eliminated from the Transfers In and Transfers Out accounts among the governmental funds?
A) $500,000
B) $1,500,000
C) $2,000,000
D) $3,500,000

117. Which of the following is considered a source of general revenue in the Government-wide Statement of Activities?
A) Charges for Services
B) Operating Grants
C) Sales Tax
D) None of the Above

118. Which of the following is true concerning infrastructure assets?
A) Capitalization of infrastructure is optional
B) Capitalization of infrastructure is required
C) Governments must depreciate infrastructure assets
D) Governments rarely possess infrastructure

119. Under which of the following circumstances would an asset be considered impaired?
A) A costly piece of diagnostic equipment at a city hospital is no longer used
because new technology exists that does a better job.
B) A bridge is damaged by an earthquake.
C) An expansion project at the city airport is halted because a major airline stops
service to the city.
D) All of the above.

120. The difference between the amount of debt limit calculated as prescribed by law and the net amount of outstanding indebtedness subject to limitation, is known as:
A) Debt Limit
B) Debt Margin
C) Long-Term Debt
D) General Long-Term Debt

121. Which of the following would not be determined to result in asset impairment under GASB Statement 42?
A) An expansion project at a city airport is halted when a major airline discontinues service to city.
B) A truck is at the end of its useful life.
C) A building is damaged by a hurricane.
D) New technology renders previous equipment obsolete.

122. A company has bonds outstanding at the beginning of the current year. The debit in the worksheet entry to bring these on to the books would be to:
A) Proceeds from Sale of Bonds
B) Amount to be Provided for Long-Term Debt
C) Expenditures – Bond Principal
D) Net Position – beginning balance

123. If an Internal Service Fund has positive operating income, the worksheet entry to add the Internal Service Fund to governmental activities would include a:
A) Debit to Transfers In
B) Credit to Net Position
C) Debit to Expenditures/expense
D) Credit to Expenditures/expense

124. When converting fund financial records to government-wide financial statements, worksheet entries are made to eliminate all of the following accounts except:
A) Interest Payable
B) Bond Proceeds
C) Debt Service Expenditure - Principal
D) Capital Expenditures

125. Which of the following would not need to be addressed/adjusted in compiling the government-wide statements?
A) Principal repayment on proprietary fund bonds
B) Issuance of general obligation bonds
C) Interfund transfers among governmental funds
D) Interest accrual on general obligation bonds

126. Internal service funds are most commonly reported in which section of the Government-wide financial statements?
A) Governmental Activities
B) Business-type Activities
C) Component Unit
D) None of the above.

127. When converting to government-wide financial statements, the entry to record the amortization of the premium on a bond would:
A) Debit the Premium on bonds payable and a credit premium expense.
B) Debit the Bond Payable and a credit Premium on bonds payable.
C) Debit the Premium on bonds payable and a credit interest expense.
D) There is no entry. You do not amortize the premium.

128. To qualify as a collection, a donated or purchased item must meet all of the following conditions except:
A) Held for public exhibition, education, or research to further public service
B) Protected, kept unencumbered, cared for, and preserved.
C) Subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other collectibles
D) All of the above conditions must be met.

48. Which of the following is an example of a special-purpose government?
A) Park district
B) Village government
C) Township government
D) City government

Which of the following is not an example of a special-purpose government?
A) Village government
B) Tollway authority
C) Library district
D) Fire protection districts

50. Which of the following would not be considered a special-purpose government for financial reporting purposes?
A) A public school system.
B) An art museum.
C) A public hospital.
D) A county board of supervisors.

51. Which of the following statements is true of a special-purpose government?
A) Special-purpose governments that are engaged in more than one governmental-type activities can combine the fund and government-wide financial statements.
B) Special-purpose governments that are engaged in a single governmental-type activity may combine the fund and government-wide financial statements.
C) Special-purpose governments engaged in only one business-type activity have to prepare government-wide financial statements.
D) Special-purpose governments must be stand-alone local governments.

52. Which of the following is not required for a special-purpose local government engaged in only fiduciary type activities?
A) Statement of Fiduciary Net position
B) Statement of Fiduciary Cash Flows
C) Notes to the Financial Statements
D) Required Supplementary Information other than MD&A

53. Special-purpose governments that are engaged in both governmental and business-type activities or in more than one governmental activity are required to include all of the following in its financial statements except?
A) Required supplementary Information
B) Fund basis financial statements
C) Government-wide financial statements
D) None of the above, these are all required

54. Which of the following is not true regarding financial reporting of special-purpose entities?
A) Special-purpose entities might be included as component units in a primary government's financial statements.
B) Special-purpose entities that engage in a single governmental activity may prepare statements that combine government-wide and governmental fund statements.
C) Special-purpose entities that are engaged only in fiduciary activities must prepare a Statement of Activities and a Statement of Fiduciary Net Position.
D) None of the above – all are true.

55. Assume a government is a special-purpose entity engaged in fiduciary activities only. Which of the following financial statements would be required?
A) Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position.
B) Statement of Net Position and Statement of Activities.
C) Statement of Net Position, Statement of Activities, Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position.
D) Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position, and Statement of Cash Flows.

Assume a government is determined to be a special-purpose government engaged in business-type activities only. Which of the following financial statements would be required?
A) Balance Sheet, Statement of Revenues, Expenditures, and Changes in fund Balances.
B) Statement of Net Position, Statement of Activities, Statement of Cash Flows.
C) Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows.
D) Statement of Net Position and Statement of Activities.

57. Assume a government is a special-purpose government engaged in only one governmental activity. Which financial statements would be required?
A) Government-wide statements only.
B) Statements combining the governmental funds and government-wide statements.
C) Both government-wide and governmental fund basis statements.
D) Either B or C above.

58. With respect to public colleges engaged in business-type activities, which of the following is not correct?
A) GASB requirements for business-type activities of public colleges requires accrual account for debt, include accrual of interest and amortization of debt discount and premium.
B) Most public college foundations are required to be reported as discretely presented component units in the college’s financial report.
C) Only amounts that are to paid by students and third-party payers can be shown as tuition and fee revenue net of any scholarship discounts and allowances.
D) All of the above are correct

59. Depending upon the circumstances, in practice public colleges and report as special purpose entities engaged in:
A) Business-type activities only.
B) Both governmental and business-type activities.
C) Governmental activities only.
D) Any one of the above.

60. Which of the following is true with respect to public four-year higher education institutions (public colleges)?
A) Revenue sources for public colleges include tuition and fees, state appropriations and donations. All other income is reported as unrelated business income.
B) Many institutions have most of their restricted resources managed by related entities, known as foundations.
C) No public colleges have the power to issue debt; it must be issued by the state as general obligation debt.
D) Public colleges may not choose to report as special-purpose entities engaged only in business-type activities.

61. Which of the following is true regarding the financial statements for special-purpose entities?
A) Special-purpose entities that are engaged only in one governmental activity may combine government-wide and governmental fund statements.
B) Special-purpose entities that are engaged in fiduciary activities only prepare the statements required for fiduciary funds (Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position).
C) Both of the above.
D) Neither of the above.

62. Special purpose governments engaged only in fiduciary-type activities are required to prepare all of the following except:
A) Statement of Fiduciary Net Position
B) Statement of Cash Flows
C) Statement of Changes in Fiduciary Net Position
D) Management Discussion and Analysis

Which of the following is true regarding financial reporting of special-purpose entities?
A) Special purpose entities might include park districts, school districts, and public colleges and universities.
B) Special-purpose entities, in some cases, have more limited reporting requirements than general-purpose entities.
C) Both of the above are true.
D) Neither of the above is true.

64. Public colleges and universities may choose to report as:
A) Special-purpose entities engaged in governmental and business-type entities.
B) Special-purpose entities engaged in business-type activities only.
C) Either (A) or (B) depending on the nature of their operations.
D) Neither (A) nor (B).

65. Public colleges and universities that choose to report as special-purpose entities engaged only in business-type activities would have which of the following financial statements?
A) Statement of Net Position, Statement of Activities.
B) Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position.
C) Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows.
D) None of the above.

66. Which of the following is not true regarding the Statement of Revenues, Expenses and Changes in Net Position for a public college reporting as a special purpose entity engaged in business type activities only?
A) The accrual basis of accounting is used to measure revenues and expenses.
B) Encumbrances are recorded at the time purchase orders are issued.
C) Depreciation expense is recorded.
D) All of the above are true.

67. A public college had tuition and fees of $21,000,000. Scholarships, for which no services were required, amounted to $2,500,000. Graduate assistantships, for which services were required, amounted to $1,600,000. The amount to be reported by the public college as net tuition and fees would be:
A) $21,000,000.
B) $19,400,000.
C) $18,500,000.
D) $16,900,000.

68. Which of the following would be true regarding the Statement of Net Position for a public college reporting as a special purpose entity engaged in business type activities only?
A) A classified statement is required, separating current and long-term assets and liabilities.
B) The net asset categories are: net investment in capital assets, restricted and unrestricted.
C) Both of the above are true.
D) Neither of the above is true.

69. Which of the following is not true regarding the Statement of Revenues, Expenses, and Changes in Net Position for a public college?
A) Tuition revenues are reported net of tuition waivers when those waivers require service on the part of the recipient student.
B) Tuition fees waived by the institution in return for services provided by employees and student assistants are shown as expenses.
C) Interest expense is accrued and bond premiums and discounts are amortized.
D) None of the above.

70. Which of the following is true regarding the Statement of Revenues, Expenses, and Changes in Net Position for a public college, operating as a special-purpose entity engaged only in business-type activities?
A) Student scholarship allowances should be reported as operating expenses as long as no services are provided.
B) Expenses are recorded when incurred.
C) Depreciation expense is not recorded.
D) None of the above.

71. Which of the following is not true regarding the Statement of Revenues, Expenses, and Changes in Net Position for a public college, operating as a special-purpose entity engaged only in business-type activities?
A) The accrual basis of accounting is used.
B) Auxiliary enterprise activities represent revenues and expenses related to units of the college that provide services to students on a user fee basis.
C) Infrastructure must be reported using the modified approach.
D) All of the above are true.

72. Which of the following is true regarding the Statement of Cash Flows for a public college?
A) The direct method must be used.
B) The statement is in the same format required for state and local governmental enterprise funds.
C) Both A and B are true.
D) Neither A nor B is true.

73. Which of the following is true regarding the Statement of Cash Flows for a public college?
A) A reconciliation is required, reconciling operating income in the Statement of Revenues, Expenses, and Changes in Net Position to the cash flows provided (used) by operating activities.
B) Cash purchases of capital assets are reported as outflows in the capital related financing activities section.
C) Both A and B are true.
D) Neither A nor B is true.

74. Which of the following is true regarding the Statement of Cash Flows for a public college?
A) Cash received for interest is reported as an increase in cash flows from operating activities.
B) Cash paid for interest is reported as a decrease in cash flows from either noncapital or capital and related financing activities.
C) Both A and B are true.
D) Neither A nor B is true.

75. Which of the following statements is true regarding accounting and financial reporting for public colleges and universities?
A) Public colleges and universities may choose to report in the same manner as private colleges and universities, using FASB standards.
B) Public colleges and universities may choose to report as special-purpose entities.
C) Both A and B are true.
D) Neither A nor B is true.

76. A public college had tuition and fees for the year ended June 30, 2015 in the amount of $45,000,000. Scholarships, for which no services were required, amounted to $4,800,000. Graduate assistantships, for which services were required, amounted to $2,300,000. The amount to be reported by the college for net tuition and fee revenue would be:
A) $37,900,000.
B) $40,200,000.
C) $42,700,000.
D) $45,000,000.

77. Which of the following groups would not be considered a component unit of a special-purpose government, for the purposes of applying GASB Statement 39: Determining Whether Certain Organizations Are Component Units?
A) A university foundation.
B) A hospital auxiliary.
C) A museum foundation.
D) A high school band booster club.

78. Which of the following is true regarding the Statement of Cash Flows for a public college?
A) The indirect method must be used.
B) The statement is in the same format required for state and local governmental enterprise funds.
C) Both of the above are true.
D) Neither of the above is true.

79. Which of the following statements is (are) true regarding public colleges and universities choosing to report as special-purpose entities engaged in business-type activities only?
A) Endowments would be reported in the Statement of Net Position as Net Position Restricted-Nonexpendable.
B) Capital appropriations from state governments are shown, in the Statement of Revenues, Expenses, and Changes in Net Position, as a category separate from revenues.
C) Both of the above.
D) Neither of the above.

80. Public colleges and universities follow __________ guidelines while private colleges and universities follow ________ guidelines
A) GAO, FASB.
B) FASB, GAO.
C) GASB, FASB.
D) FASB, GASB.

81. Which of the following groups would not be considered a component unit of a special-purpose government, for the purposes of applying GASB Statement 39: Determining Whether Certain Organizations Are Component Units?
A) General governments.
B) Booster clubs.
C) Museums.
D) Health care entities.

82. According to the National Association of College and Business Officers, scholarship discounts and allowances paid by institutional funds, assuming that no services are provided by the recipients:
A) Are included in tuition revenue and recorded as an expense.
B) Are reported as a reduction of revenue by directly reducing the revenue account or increasing a contra- revenue account.
C) Are not included in tuition revenue but are included as an “other source”.
D) Are reported as an adjustment to tuition revenue in the government-wide statements.

83. Fees waived by the an educational institution in return for services to be provided by students are reported:
A) As a reduction in tuition revenue by directly reducing the revenue account or increasing a contra-revenue account.
B) As an adjustment to tuition revenue in the government-wide statements.
C) As an expense.
D) By deducting the waived fee from tuition revenue before it is recorded.

84. Which of the following is true?
A) Tuition and fees charged are included in income and the fees waived for graduate assistants are expensed.
B) Scholarship allowances for which no services are required are expensed.
C) Fees waived for graduate assistantships for which services are required are deducted directly from tuition revenue.
D) Revenues for summer sessions are recorded in deferred revenues and recorded as revenue when the semester ends.

85. GASB requires that educational institutions who engage in business-type activities and issue debt account for the debt by:
A) Recording the debt service as an expenditure as it becomes due.
B) Recording the interest as an expense when it is due and payable.
C) Recording the principal net of any premium or discount when the debt is issued and expense the interest as it is paid.
D) Recording the interest expense on the accrual basis, including amortizing the premium or discount, if applicable.

86. With respect to public colleges and universities, state appropriations for operating purposes are shown as:
A) Non-operating revenue.
B) Operating revenue.
C) Non-expendable endowments.
D) None of the above.

Tuition and fees for the Northern University was assessed at $22,000,000. Scholarship allowances, for which no services are required, were $1,600,000 and graduate assistantships, for which services are required, were $1,000,000.

87. What is the journal entry to record tuition revenue?
A) Accounts receivable 20,400,000
Operating Revenue-Student Tuition & Fees 20,400,000
B) Accounts Receivable 22,000,000
Operating Revenue-Student Tuition & Fees 22,000,000
C) Accounts Receivable 19,400,000
Operating Revenue-Student Tuition & Fees 19,400,000
D) Accounts Receivable 21,000,000
Operating Revenue-Student Tuition & Fees 21,000,000

Tuition and fees for the Northern University was assessed at $22,000,000. Scholarship allowances, for which no services are required, were $1,600,000 and graduate assistantships, for which services are required, were $1,000,000.88. What is the journal entry to record the scholarship allowances?
A) Scholarships and Fellowships Expense 1,600,000
Accounts Receivable 1,600,000
B) Operating Revenue Deduction –Scholarship
Allowances 1,600,000
Accounts Receivable 1,600,000
C) Operating Revenue Deduction –Scholarship
Allowances 1,600,000
Deferred Revenues 1,600,000
D) Not recorded because it was deducted from tuition revenue before revenue it was recorded

Tuition and fees for the Northern University was assessed at $22,000,000. Scholarship allowances, for which no services are required, were $1,600,000 and graduate assistantships, for which services are required, were $1,000,000.89. What is the journal entry to record the graduate assistantships?
A) Not recorded because it was deducted from tuition revenue before revenue it was recorded
B) Assistantships and Fellowships Expense 1,000,000
Accounts receivable 1,000,000
C) Operating Revenue Deduction –Scholarship
Allowances 1,000,000
Accounts Receivable 1,000,000
D) Operating Revenue Deduction –Scholarship
Allowances 1,000,000
Deferred Revenues 1,000,000

• Northern University has a fiscal year end of June 30.
• In June 2015, tuition and fees of $1,200,000 was assessed for the summer term that runs from June 1, 2015 through August 31, 2015. $1,200,000 was collected on June 1, 2015.

90. When is this revenue reportable on the financial statements for Northern?
2015 2016
A) $ 1,200,000 0
B) $ 0 1,200,000
C) $ 600,000 600,000
D) $ 400,000 800,000

• Northern University has a fiscal year end of June 30.
• In June 2015, tuition and fees of $1,200,000 was assessed for the summer term that runs from June 1, 2015 through August 31, 2015. $1,200,000 was collected on June 1, 2015.
91. What is the journal entry on June 1 for Northern?
A) Cash and Cash Equivalents 1,200,000
Operating Revenues-Student Tuition and Fees 400,000
Deferred Revenues-Student Tuition and Fees 800,000
B) Cash and Cash Equivalents 400,000
Cash and Cash Equivalents, Reserved 800,000
Operating Revenues-Student Tuition and Fees 400,000
Deferred Revenues-Student Tuition and Fees 800,000
C) Cash and Cash Equivalents 1,200,000
Operating Revenues-Student Tuition and Fees 1,200,000
D) Cash and Cash Equivalents 1,200,000
Deferred revenue 1,200,000

92. Northern University received state appropriations as follows:
• Unrestricted general purposes $1,300,000
• Capital outlay, set aside for specific projects 1,700,000
What is the journal entry to record this event?

A) Cash and Cash Equivalents 1,300,000
Restricted Cash and Cash Equivalents 1,700,000
Nonoperating Revenues – State Appropriations 1,300,000
Capital Appropriations 1,700,000
B) Cash and Cash Equivalents 3,000,000
Nonoperating Revenues – State Appropriations 1,300,000
Capital Appropriations 1,700,000
C) Cash and Cash Equivalents 3,000,000
Nonoperating Revenues – State Appropriations 1,300,000
Nonoperating Revenues-Capital Appropriations 1,700,000
D) Cash and Cash Equivalents 1,700,000
Restricted Cash and Cash Equivalents 1,300,000
Nonoperating Revenues – State Appropriations 1,700,000
Capital Appropriations 1,300,000

58. Which organization has standard setting authority over governmentally related not-for-profit organizations, such as hospitals colleges and universities?
A) FASB.
B) GASB.
C) AICPA.
D) SEC.

Private not-for-profits must follow all applicable ____ standards in recording transactions.
A) AICPA.
B) GASB.
C) FASB.
D) SEC.

60. Identify the standard setting body for private not-for-profit organizations and the basis of accounting that should be used.
A) GASB & Accrual.
B) GASB & Modified Accrual.
C) FASB & Accrual.
D) FASB & Modified Accrual.