Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

TEST BANK
ACCOMPANY ESSENTIALS OF ACCOUNTING FOR GOVERNMENTAL AND NOT-FOR-PROFIT ORGANIZATIONS: ELEVENTH EDITION
TO

PREPARED BY: PAUL COPLEY AND MARY LORETTA MANKTELOW JAMES MADISON UNIVERSITY

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

Chapter 1 Introdu t!on to A ount!n" and #!nan !a$ Report!n" %or &o'ern(enta$ and Not)%or)Pro%!t Or"an!*at!on+
True,#a$+e -ue+t!on+ 1* +he Governmental Accounting -tandard .oard et financial reporting tandard for all unit of government/ federal, tate, and local* An 'er/ Fal e "* Fund accounting e0i t primaril% to provide a urance that re ource are u ed according to legal or donor re triction * An 'er/ +rue #* +he Financial Accounting -tandard .oard et financial reporting tandard for private ector organization , e0cept nongovernmental, not-for-profit organization * An 'er/ Fal e 1* FA-A., GA-. and FA-. tandard are et forth primaril% in document called tatement * An 'er/ +rue 2* FA-A., GA-. and FA-. tandard are et forth primaril% in document called concept tatement * An 'er/ Fal e 3* +he FA-A. 'a e ta$li hed to recommend accounting and financial reporting tandard for governmental and nonprofit enterpri e * An 'er/ Fal e 4* +he GA-. re5uire upplementar% information to $e reported 'ith it financial tatement if it i e ential to e ta$li h appropriate conte0t for the financial tatement and note * An 'er/ +rue 6* +he Financial Accounting -tandard .oard et financial reporting tandard for private not-for-profit and inve tor-o'ned $u ine e * An 'er/ +rue

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

7* +he Financial Accounting -tandard .oard and the Governmental Accounting -tandard .oard are parallel $odie under the over ight of the Financial Accounting Foundation* An 'er/ +rue 10* An organization i pre umed to $e governmental if it ha the a$ilit% to i ue directl% de$t that i e0empt from federal ta0e * An 'er/ +rue 11* +he Federal Accounting -tandard Advi or% .oard re5uire le doe the FA-. or GA-.* An 'er/ Fal e 1"* +he FA-A. re5uire more financial tatement than are t%picall% re5uired of tate and local government * An 'er/ +rue 1#* One o$8ective of the Governmental Accounting -tandard .oard i to help u er determine compliance 'ith finance-related la' , rule , and regulation * An 'er/ +rue 11* Government mu t have a man% fund a nece ar% to fulfill legal re5uirement and ound financial admini tration $ut mu t have at a minimum a General Fund* An 'er/ +rue 12* +he Governmental Accounting -tandard .oard con ider the financial reporting entit% to include the primar% government and it component unit * An 'er/ +rue 13* A &anagement9 :i cu ion and Anal% i i re5uired for tate and local governmental unit , $ut not the federal government* An 'er/ Fal e 14* +he GA-. Concept -tatement on -ervice )ffort and Accompli hment Reporting encourage tate and local government to include input of nonmonetar% re ource in their financial reporting* An 'er/ +rue e0ten ive report than

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

16* +he GA-. Concept -tatement on -ervice )ffort and Accompli hment Reporting re5uire tate and local government to include input of nonmonetar% re ource in their financial reporting* An 'er/ Fal e 17* Although certain upplementar% information ma% not $e re5uired, if pre ented, it mu t follo' GA-. guidance regarding it format and content* An 'er/ +rue "0* +he format and content of upplementar% information 'hich i not re5uired $% GA-. i up to the di cretion of the reporting entit% An 'er/ Fal e "1* GA-. and FA-. Concept -tatement e ta$li h accounting tandard that mu t $e complied 'ith to receive an un5ualified audit opinion* An 'er/ Fal e ""* FA-A., GA-. and FA-. tandard are et forth primaril% in document called interpretation * An 'er/ Fal e "#* Fund-$a i tatement are pre ented for three categorie of government activitie / governmental, proprietar%, and fiduciar%* An 'er/ +rue "1* -tate and local government ma% u e eleven different fund t%pe * An 'er/ +rue "2* +he economic re ource mea urement focu and accrual $a i of mea urement i an important feature of government-'ide financial tatement * An 'er/ +rue "3* .u ine activitie fund tatement mu t $e changed to the accrual $a i from the modified accrual $a i 'hen preparing government-'ide financial tatement * An 'er/ Fal e

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

"4* Governmental activitie fund tatement ma% u e modified accrual $a i 'hen preparing government-'ide financial tatement * An 'er/ Fal e "6* Fiduciar% fund of a governmental unit u e the current financial re ource mea urement focu and modified accrual $a i of accounting An 'er/ Fal e "7* +he government-'ide tatement and the fund tatement for proprietar% fund and fiduciar% fund u e the economic re ource mea urement focu and the accrual $a i of accounting* An 'er/ +rue #0* ;nder the accrual $a i of accounting, revenue are recognized 'hen mea ura$le and availa$le to finance e0penditure of the current period* An 'er/ Fal e #1* General fi0ed a et of the government are reported $oth in the government-'ide financial tatement and the governmental fund financial tatement * An 'er/ Fal e #"* Compari on of the legall% approved $udget 'ith actual re ult of the General Fund i included a part of re5uired upplementar% information in the CAFR* An 'er/ +rue

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

##* Compari on of the legall% approved $udget 'ith actual re ult of the General Fund i not part of re5uired upplementar% information in the CAFR* An 'er/ Fal e #1* <ong-term de$t that i to $e paid 'ith ta0 revenue i reported $oth in the government'ide tatement and in the governmental fund tatement An 'er/ Fal e #2* &ea urement focu refer to tho e item , uch a current and long-term a et , that are $eing reported on the financial tatement * An 'er/ +rue #3* Infra tructure i not capitalized $% tate and local governmental unit * An 'er/ Fal e #4* Fiduciar% fund include agenc%, pen ion tru t, inve tment tru t, and permanent fund * An 'er/ Fal e #6* +he Financial Accounting -tandard .oard ha authorit% to e ta$li h accounting and financial reporting tandard for $oth private and tate univer itie * An 'er/ Fal e #7* FA-. et the reporting tandard for private and pu$lic not-for-for profit An 'er/ Fal e 10* Internal -ervice fund are treated a governmental activitie in the government-'ide tatement if the principal cu tomer are other department 'ithin the General Fund* An 'er/ +rue 11* Permanent fund can $e either a governmental fund or a fiduciar% fund 'here onl% income on donated a et ma% $e pent* An 'er/ Fal e

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

1"* :epreciation on capital a et i included a an e0pen e in the -tatement of Activitie in the government-'ide financial tatement An 'er/ +rue 1#* :epreciation on capital a et i included a an e0pen e in the -tatement of Revenue , )0pen e , and Change in Fund Net A et in the proprietar% fund financial tatement An 'er/ +rue 11* :epreciation on capital a et i not included a an e0pen e in the -tatement of Revenue , )0pen e , and Change in Fund Net A et in the proprietar% fund financial tatement An 'er/ Fal e 12* According to GA-. tandard relating to .udgetar% Accounting, an annual $udget hould $e adopted $% ever% governmental unit* An 'er/ +rue 13* According to GA-. tandard relating to .udgetar% Accounting, $udgetar% compari on hould $e included in the appropriate financial tatement or chedule for governmental fund for 'hich an annual $udget ha $een adopted* An 'er/ +rue 14* According to GA-. tandard relating to .udgetar% Accounting, $udgetar% compari on are not re5uired for proprietar% fund * An 'er/ +rue 16* According to GA-. tandard relating to .udgetar% Accounting, the accounting % tem hould provide the $a i for appropriate $udgetar% control* An 'er/ +rue 17* For mo t tate and local government , the $udget, 'hen adopted according to procedure pecified $% tate la' , i $inding upon the admini trator of a governmental unit* An 'er/ +rue

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

20* A fund repre ent part of the activitie of an organization 'hich i eparated from other activitie in the accounting record to more ea il% demon trate compliance 'ith legal re triction or limitation * An 'er/ +rue 21* A government ma% have t'o or more General Fund * An 'er/ Fal e 2"* +he GA-. recentl% pu$li hed a 'hite paper 'hich identifie five environmental difference $et'een government and for-profit enterpri e * An 'er/ +rue Mu$t!p$e Cho! e -ue+t!on+ 2#* Governmental fund include/ A= -pecial revenue fund .= Internal ervice fund C= :e$t ervice fund := A and C An 'er/ : 21* +he >(ierarch% of GAAP? i e ta$li hed $% the/ A= Financial Accounting -tandard .oard* .= Federal Accounting -tandard Advi or% .oard C= Governmental Accounting -tandard .oard := All of the a$ove have e ta$li hed a hierarch% An 'er/ : 22* +he term >proprietar% fund ? applie to/ A= enterpri e and internal ervice fund onl%* .= all fund that u e accrual accounting* C= enterpri e, internal ervice, and private-purpo e tru t fund * := none of the a$ove an 'er are correct* An 'er/ A

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

23* +he term >fiduciar% fund ? applie to/ A= enterpri e and internal ervice fund * .= pen ion, inve tment tru t and enterpri e fund C= enterpri e, internal ervice, and private-purpo e tru t fund * := none of the a$ove an 'er are correct* An 'er/ : 24* +he GA-. et accounting tandard for all of the follo'ing e0cept/ A= -tate and local government .= Nongovernmental not-for-profit ho pital C= Component unit o'ned or controlled $% government := Governmentall% related not-for-profit univer itie An 'er/ . 26* @hich of the follo'ing fund t%pe i pre ent in ever% general-purpo e governmentA A= Permanent .= General C= -pecial revenue := Capital pro8ect An 'er/ . 27* @hich of the follo'ing i a fiduciar% fundA A= Inve tment tru t .= Permanent C= )nterpri e := Internal ervice An 'er/ A 30* @hich of the follo'ing i not a fiduciar% fundA A= Agenc% .= Permanent C= Pen ion tru t := Private-purpo e tru t An 'er/ .

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

31* @hich of the follo'ing i a governmental fundA A= Agenc% .= )nterpri e C= -pecial revenue := Internal ervice An 'er/ C 3"* @hich of the follo'ing i not one of the o$8ective of Federal Financial Reporting, a outlined in -FFAC 1, 'hich 'a i ued $% the FA-A.A A= Financial reporting hould ena$le evaluation of the ervice effort , co t and accompli hment of the reporting entit%* .= Financial reporting hould ena$le evaluation of the ucce rate of program C= Financial reporting hould reveal 'hether financial % tem and control are ade5uate := Financial reporting hould demon trate accounta$ilit% regarding rai ing and e0pending mone% according to $udgetar% proce and la' and regulation An 'er/ .* 3#* +he FA-A. ha the authorit% to e ta$li h accounting and financial reporting tandard for/ A= Federal government .= Inve tor o'ned $u ine C= -tate and local government := Pu$lic not-for-profit An 'er/ A 31* +he FA-. ha the authorit% to e ta$li h accounting and financial reporting tandard for/ A= Federal government .= Private not-for-profit C= Pu$lic not-for-profit := -tate and local government An 'er/ . 32* +he GA-. ha the authorit% to e ta$li h accounting and financial reporting tandard for/ A= Federal government .= Private not-for-profit C= -tate government := None of the a$ove An 'er/ C

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

33* In order for a fund to e0i t, there mu t $e/ A= A fi cal entit%B a et et a ide for a pecific purpo e .= A dou$le-entr% accounting entit% C= .oth A C . are re5uired := A C . are optional and not re5uired An 'er/ C 34* @hich fund categor% mu t change from modified accrual to accrual $a i 'hen preparing government-'ide financial tatement A A= Governmental .= Proprietar% C= Fiduciar% := A C . onl% An 'er/ A 36* @hich of the follo'ing u e current financial re ource mea urement focu A A= Fiduciar% fund tatement .= Governmental fund tatement C= Proprietar% fund tatement := Internal -ervice fund tatement An 'er/ . 37* @hich of the follo'ing $e t de cri$e ho' man% fund a government hould u eA A= One for each revenue ource .= +'o at a minimumB the General Fund and one enterpri e fund C= A man% a nece ar% to fulfill legal re5uirement and ound financial admini tration := None of the a$ove An 'er/ C

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

40* @hich of the follo'ing 'ould not $e included in FA-. -tatement of Financial Accounting Concept D1, 'hich identifie the information need of the u er of non$u ine financial tatement A A= Format and content of financial tatement .= A e ing ervice provided $% a non-$u ine organization and it a$ilit% to continue to provide tho e ervice C= A e ing management E te'ard hip and performance := )valuation of an organizationE re ource , o$ligation and effect of change in net re ource An 'er/ A 41* +he Governmental Accounting -tandard .oard ha $een given authorit% to e ta$li h accounting and financial reporting tandard for/ A= all governmental unit and agencie * .= federal, tate, and local government and governmentall%-o'ned utilitie , authoritie , ho pital , and college and univer itie ** C= all governmental unit and all not-for-profit organization * := tate and local governmental entitie , and governmentall%-o'ned utilitie , authoritie , ho pital , and college and univer itie * An 'er/ : 4"* @hich of the follo'ing characteri tic 'ould not define an organization a governmentalA A= +he po'er to enact and enforce a ta0 lev%* .= +he potential for unilateral di olution $% a government 'ith the net a et reverting to a government* C= +he receipt of grant mone% from a tate or local government for the purpo e of providing ervice to the pu$lic* := All of the a$ove* An 'er/ C 4#* <evel >A? GAAP for +he ;niver it% of Firginia, a pu$lic in titution, 'ould $e e ta$li hed $% the/ A= Financial Accounting -tandard .oard* .= Governmental Accounting -tandard .oard* C= American In titute of Certified Pu$lic Accountant * := National A ociation of College and ;niver it% .u ine Officer * An 'er/ .

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

41* ;nder the modified accrual $a i of accounting, revenue hould $e recognized 'hen the% are/ A= authorized $% the $udget ordinance* .= realiza$le and earned* C= mea ura$le and availa$le to finance e0penditure of the current period* := realized through collection* An 'er/ C 42* Fiduciar% fund are to u e the/ A= economic re ource mea urement focu and modified accrual $a i of accounting* .= current financial re ource mea urement focu and accrual $a i of accounting* C= economic re ource mea urement focu and accrual $a i of accounting* := none of the a$ove, the fiduciar% fund have no revenue * An 'er C 43* Proprietar% fund u e the/ A= economic re ource mea urement focu and accrual $a i of accounting* .= current financial re ource mea urement focu and modified accrual $a i of accounting C= economic re ource mea urement focu and modified accrual $a i of accounting* := current financial re ource mea urement focu and accrual $a i of accounting* An 'er/ A 44* Governmental fund u e the/ A= economic re ource mea urement focu and accrual $a i of accounting* .= current financial re ource mea urement focu and accrual $a i of accounting* C= economic re ource mea urement focu and modified accrual $a i of accounting* := current financial re ource mea urement focu and modified accrual $a i of accounting An 'er/ : 46* Government-'ide tatement u e the/ A= current financial re ource mea urement focu and accrual $a i of accounting* .= economic re ource mea urement focu and accrual $a i of accounting* C= economic re ource mea urement focu and modified accrual $a i of accounting* := none of the a$ove* An 'er/ .

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

47* Governmental fund do not include/ A= -pecial revenue fund .= Agenc% fund C= :e$t ervice fund := +he General fund An 'er/ . 60* @hich of the follo'ing organization ha authorit% to e ta$li h accounting and financial reporting tandard for the federal governmentA A= Federal Accounting -tandard Advi or% .oard* .= Office of &anagement and .udget* C= Governmental Accounting -tandard .oard* := None of the a$oveB no one ha $een granted authorit% to et tandard for the federal government An 'er/ A 61* @hich of the follo'ing i mo t correct 'ith regard to &anagement9 :i cu ion and Anal% i G&:CA=A A= -tate and local government are re5uired to provide an &:CA* .= Federal agenc% financial report are re5uired to provide an &:CA* C= .oth tate and local government and federal agencie are encouraged, $ut not re5uired to provide an &:CA* := .oth tate and local government and federal agencie are re5uired to provide an &:CA* An 'er/ : 6"* @hich of the follo'ing i not true regarding GA-. Concept -tatement No* ", Service Efforts and Accomplishments Reporting: A= It encourage government to e0periment 'ith reporting more complete information a$out an entit%9 performance than can $e di pla%ed in the traditional financial tatement * .= It outline categorie of information that might $e reported* C= It pre cri$e detailed tandard governing the reporting of ervice effort and accompli hment reporting* := None of the a$ove, all are true* An 'er/ C

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

6#* GA-. Concept -tatement No* #, Communication Methods in General Purpose External Financial Reports that Contain Basic Financial Statements, tate that A= note to the financial tatement ma% include managementE o$8ective e0planation * .= re5uired upplementar% information mu t $e o$8ective and ma% not include prediction or u$8ective a e ment * C= di clo ure in the note i not an ade5uate u$ titute for recognition in the financial tatement * := All of the a$ove are correct* An 'er/ : 61* ;nder GA-. -tatement #1, capital a et / A= mu t $e reported in government-'ide tatement $ut are not reported in an% of the fund financial tatement * .= mu t $e reported in government-'ide tatement and in proprietar% fund financial tatement * C= are not to $e reported in either government-'ide or fund financial tatement * := are to $e reported $ut not depreciated in government-'ide and fund financial tatement * An 'er/ . 62* <ong-term de$t of a governmental unit 'ould $e reported in the/ A= government-'ide financial tatement and proprietar% fund financial tatement * .= government-'ide financial tatement onl%* C= de$t ervice fund of governmental fund financial tatement and government'ide financial tatement * := note to the financial tatement onl%* An 'er/ A 63* A cit% government collect local option ale ta0e legall% re tricted to pa% for the con truction of a ne' courthou e* @hich fund hould account for the receipt of the ale ta0e A A= -pecial revenue fund .= Capital pro8ect fund C= Private-purpo e tru t fund := General fund An 'er/ .

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

64* A cit% government collect local option ale ta0e legall% re tricted to pa% for the hiring of teacher for hearing impaired chool children* @hich fund hould account for the receipt of the ale ta0e A A= -pecial revenue fund .= Capital pro8ect fund C= Private-purpo e tru t fund := General fund An 'er/ A 66* A cit% government maHe it emiannual pa%ment of intere t on revenue $ond i ued to pa% for the con truction of additional pu$lic tran it tation * @hich fund 'ould account for the pa%mentA A= :e$t ervice fund .= Capital pro8ect fund C= )nterpri e fund := Internal ervice fund An 'er/ C 67* A cit% government ell police car no longer in u e* No re triction have $een placed on the proceed * @hich fund hould account for the receiptA A= :e$t ervice fund .= Capital pro8ect fund C= )nterpri e fund := General fund An 'er/ : 70* ;nder GA-. -tatement #1, accrual accounting i u ed for/ A= government-'ide financial tatement onl%* .= government-'ide financial tatement and proprietar% fund financial tatement onl%* C= government-'ide, proprietar% fund, and fiduciar% fund financial tatement onl%* := government-'ide and all fund financial tatement An 'er/ C

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! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

71* ;nder GA-. -tatement #1, modified accrual accounting 'ould $e found in the/ A= government-'ide financial tatement onl%* .= governmental fund financial tatement onl%* C= governmental and fiduciar% fund financial tatement onl%* := governmental, proprietar%, and fiduciar% fund financial tatement $ut not in the government-'ide financial tatement An 'er/ . 7"* @hich of the follo'ing i not a fiduciar% fund t%peA A= Agenc%* .= )0penda$le tru t* C= Private-purpo e tru t* := Inve tment tru t* An 'er/ . 7#* <evel IAI GAAP for CooH Count% (o pital, a pu$lic ho pital, 'ould $e e ta$li hed $% the/ A= Governmental Accounting -tandard .oard* .= Financial Accounting -tandard .oard* C= (o pital Financial &anagement A ociation* := American In titute of Certified Pu$lic Accountant * An 'er/ A 71* @hich of the follo'ing i true regarding fund cla ification A A= Governmental fund include the General, pecial revenue, de$t ervice, capital pro8ect , and permanent* .= Proprietar% fund include enterpri e, internal ervice, and private-purpo e* C= .oth of the a$ove* := None of the a$ove* An 'er/ A 72* Notre :ame ;niver it%, a private in titution, ha level >A? GAAP e ta$li hed $% the/ A= American In titute of Certified Pu$lic Accountant * .= Governmental Accounting -tandard .oard* C= Financial Accounting -tandard .oard* := National A ociation of College and ;niver it% .u ine Officer An 'er/ C

1-14
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

73* <ong-term de$t paid from proprietar% fund i reported a a lia$ilit% in A= the proprietar% fund -tatement of Net A et * .= the government-'ide -tatement of Net A et * C= $oth A and .* := neither A nor .* An 'er/ C 74* @hich of the follo'ing are the governmental fund A A= General, pecial revenue, de$t ervice, capital pro8ect , permanent* .= General, pecial revenue, de$t ervice, capital pro8ect , private purpo e* C= General, pecial revenue, de$t ervice, capital pro8ect , internal ervice* := None of the a$ove* An 'er/ A 76* @hich of the follo'ing i an o$8ective of federal financial reportingA A= .udgetar% Integrit% .= Operating Performance C= -te'ard hip := All of the a$ove An 'er/ : 77* @hich of the follo'ing fund i con idered a Fiduciar% FundA A= :e$t -ervice Fund .= )nterpri e Fund C= Internal -ervice Fund := Pen ion +ru t Fund An 'er/ : 100* @hich of the follo'ing tatementG = are not included in the proprietar% fund / A= -tatement of Revenue , )0pen e , and Change in Net A et .= -tatement of Ca h Flo' C= -tatement of Net A et := All of the a$ove are included An 'er/ :

1-16
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

101*

Capitalized fi0ed a et are reported in 'hich of the follo'ing fund-$a i A= Agenc% fund .= Proprietar% fund C= Governmental fund := All of the a$ove An 'er/ .

tatement A

10"*

@hich of the follo'ing fund t%pe u e modified accrual accountingA A= -pecial Revenue .= Internal -ervice C= Inve tment +ru t := )nterpri e An 'er/ A

10#*

@hich of the follo'ing fund t%pe doe not u e modified accrual accountingA A= :e$t -ervice .= -pecial Revenue C= Inve tment +ru t := Permanent An 'er/ C

101*

A permanent fund cla ified under governmental fund J A= Account for mo t of the $a ic ervice provided $% the governmental unit* .= Account for financial re ource intended for ma8or capital pro8ect C= Account for ervice provided $% one department of a government to another := Account for re ource that are legall% re tricted o onl% earning , not principal, ma% $e e0pended, and for purpo e to $enefit the government and it citizenr%* An 'er/ :

102*

@hich of the follo'ing fund i not a Fiduciar% FundA A= Private Purpo e +ru t Fund .= Permanent Fund C= Pen ion Fund := Inve tment +ru t Fund An 'er/ .

1-17
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

103* +he KKKKKKK et the accounting and financial reporting tandard for $oth tate and local government and pu$lic not-for-profit * A= FA-A. .= FA-. C= GA-. := AICPA An 'er/ C 104* +he KKKKKKKKKKK i the governmentE official annual report prepared and pu$li hed a a matter of pu$lic record* A= comprehen ive annual financial report .= governmental annual financial report C= independent auditorE report := complete audited financial report An 'er/ A 106* -tate and local governmental fund are organized into three categorie including/ A= governmental, proprietar%, and re tricted .= proprietar%, fiduciar%, and re tricted C= governmental, fiduciar%, and re tricted := governmental, proprietar%, and fiduciar% An 'er/ : 107* +he KKKKKK Fund account for all re ource other than tho e re5uired to $e accounted for in other fund * A= -pecial revenue .= General C= )nterpri e := Agenc% An 'er/ . 110* +he KKKKKK Fund account for and report the proceed of pecific revenue ource that are re tricted or committed to e0penditure for pecified purpo e other than de$t ervice or capital pro8ect * A= -pecial revenue .= General C= )nterpri e := Agenc% An 'er/ A

1-"0
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

111* +he KKKKKK Fund are u ed 'hen re ource are provided primaril% through the u e of ale and ervice charge to partie e0ternal to the government and it i the intent of the government to mea ure net profit or lo * A= -pecial revenue .= General C= )nterpri e := Agenc% An 'er/ C 11"* +he KKKKKK Fund are u ed to account for ituation in 'hich the government i acting a a collectingLdi $ur ing agent* A= -pecial revenue .= General C= )nterpri e := Agenc% An 'er/ : 11#* @hat $a i of accounting 'ould the )nterpri e Fund u eA A= Accrual .= &odified Accrual C= Ca h := )0pended Accrual An 'er/ A 111* @hat are )nterpri e fund u ed forA A= +o account for pen ion and emplo%ee $enefit fund for 'hich the governmental unit i the tru tee* .= +o report re ource that are legall% re tricted o onl% earning , not principal, ma% $e e0pended, and for purpo e to $enefit the government and it citizenr%* C= +o account for mo t of the $a ic ervice provided $% the governmental unit * := +o account for re ource provided primaril% through the u e of ale and ervice charge to partie e0ternal to the government* An 'er/ :

1-"1
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

112* @hich of the follo'ing i an environmental difference $et'een government and forprofit $u ine enterpri e A A= Relation hip 'ith taHeholder .= :onor re tricted a et C= Fiduciar% re pon i$ilitie := .oth . and C An 'er/ A 113* A government ma% have KKKKKKKKKKKKKKKKKK General FundG = in a given %earA A= A man% a needed .= Onl% one* C= +he num$er 'ill var% depending on the need of the government* := None of the a$ove* An 'er/ .* 114* +he Financial Accounting -tandard .oard GFA-.= i the tandard etting organization for 'hich of the follo'ing reporting organization A A= Private not-for-profit .= Pu$lic not-for-profit C= Inve tor o'ned $u ine e := A and C are $oth correct* An 'er/ : 116* +he fund $a i tatement for governmental fund are pre ented u ing the A= )conomic Re ource &ea urement focu and the Accrual .a i of Accounting .= Current Financial Re ource &ea urement focu and the Accrual .a i of Accounting C= Current Financial Re ource &ea urement focu and the &odified Accrual .a i of accounting := )conomic Re ource &ea urement focu and the &odified Accrual .a i of Accounting An 'er/ C

1-""
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

117* @hat t%pe of fund i u ed 'hen re ource are provided mainl% through $u ine -liHe tran action to partie e0ternal to the governmentA A= Internal -ervice Fund .= Capital Pro8ect Fund C= Agenc% Fund := )nterpri e Fund An 'er/ : 1"0* Financial report for tate and local government are 'ell uited for all the follo'ing )MC)P+A A= A e ing financial condition and re ult of operation .= &ea uring the effectivene of government ervice uch a police and fire protection C= Comparing actual re ult 'ith the legall% adopted $udget := A i ting in determining compliance 'ith finance-related la' and regulation An 'er/ . 1"1* @hich of the follo'ing fund i u ed to account for the pa%ment of principal and intere t of general long term de$t of a governmentA A= Capital Pro8ect Fund .= Internal -ervice Fund C= Agenc% Fund := None of the a$ove An 'er/ : 1""* +he GA-. i under the over ight of/ A= GAO* .= FA-A.* C= FAF* := FA-.* An 'er/ C

1-"#
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

Short An+.er -ue+t!on+ 1"#* Contra t revenue recognition under the accrual and modified accrual $a e of accounting* An+.er: ;nder modified accrual accounting, revenue hould $e recognized 'hen mea ura$le and availa$le to finance e0penditure of the current period* ;nder accrual accounting, revenue are recognized 'hen earned and realiza$le* 1"1*Identif% the accounting tandard etting $odie for ;*-* commercial, private not-forprofit , pu$lic not-for-profit , tate and local government , and the federal government* An+.er: Commercial enterpri e / +he Financial Accounting -tandard .oard e ta$li he accounting principle for all commercial enterpri e in the ;*-* Private Not-for-profit / +he Financial Accounting -tandard .oard e ta$li he accounting principle for all Private Not-for-Profit in the ;*-* Pu$lic Not-for-profit / +he Governmental Accounting -tandard .oard e ta$li he accounting principle for all governmentall% related not-for-profit organization in the ;*-* -tate and <ocal Government / +he Governmental Accounting -tandard .oard e ta$li he accounting principle for all ;*-* tate and local government * Federal government/ +he Federal Accounting -tandard Advi or% .oard e ta$li he accounting principle for the federal government and it agencie * 1"2*Contra t the economic re ource mea urement focu and the current financial re ource mea urement focu 'ith regard to the accounting treatment of capital a et * An+.er: ;nder the economic re ource mea urement focu , capital a et are capitalized and depreciated* ;nder the current financial re ource mea urement focu , capital a et are not capitalized or depreciated, $ut are charged to e0penditure 'hen received*

1-"1
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

1"3* @hat are the five environmental factor relating to ho' government are different from commercial $u ine e a de cri$ed $% GA-. in a 'hite paper entitled/ h! Governmental Accounting and Financial Reporting "s # and Should Be # $ifferent: An 'er/ +he five environmental difference are/ Or"an!*at!ona$ Purpo+e Government e0i t for the 'ell $eing of citizen $% providing pu$lic ervice * ;nliHe $u ine e , profit i not an o$8ective o a mea ure other than net income i needed* In addition, the taHeholder and the information the% re5uire are ver% different* Government report information that i far more di aggregated than a commercial enterpri e* Sour e+ o% Re'enue Government derive man% of their re ource from ta0e * Individual and $u ine e pa% ta0e $ecau e the% are legall% $ound* -ince there i no >product or ervice? $eing conve%ed at the time of pa%ment, it i difficult determine 'hen to recognize revenue* Potent!a$ %or Lon"e'!t/ Government rarel% go out of $u ine , o the% have an accounting focu 'ith a long term vie' of operation and the u taina$ilit% of ervice and the a$ilit% of meet future demand* Re$at!on+h!p .!th Sta0eho$der+ Government have an o$ligation to demon trate accounta$ilit% for pu$lic fund * Fund accounting i u ed $% government to provide a urance that re ource are u ed according to legal or donor re triction * Ro$e o% the Bud"et .udget are e0pre ion of pu$lic polic% and often carr% the authorit% of la'* Pu$lic official mu t ta% 'ithin their $udget * Re5uired $udget v * actual compari on indicate the degree of compliance in thi area* 1"4* Identif% the three $a ic fund categorie , the fund that maHe up each of them, and the categor%E $a i of accounting* An+.er: 1* "* #* Governmental N Fund include permanent, de$t ervice, capital pro8ect, pecial revenue, and general* +he $a i of accounting i modified accrual* Proprietar% N Fund include internal ervice and enterpri e* +he $a i of accounting i accrual* Fiduciar% N Fund include private purpo e tru t, inve tment tru t, pen ion tru t, and agenc%* +he $a i of accounting i accrual*

1-"2
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

1"6*Contra t the economic re ource mea urement focu and the current financial re ource mea urement focu 'ith regard to the accounting treatment of long-term de$t* An+.er: ;nder the economic re ource mea urement focu , long-term de$t i recorded a a lia$ilit% and pa%ment for principal are treated a a reduction in the lia$ilit%* -ince long-term lia$ilitie do not re5uire current financial re ource to ettle, the% are not recorded under the current financial re ource mea urement focu * Pa%ment of principal are charged to e0penditure * 1"7* +he FA-., GA-., and FA-A. have each e ta$li hed a hierarch% of GAAP for financial tatement preparer A <i t one categor% A and one categor% . item for each organization* An 'er/ FA-A. -tatement 13", GA-. -tatement 22, FA-A. Ge0po ure draft= Categor% A FA-./ FA-. -tatement C Interpretation FA-. -taff Po ition AICPA Accounting Re earch .ulletin and Accounting Principle .oard Opinion not uper eded $% the FA-. GA-. -tatement and interpretation FA-A. -tatement and interpretation AIACPA and FA-. pronouncement pecificall% made applica$le to federal governmental entitie $% FA-A. tatement and interpretation FA-. +echnical .ulletin AICPA Indu tr% Audit and Accounting Guide and -tatement Po ition if cleared $% the FA-. GA-. +echnical .ulleting AICPA Indu tr% Audit and Accounting Guide and -tatement Po ition if cleared $% the GA-. FA-A. +echnical .ulletin AICPA Indu tr% Audit and Accounting Guide and -tatement Po ition if pecificall% made applica$le to federal governmental entitie $% the AICPA and cleared $% the FA-A.

GA-./ FA-A./

Categor% . FA-./

GA-./

FA-A./

1-"3
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

1#0* @hat are the four o$8ective that hould $e follo'ed 'ith re pect to federal financial reporting according to -FFAC D1 a i ued $% the FA-A.A An 'er/ Bud"etar/ !nte"r!t/ Financial reporting hould demon trate accounta$ilit% 'ith regard to rai ing and e0pending mone% in accord 'ith the $udgetar% proce , la' and regulation * Operat!n" per%or(an e Financial reporting hould ena$le evaluation of ervice effort , co t and accompli hment * Ste.ard+h!p Financial reporting hould ena$le a e ment of the impact on the nation of government operation and inve tment S/+te(+ and ontro$+ Financial reporting hould reveal 'hether financial % tem and control are ade5uate 1#1* In it -tatement of Financial Accounting Concept D1, the FA-. identifie the information need of the u er of non-$u ine financial tatement * +he e include providing information that i u eful to pre ent and potential re ource provider in 'hich four evaluation area A An 'er/ A= &aHing deci ion a$out the allocation of re ource .= A e ing ervice provided $% a non-$u ine organization and it a$ilit% to continue to provide tho e ervice C= A e ing management E te'ard hip and performance := )valuation of an organizationE re ource , o$ligation and effect of change in net re ource 1#"* Provide the definition of the follo'ing term a outlined $% GA-. Concept -tatement No* 1, )lement of Financial -tatement / A et <ia$ilitie Net po ition Inflo' of re ource Outflo' of re ource An 'er/ A++et+: Re ource 'ith pre ent ervice capacit% that the government pre entl% control * L!a1!$!t!e+: Pre ent o$ligation to acrifice re ource that the government ha little or no di cretion to avoid

1-"4
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

Net po+!t!on: +he re idual of all other element pre ented in a tatement of financial po ition In%$o.+ o% re+our e+: Ac5ui ition of net a et $% the government that are applica$le to the reporting period Out%$o.+ o% re+our e+: Con umption of net a et $% the government that are applica$le to the reporting period 1##* @hat are the fund-$a i financial tatement for each of the follo'ing fund categorie A Fiduciar% Proprietar% Governmental An 'er/ #!du !ar/: -tatement of Fiduciar% Net A et -tatement of Change in Fiduciar% Net A et Propr!etar/: -tatement of Net A et -tatement of Revenue , )0pen e , and Change in Net A et -tatement of Ca h flo' &o'ern(enta$: .alance heet -tatement of Revenue , )0penditure and Change in Fund .alance 1#1* <i t and define the five cla ification of governmental fund *

An 'er/ 1* General Fund +hi fund account for mo t of the $a ic ervice provided $% the government* It account for and report all financial re ource not accounted for and reported in another fund* "* Capital Pro8ect Fund +hi fund account for and report financial re ource that are committed or a igned to e0penditure for capital outla% * It account for the purcha e or con truction of ma8or capital improvement e0cept tho e purcha ed or con tructed $% a proprietar% or fiduciar% fund #* :e$t -ervice Fund +hi fund account for and report financial re ource that are re tricted, committed or a igned to e0penditure for pecified purpo e other than de$t ervice or capital pro8ect * Included in thi categor% are activitie funded $% federal or tate grant or $% ta0e pecificall% re tricted to certain activitie *

1-"6
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organization

1* Permanent Fund +hi fund account for and report re ource that are re tricted to the e0tent that onl% earning , and not principal, ma% $e u ed for purpo e that upport the reporting of government program * 2* -pecial Revenue Fund +hi fund account for and report the proceed of pecific revenue ource that are re tricted or committed to e0penditure for a pecified purpo e other than de$t ervice or capital pro8ect *

1-"7
! "01# $% &cGra'-(ill )ducation* +hi i proprietar% material olel% for authorized in tructor u e* Not authorized for ale or di tri$ution in an% manner* +hi document ma% not $e copied, canned, duplicated, for'arded, di tri$uted, or po ted on a 'e$ ite, in 'hole or part*