1.

Assume that a governmental entity has, in addition to the General Fund, four other
governmental funds. Upon applying the quantitative criteria to determine the minimum
requirements for major fund reporting it is determined that two of those four funds meet
the criteria. At a minimum, the governmental entity will report how many major funds?
a. zero
b. two
c. three
d. four
e. five
2. The government-wide financial statements report all of the following equity
classifications except
a. restricted net position.
b. retained earnings.
c. unrestricted net position.
d. invested in capital assets, net of related debt.
e. All of the above are common equity classifications in the government-wide
financial statements.
3. Which of the following types of revenue would always be reported as a general revenue
in the government-wide financial statements?
a. Interest earned on a capital grant
b. Charges for services
c. Operating grant
d. Property taxes
e. Both items a and b
f. Both items c and d
4. Capital assets are not reported
a. in governmental activities.
b. in business-type activities.
c. in Internal Service Funds.
d. the Enterprise Funds.
e. in the General Fund.
f. in either items c or e.
5. The government-wide statements include
a. Statement of Net Position
b. Statement of Activities
c. Statement of Cash Flows
d. Both items a and b
e. All of the above.
6. Which of the following is true?
a. Major fund reporting is required for Enterprise Funds
b. Major fund reporting is required for Internal Service Funds

c. Major fund reporting is required for Agency Funds

d. Major fund reporting is require for Private-purpose Trust Funds
7. In the proprietary fund financial statements, a government should include a separate
column for
a. each major Enterprise Fund.
b. a total column for all Enterprise Funds.
c. the Internal Service Fund type.
d. each major Enterprise Fund, the nonmajor Enterprise Funds in the aggregate and
the Internal Service Funds in the aggregate.
8. Interest expense for governmental activities at the government-wide level should be
reported
a. as part of the function for which the financing was beneficial.
b. as part of the general government function.
c. in total as capitalized interest.
d. as an indirect expense not allocated to a functional area.
9. The General Fund levies taxes of $3,750,000 during the fiscal year, 1% of which is
deemed to be uncollectible. $3,650,000 was collected or met the availability criteria.
How much revenue should be recorded in the government-wide financial statements?
a. $3,613,500
b. $3,650,000
c. $3,712,500
d. $3,750,000
10. A governmental entity has a General Fund, four Special Revenue Funds, two Debt
Service Funds, a Permanent Fund, two Enterprise Funds, three Internal Service Funds,
and two Pension Trust Funds. Using the criteria from GASB Statement No. 34 to identify
major funds, the government discovers that two of the Special Revenue Funds and one
Enterprise Fund meet the minimum criteria to be a major fund. How many individual
governmental funds may be reported as major funds?
a. three
b. four
c. eight
d. twelve
e. fifteen
11. If a county sells a capital asset with a net book value of $35,000 for $27,000, the oneworksheet conversion adjustment would include a
a. DEBIT to other financing sources.
b. DEBIT to loss on sale of capital assets.
c. CREDIT to other financing sources.
d. CREDIT to loss on sale of capital assets.
e. Both items a and b.
f. Both items c and d.

12. The Capital Projects Fund issued general long-term debt at a premium. The oneworksheet conversion adjustment would include a
a. DEBIT to cash.
b. CREDIT to bonds payable.
c. DEBIT to unamortized premium on bonds.
d. CREDIT to other financing sources.
e. All of the above.
13. The one-worksheet conversion adjustment to reflect debt service payments of $85,000
($55,000 principal; $30,000 interest) by a governmental fund would be
dr
a. Debt Service Expense
$85,000
Cash
b. Bonds Payable
$55,000
Cash
c. Bonds Payable
$55,000
Debt Service Expenditures Principal
d. Bonds Payable
$85,000
Debt Service Expenditures Principal
e. Debt Service Expense
$55,000
Net Assets

cr
$85,000
$55,000
$55,000
$85,000
$55,000

14. Taxes were levied in the General Fund during 20X8. $157,700 of the taxes were still
uncollectible as of the end of the fiscal year. The one-worksheet conversion adjustment
necessary as the government-wide statements are being prepared would include a DEBIT
to
a. Deferred revenues
b. Revenues
c. Taxes receivable
d. Other financing sources
e. Allowance for doubtful accounts
15. Assume that the General Fund paid $195,000 related to compensated absences during the
year. If the beginning balance of compensated absences for the governmental activities
was $65,000 and the ending balance was $55,000, then the expenses related to
compensated absences in the governmental activities column would be
a. $195,000
b. $185,000
c. $65,000
d. $55,000
e. $0

16. The Cable Enterprise Fund purchased $300,000 of capital equipment during the year.
The one-worksheet conversion adjustment necessary for the preparation of the
government-wide financial statements would be
dr
a. Capital Assets
Capital Outlay Expenditures
b. Capital Assets
Cash
c. Capital Assets
Capital Contribution
d. Capital Assets
Capital Outlay Expenses
e. None of the above.

cr

$300,000
$300,000
$300,000
$300,000
$300,000
$300,000
$300,000
$300,000

17. Which of the following items would be ADDED to changes in fund balance in
reconciling the governmental funds operating statement information to the changes in net
position in the government-wide statement?
a. Depreciation
b. Capital outlay expenditures
c. Book value of capital assets sold
d. Bond proceeds
18. A government had capital outlay expenditures of $226,000 during the year in the General
Fund. It was determined that $195,000 of the capital outlay should be reported as capital
assets in the government-wide financial statements. What would the one-worksheet
conversion adjustment be to record the capital assets as a governmental activity?
dr
a. Capital Outlay Expenditures
Fund Balance
b. Capital Outlay Expenditures
Fund Balance
c. Capital Assets
Capital Outlay Expenditures
d. Capital Assets
Capital Outlay Expenditures
e. None of the above.

cr

$226,000
$226,000
$195,000
$195,000
$226,000
$226,000
$195,000
$195,000

19. Depreciation expense for the current year was $366,750 in the Water Enterprise Fund.
Depreciation expense will be reported at the government-wide level as
a. part of unallocated depreciation expense in governmental activities.
b. part of unallocated depreciation expense in the business-type activities.
c. part of the business-type activities expenses for the water segment.

d. capital outlay expenses in business-type activities.

e. None of the above.
20. Which of the following items is NOT included in reconciling the governmental funds
operating statement information to the changes in net position in the government-wide
statement?
a. Depreciation
b. Amortization of bond premiums
c. Expenditures for retirement of general long-term debt principal
d. Increase in salaries payable
21. If a primary government reports a discretely presented component unit, then the primary
government must
a. prepare two separate Managements Discussion and Analyses.
b. prepare two sets of note disclosures.
c. must include the financial information of the discretely presented component unit
within the basic financial statements.
d. must include information related to the discretely presented component unit
within the statistical section of the CAFR.
e. All of the above are required.
22. The independent auditors report is normally included within
a. the introductory section of a CAFR.
b. managements discussion and analysis.
c. the financial section of a CAFR.
d. the statistical section of a CAFR.
e. any of the above sections at managements discretion.
23. Britt County has seven discretely presented component units. Three of the component
units are considered governmental in nature and the remaining four are considered
business-type in nature. How many columns for the discretely presented component
units would be reported on the General Fund balance sheet?
a. 0
b. 1
c. 2
d. 3
e. 4
f. 7
24. Assume that a government has three nonmajor Enterprise Funds. Which of the following
statements regarding the reporting requirements in a CAFR is false?
a. The CAFR must include combining financial statements for any nonmajor fund
columns that include more than one fund.
b. Even if the funds are nonmajor, the government may choose to declare them as
major funds and report each in a separate column on the appropriate fund
statements.

c. Nonmajor funds are not reported on an Enterprise Fund statement of cash flows.
d. Both items a and b.
e. Both items b and c.
25. The city of Newport appointed the original governing board of the Newport Historical
Association, at which point the board became self-sustaining. The city has historically
(but voluntarily) provided funding for the Association for the past several years. The city
of Newport should
a. not report the Association as a component unit.
b. report the Association as a blended component unit.
c. report the Association as discretely presented component unit.
d. disclose that the Association is a joint venture.
26. Which of the following potential component units would not be reported as blended
component unit of the county?
a. A hospital which is the primary health care provider for the county residents and
whose board is appointed by the county.
b. A recreation district where the governing board of the county serves as its
governing board.
c. A financing authority whose primary customer is the county.
d. A school district whose school board is the same as the county board members.
e. All of the above could be reported as a blended component unit.
27. The Mount Pilot Airport Authority is governed by a seven-member board. Four of the
board members are appointed by the town of Mount Pilot and the remaining three are
appointed by the governing board of Griffith County. Neither the town or the county
share in any profits, nor are required to fund any deficits, of the Authority. The town,
however, does approve the Authoritys proposed budget. The county may make
budgetary recommendations to the Authority, but they are not required to approve the
proposed budget. The Authority should be reported as
a. a jointly governed organization by both the town and the county.
b. a joint venture by both the town and the county.
c. discrete component units of both the town and the county.
d. a blended component unit of the town.
e. a discretely presented component unit of the town.
28. Which of the following is a section of a comprehensive annual financial report?
a. Introductory
b. Financial
c. Statistical
d. All of the above
29. Which fund type would be reported in the Statement of Revenues, Expenditures, and
Changes in Fund Balance?
a. Enterprise Funds

b. Internal Service Funds

c. Permanent Funds
d. Pension trust funds
30. Substantively the same governing body means that
a. virtually the entire governing body of the primary government serves, in an ex
officio capacity, as virtually the entire governing body of a component unit.
b. a voting majority of the component unit governing body is made up of a voting
majority of the primary government governing body.
c. a voting majority of the primary government governing body serves on the
component unit governing body.
d. a voting majority of the component unit governing body also serves on the
primary government governing body.
31. A not-for-profit organization receives donated supplies valued at $40,000 in June.
Assume that as of the fiscal year end in December the organization had used 25% of the
materials. The organization should report
a. restricted contributions of $40,000 and no expenses.
b. restricted contributions and expenses of $40,000.
c. unrestricted contributions of $40,000 and expenses of $10,000.
d. unrestricted contributions and expenses of $10,000.
e. unrestricted contributions of $10,000 and no expenses.
32. A nongovernment voluntary health and welfare organization received unrestricted cash
donations of $23,000 for the current year, $30,000 of donations to be used for the
following year, and a $100,000 donation to establish a permanent investment endowment.
The organization should report
a. unrestricted revenues of $53,000 and permanently restricted revenues of
$100,000.
b. temporarily restricted revenues of $153,000.
c. unrestricted revenues of $23,000 and temporarily restricted revenues of $130,000.
d. unrestricted revenues of $23,000, temporarily restricted revenues of $30,000,
and permanently restricted revenues of $100,000.
e. None of the above.
33. A private school is given $40,000 to permanently endow one of its education programs.
A debit of $40,000 should be made to
a. cash.
b. unrestricted cash.
c. temporarily restricted cash.
d. cash restricted for endowment.
e. none of the above.
34. In 20X8 the following pledges were made - $35,000 in unrestricted contributions for use
in 20X8, $20,000 in contributions restricted for use in 20X9, and a $400,000 contribution
restricted for the establishment of a permanent endowment. It is anticipated that 10% of

all pledges except the endowment pledge will be uncollectible. Pledges receivable for
20X8 should be
a. $455,000.
b. $449,500.
c. $55,000.
d. $49,500.
e. $35,000.
f. $31,500.
35. A fund raising banquet was held for a not-for profit organization. Ticket sales for the
banquet totaled $65,000 and meals cost $20,000. The recipient not-for-profit
organization should recognize
a. restricted support of $65,000.
b. expenses of $20,000.
c. unrestricted support of $65,000.
d. None of the above.
e. Both items a and b.
f. Both items b and c.
36. The board of directors of a not-for-profit organization voted to designate $100,000 of its
unrestricted net assets to be used for its permanent endowment. Which of the following
best describes the accounting and financial reporting implications of this action?
a. The net assets are still considered unrestricted.
b. The net assets are now considered temporarily restricted.
c. The net assets are now considered permanently restricted.
d. Unrestricted net assets will decrease in total.
e. None of the above.
37. Investment earnings of $1,250 were earned on restricted investments. The earnings are to
be used for various research projects during the current year. The earnings would be
reported as
a. unrestricted revenes.
b. temporarily restricted revenues.
c. permanently restricted revenues.
d. general interest revenue.
e. None of the above.
38. Computer equipment used in the business office of a not-for-profit organization was sold
for $9,000. The original cost of the equipment had been $21,000 and there was $15,000
of accumulated deprecation as of the date of sale. How will the gain be reported?
a. Gains are not recognized in not-for-profit organizations.
b. Unrestricted gain of $3,000
c. Temporarily restricted gain of $3,000
d. Permanently restricted gain of $3,000
e. Temporarily restricted revenue of $9,000

Answer Key
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C
B
D
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D
A
D
D
C
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B
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C
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D
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F
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B