Becker Review Questions (Exam 2)

Question 1

Which funds would most appropriately use the current financial resources measurement focus and modified accrual accounting in their fund financial statements?
Governmental Proprietary Fiduciary
A. Yes No Yes
B. No Yes Yes
C. Yes No No
D. Yes Yes Yes

Answer 1

Governmental Proprietary Fiduciary
C. Yes No No

Question 2

Which of the following local government funds use the accrual basis of accounting?

A. Enterprise
B. Debt Service
C. Capital Projects
D. Special Revenue

Answer 2

A. Enterprise

Question 3

Which of the following is a government fund that uses the current financial resources measurement focus?

A. Enterprise Fund
B. Internal Service Fund
C. Special Revenue Fund
D. Private-purpose trust fund

Answer 3

C. Special Revenue Fund

Question 4

The measurement focus of government-type funds is on the determination of:

	Current Financial 
	Resources         Financial Position A.   Yes                                 No B.   No                                 Yes C.  No                                   No D.  Yes                                  Yes

Answer 4

Current Financial Resources Financial Position
D. Yes Yes

Question 5

The primary authoritative body for determining the measurement focus and basis of accounting standards for governmental fund operating statements is the:

A. Governmental Accounting Standards Board (GASB)
B. National Council on Governmental Accounting (NCGA)
C. Government Accounting and Auditing committee of the AICPA (GAAC)
D. Financial Accounting Standards Board (FASB)

Answer 5

A. Governmental Accounting Standards Board (GASB)

Question 6

Α local governmental unit could have funds using which of the following accounting bases?

 Accrual basis              Modified accrual basis A.          No                                       Yes B.          No                                       No C.          Yes                                      No D.          Yes                                      Yes

Answer 6

Accrual basis Modified accrual basis
D. Yes Yes

Question 7

Under the modified accrual basis of accounting for a governmental unit, revenues should be recognized in the accounting period in which they:

A. are earned and become measurable
B. are collected
C. Become available and measurable
D. Become available and earned

Answer 7

C. Become available and measurable

Question 8

The modified accrual basis of accounting should be used for which of the following funds for purposes of fund financial statements?

A. Capital Projects fund.
B. Enterprise fund
C. Pension trust fund
D. proprietary fund

Answer 8

A. Capital Projects fund.

Question 9

Select the description below which best describes a characteristic of the modified accrual accounting method used for government entities including the general fund

A. governmental fund revenues are recorded on the accrual basis if they are measurable
B. receivables are recorded net of bad debt expense under modified accrual accounting
C. expenditures for capital items are always depreciated
D. emphasis is on flow of current financial resources, which is very close to cash flow

Answer 9

D. emphasis is on flow of current financial resources, which is very close to cash flow

Question 10

what basis of accounting should be used when preparing a governmental funds statement of revenues, expenditures, and changes in fund balances?

A. accrual basis of accounting
B. modified accrual basis of accounting
C. modified cash basis of accounting
D. cash basis of accounting

Answer 10

B. modified accrual basis of accounting

Question 11

The city accountant for a newly established municipality is setting up the new fund structure for the city’s accounting many funds should the accountant establish for the city?

A. two, a general fund and a special revenue fund required by. GAAP
B. two, a special revenue fund and a general fund as required by the city manager
C. the minimum number of funds consistent with the needs of the city accountant
D. the minimum number of funds consistent with legal requirements and sound financial admin

Answer 11

D. the minimum number of funds consistent with legal requirements and sound financial admin

Question 12

Roy City received a gift, the principal of which is to be invested in perpetuity with the income to be used to support the local library. In which fund should this gift be recorded?

A. permanent fund
B. investment trusts fund
C. private- purpose trusts fund
D. special revenue event

Answer 12

A. permanent fund

Question 13

Which even(s) is(are) supportive of interperiod equity as a financial reporting objective of a governmental unit?
I. a balanced budget is adopted
II. residual equity transfers out equals residual equity transfers in

A. I only
B. II only
C. Both I and II
D. Neither I nor II

Answer 13

A. I only

Question 14

Which of the following bases of accounting is required to be used in the government-wide financial statements?
A. modified cash basis for both governmental activities and business-type activities
B. modified accrual basis for both governmental activities and business-type activties
C. accrual basis for business-type activities and modified accrual basis for governmental activities
D. accrual basis for both governmental activities and business-type activities

Answer 14

D. accrual basis for both governmental activities and business-type activities

Question 15

The economic resources measurement focus and accrual basis of accounting would be most appropriate for which fund as used in the fund financial statements?

A. general fund
B. permanent fund
C. internal service fund
D. capital projects fund

Answer 15

C. internal service fund

Question 16

In complying with GASB 34, a government will present separate fund financial statements for its governmental and proprietary funds. The purpose of this presentation is to:

A. demonstrate compliance with legal, regulatory or other budgetary compliance features of the government’s administration of its finances
B. report additional and detailed information about the primary government
C. provide internal transfer pricing data regarding individual internal service funds
D. document the prioritization of general revenue allocations

Answer 16

B. report additional and detailed information about the primary government

Question 17

A permanent fund of a municipality would have the same measurement focus as a(an):
A. General fund
B. Internal Service Fund
C. Custodial Fund
D. Investment Trust Fund

Answer 17

A. General fund

Question 18

Which of the following funds of a governmental unit recognizes revenues only in the accounting period in which they become available and measurable in their fund financial statements

   General Fund          Enterprise Fund A.            Yes                                No B.             No                                Yes C.            Yes                                Yes D.             No                                No

Answer 18

General Fund Enterprise Fund
A. Yes No

Question 19

In which of the following fund types of a city government are revenues and expenditures recognized on the same basis of accounting as the general fund?
A. fiduciary funds
B. internal service
C. enterprise
D. debt service

Answer 19

D. debt service

Question 20

Which of the following fund types should account for fixed assets in a manner similar to a “for profit” organization?

A. special revenue fund
B. capital projects fund
C. general fixed assets account group
D. enterprise fund

Answer 20

D. enterprise fund

Question 21

The primary emphasis in accounting and reporting for governmental funds is on:

A. source, use, and balance of current financial resources
B. income determination
C. capital maintenance
D. transfers relating to proprietary activites

Answer 21

A. source, use, and balance of current financial resources

Question 22

All of the following funds are the accrual basis of accounting and the economy resources measurement focus, except:
A. internal service funds
B. investment trust funds
C. capital projects funds
D. private purpose trust funds

Answer 22

C. capital projects funds

Question 23

Which of the following is not an accounting characteristic of focus of proprietary funds?

A. the focus is on economic resources measurement
B. accrual accounting is used
C. fixed assets and long-term debt are reported on the statement of net position
D. budgetary accounts are reported in internal service funds

Answer 23

D. budgetary accounts are reported in internal service funds

Question 24

The city of Cobb has two trust funds for the benefit of the city’s library, trust fund A and trust fund B. Only the earnings from trust fund A can be expended and both the principal and interest from trust fund B can be expended. How should the city of Cobb report each trust fund?

    Trust Fund A                Trust Fund B A.     Permanent                   Permanent B.     Special Revenue          Special Revenue C.     Special Revenue          Permanent D.     Special Revenue.         Special Revenue

Answer 24

Trust Fund A Trust Fund B
B. Special Revenue Special Revenue

Question 25

Which of the following fund types of a governmental unit has (have) an economic measurement focus?

 General Funds          Permanent Funds A.          Yes                                   Yes B.          Yes                                   No C.          No                                    No D.          No                                   Yes

Answer 25

General Funds Permanent Funds
C. No No