Exam 1 Questions Review (for Exam 2)

Question 1

A town receives from the state its share of gas tax that was collected last month. Which fund balance classification would best reflect the constraint on the use of this money? (the gas tax was passed by the legislature and the proceeds if the gas tax can only be used for road and bridge maintenance.

A. Non-spendable
B. restricted
C. unassigned
D. committed

Answer 1

B. restricted

Question 2

A city and a land owner agree that the city will borrow 5 mil to widen a road and add traffic signal that will be needed if the landowner constructs a major shopping center. An agreement is made to dedicate the new property taxes that will come from the development of the bond. This arrangement is commonly called a _________
A. New Revenue bond (NFB)
B. Tax Increment Financing (TIF)
C. General obligation property bond (GO bond)
D. Tax qualified obligation

Answer 2

B. Tax Increment Financing (TIF)

Question 3

The legislature allocates one million to the City of Baton Rοuge and the city can only use the money to update fire department equipment. This constraint would result in the funds being reflected as _________________ fund balance

A. permanent
B. assigned
C. committed
D. restricted

Answer 3

D. restricted

Question 4

A city spends $50000 on a new truck that will be used by employees of the water department. The money came out of a _____________ fund.

A. fiduciary fund
B. enterprise fund
C. special revenue fund
D. capital projects fund

Answer 4

B. enterprise fund

Question 5

Which of the following is NOT a proper categorization of a fund balance?

A. retained
B. committed
C. assigned
D. restricted

Answer 5

A. retained

Question 6

A city golf course is primarily funded by user fees ( known as green fees) and proceeds from concession sales. The operations of the city golf course would likely be accounted for in a ________ fund.

A. fiduciary fund
B. enterprise fund
C. special revenue fund
D. internal service fund

Answer 6

B. enterprise fund

Question 7

Which governing body provides authoritative guidance to non-profit entities regarding financial reporting?

A. Both FASB and GASB
B. GASB
C. FASB
D. AICPA anf GASB

Answer 7

C. FASB

Question 8

The city of Clinton, LA received a gift of 1,000,000 that is to be invested and only the interest can be spent by the city. The interest income is to be used to maintain the city parks. What type of fund will be set up for this money

A. investment trust fund
B. special revenue
C. fiduciary fund
D. permanent fund

Answer 8

D. permanent fund

Question 9

Government funds include which of the following:

A. fiduciary fund
B. internal service fund
C. capital project fund
D. trust fund

Answer 9

C. capital project fund

Question 10

Which of the following financial statements are prepared using the modified accrual basis of accounting and thus do not report long term assets?

A. government wide FS
B. governmental wide FS
C. enterprise funds FS
D. internal service funds

Answer 10

B. governmental wide FS

Question 11

A parish spends $50,000 on a new dump truck for the road maintenance department. Which fund does the money likely come from?

A. debt service fund
B. enterprise fund
C. general fund
D. special revenue fund

Answer 11

C. general fund

Question 12

Which of the following is true?

A. a town may have as many general funds, special revenue funds and capital projects funds as it sees fit
B. a town can only have one general fund, one special revenue fund but multiple capital projects funds
C. a town may or may not have a general fund, special revenue fund or capital projects fund depending on which is needed
D. a town must have a general fund, and only one general fund, but may have multiple special revenue funds and capital projects funds

Answer 12

D. a town must have a general fund, and only one general fund, but may have multiple special revenue funds and capital projects funds

Question 13

13 Which of the following is TRUE about requirements for an Annual Comprehensive Financial Report?

A. GASB rules require that governments report their original adopted budget and the final actual results
B. GASB rules require that governments report their final revised budget and the final actual results C. GASB rules require that governments report their original adopted budget, the final revised budget, and final actual results.
D. None of the above

Answer 13

C. GASB rules require that governments report their original adopted budget, the final revised budget, and final actual results.

Question 14

Regarding non-profits, which of the following is NOT a categorization of fund balance?

A. Restricted
B. Unrestricted
C. Committed
D. None of the above

Answer 14

C. Committed

Question 15

A city orders a fire truck by sending a purchase order to the fire truck manufacturer in the amount of
$600,000. It is expected to take 6 months for the fire truck to be built to specifications and delivered
to the city. When the city issues the purchase order, it would likely record _________________
to reflect that this $600,000 commitment has been made and to ensure the money is available
when the truck is delivered.

A. Accounts Payable
B. Restricted Fund journal entry
C. an Encumbrance
D. Reserve Entry

Answer 15

C. an Encumbrance

Question 16

Ferriday Louisiana participates in the MERSL, a multi-employer pension plan. The plan is only funded
at 75%, meaning that assets on hand are only 75% of the amount needed based on an actuarial
calculation. The participanting towns in the plan do not have the power to control contribution rates
nor investment choices of the plan. Regarding the unfunded obligation of the pension, GASB 68 says:

A. Ferriday does not have to reflect any liability in the government-wide financial statements because they are merely a participant with no control over the plan activities and policies.
B. Ferriday must report the full amount of the unfunded obligation of the pension plan.
C. Ferriday must report its proportionate share of the unfunded obligation of the pension plan
D. The state of Louisiana would report the liability on behalf of all cities and parishes.

Answer 16

C. Ferriday must report its proportionate share of the unfunded obligation of the pension plan

Question 17

The financial reporting of Tulane University is governed by______________

A. FASAB
B. GASB
C. FASB
D. The legislative auditor’s office

Answer 17

C. FASB

Question 18

Sally goes to work for the City of Shreveport. Employees at the City of Shreveport participate
in a pension plan administered by the state of Louisiana. If she works at least 10 years, she will
receive a guaranteed payment stream starting at age 60. This is an example of:

A Defined Benefit Plan
B. Defined Contribution Plan
C. 401k Plan
D. TIF Funding

Answer 18

A Defined Benefit Plan

Question 19

T or F Non-profit entities fall under guidance of FASB, therefore they are not allowed to use fund accounting

Answer 19

False

Question 20

The City of Houston maintains a fleet of vehicles to be used by employees on an “as needed” basis for work-related travel. The fleet management department maintains the vehicles and charges other departments a daily fee for use of these vehicles. These fees represent the majority of revenues of the fleet management department. The fleet management department is likely accounted for in a ________.

A Internal Service Fund
B Enterprise Fund
C General Fund
D Special Revenue Fund

Answer 20

A Internal Service Fund

Question 21

Which of the following best discribes a releationship of trust?

A. Fiscal
B. Encumbrance
C. Fiduciary
D. Appropriation

Answer 21

C. Fiduciary

Question 22

Shreveport issued a total of $50,000,000 of bonds to construct a city hall. Shreveport also received a
$50,000,000 grant from the state to build a new soccer and baseball complex. The funds received
for these two projects would likely be placed in ______________________.

A. a debt service fund ($50,000,000) and a capital projects fund ($50,000,000)
B a single capital projects fund for the combined $100,000,000
C. Two capital projects funds. One for the city hall and one for the sports complex
D. The general fund until construction begins

Answer 22

C. Two capital projects funds. One for the city hall and one for the sports complex

Question 23

Interperiod equity refers to a condition whereby

A Total tax revenues are approximately the same year to year
B Taxes are distributed fairly among all taxpayers
C Current year revenues cover both operating and capital expenditures
D Current year revenues are sufficient to pay for current year services provided

Answer 23

D Current year revenues are sufficient to pay for current year services provided

Question 24

A city issues $50 million of GO bonds to improve streets and bridges.
The first interest payment of $650,000 is due in 18 months.
The amount of the liability that would be reflected in the
debt service fund is _________

A $50 million
B 650,000
C $50,650,000
D 0

Answer 24

D 0

Question 25

Which funds must be displayed individually in the fund financial statements?

A. All proprietary funds and all of the major governmental funds
B. All funds must be displayed individually in the fund financial statements
C. Those funds that the governing body thinks are significant
D. Major funds (governmental and proprietary) are reflected individually while non-major funds are grouped together.

Answer 25

D. Major funds (governmental and proprietary) are reflected individually while non-major funds are grouped together.

Question 26

Approximately how many people work for the Louisiana Legislative Auditors office?

A. 25
B. 250
C. 2,500

Answer 26

B. 250

Question 27

An elected body (city counsil, board of supervisors) speaks through its ______________

A. Media Spokesperson
B. Social Media
C. Minutes of Meetings
D. Agenda

Answer 27

C. Minutes of Meetings

Question 28

A charitable non-profit asks you to sit on their board. You are curious about the
operation and you want to see financial information about the organization. You could
review their ____________________ that is filed with the IRS and is available to the
public.

A. Form 1040
B. Form 1040 NP
C. Form 990
D. Form C&NP

Answer 28

C. Form 990

Question 29

________________ funds are funds that are held on behalf of another entity or person.
The person holding these funds has a ________________ duty to do what is in the best
interest of the beneficiary of those funds. These funds are not reflected on the
Government Wide financial statements.

A. Permanent Funds
B. Service Funds
C. Fiduciary Funds
D. Debt Funds

Answer 29

C. Fiduciary Funds

Question 30

______________ is an abbreviation that is commonly used for a term that describes
benefits received by retirees other than a pension. GASB requires that local governments
record a liability for the present value of those future benefits.

A. PCAOB
B. PGA
C. OPEB
D. GASB 96

Answer 30

C. OPEB

Question 31

_________________ describes a retirement benefit plan in which the future retirement benefits
are known and are spelled out in the plan document.

A. Defined Contribution Plan
B. Roth 401k
C. Defined Benefit Plan
D. Roth IRA

Answer 31

C. Defined Benefit Plan

Question 32

Which fund might have an unassigned fund balance?

A. Special Revenue Fund
B. Capital Projects Fund
C. General Fund
D. All of the above

Answer 32

C. General Fund

Question 33

Which of the following bonds is backed by the full faith and credit (and taxing authority) of the
issuing government?

A. Revenue Bond
B. Pension Bond
C. G.O. Bond
D. Surety Bond

Answer 33

C. G.O. Bond