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Question(s) / Instruction(s):

21.     Which of the following account captions are you least likely to see on a governmental funds balance sheet?
          a.          Due from other governments
          b.          Property, plant and equipment
          c.          Deferred revenue
          d.          Due to other funds


     22.     Which financial statements are required to be prepared for governmental funds in the fund-level financial statements?
          a.          balance sheet and statement of cash flows
          b.          balance sheet and statement of revenues, expenditures, and changes in fund balances
          c.          statement of fiduciary net assets and statement of revenues, expenditures, and changes in fund balances
          d.          balance sheet and statement of revenues, expenses, and changes in fund net assets

     
     23.     What is the reporting requirement for the fund balance section of the governmental funds balance sheet?
     a.     governmental fund balances should be reported in a single amount
     b.     governmental fund balances should be segregated in three components: invested in capital assets, net of related debt; restricted; and unrestricted
     c.     governmental fund balances should be segregated between reserved and unreserved amounts
          d.          governmental fund balances should be segregated in three components: unreserved; special; and extraordinary     

 

     24.     Which of the following would not be an example of deferred revenues in the December 31, 2008, governmental funds balance sheet of a municipality?
          a.          property taxes levied for the year beginning January 1, 2008, that were not collected in 2008, but that are expected to be collected between April and September of 2009
          b.          property taxes levied for the year beginning January 1, 2009, that were collected in December, 2008
          c.          sales taxes applicable to sales made in December, 2008, that were remitted by merchants in January, 2009
          d.          a cash grant received from the state in December, 2008, with an eligibility requirement that the grant must be used for a program to be started after January 1, 2009

 

     25.     How are amounts due to other funds reported in fund-level financial statements?
          a.          assets in the balance sheet
          b.          expenditures in the statement of revenues, expenditures, and changes in fund balances
          c.          liabilities in the balance sheet
          d.          transfers out in the statement of revenues, expenditures, and changes in fund balances

 

     26.     How are reserves for encumbrances reported in governmental funds balance sheets?
          a.          liabilities
          b.          separate elements of the fund balance
          c.          items that are either due to or from another fund
          d.          contra-assets to the inventory


     
     27.     Why are separate operating statements prepared for governmental funds and proprietary funds in the fund-level financial statements?
          a.          because a single operating statement would require too many columns for the average reader to understand readily
          b.          because governmental funds use the full accrual basis of accounting in the fund financial statements, whereas proprietary funds use the modified accrual basis of accounting
          c.          because governmental funds have a different measurement focus and basis of accounting than proprietary funds in the fund-level financial statements
          d.          because governmental fund operating statements need to be read together with the "budget and actual" schedules, whereas proprietary fund operating statements do not

 

     28.     A municipality allows its employees to accumulate up to 45 days' vacation pay that may be "cashed in" by the employees on retirement. Many employees whose salaries are paid from General Fund appropriations avail themselves of this opportunity. Where does this noncurrent liability appear on the governmental funds balance sheet?
          a.          General Fund column; Accrued vacation leave caption
          b.          This liability is not reported in the governmental funds balance sheet.
          c.          General Fund column; Noncurrent liabilities caption
          d.          General Fund column; Payable from restricted assets caption

 

     29.     Which of the following financial statements is not required to be prepared for proprietary funds in the fund-level financial statements?
          a.          Statement of net assets (or balance sheet)
          b.          Statement of revenues, expenses, and changes in fund net assets
          c.          Statement of revenues, expenditures, and changes in fund balances
          d.          Statement of cash flows

 

     30.     What is the purpose of preparing proprietary fund balance sheets in classified format?
          a.          to distinguish between current and noncurrent assets and liabilities
          b.          to distinguish between assets and liabilities
          c.          to distinguish between restricted and unrestricted net assets
          d.          to segregate net assets into three components: invested in capital assets, net of related debt; restricted; and unrestricted

 

     
     31.     In the net asset component called "invested in capital assets, net of related debt" (that appears in proprietary fund financial statements), what is the meaning of net of related debt?
          a.          bonds, notes, or other borrowings originally issued to acquire or improve the capital assets shown in the amount invested in capital assets
          b.          outstanding balances of bonds, notes, or other borrowings, issued for any purpose approved by the governing body
          c.          outstanding balances of all liabilities, regardless of their form, issued to acquire or improve the capital assets shown in the amount invested in capital assets
          d.          outstanding balances of bonds, notes, or other borrowings, issued to acquire or improve the capital assets shown in the amount invested in capital assets

     32.     Which of the following best expresses the general rule regarding the reporting of operating revenues, nonoperating revenues, and special items in the proprietary funds statement of revenues, expenses, and changes in fund net assets?
          a.     operating revenues, nonoperating revenues, and special items should be reported in separate sections of the statement.
          b.      operating revenues, nonoperating revenues, and special items should be included in a single section, headed "Revenues and other gains."
          c.     special items should be included as nonoperating revenues, but operating revenues and nonoperating revenues should be reported in separate sections of the statement.
          d.     nonoperating revenues and special items should be netted against nonoperating expenses and reported as a single item, captioned "other."

 

     33.     A municipality incurs liabilities in its operations (such as vacation leave and expected claim settlements) that could be classified as "long-term" because cash payouts will not occur for more than one year. The liabilities result from both governmental and proprietary activities. Where are these long-term liabilities reported in the fund-level balance sheets?
          a.          as noncurrent liabilities, in the appropriate fund column, on both fund level balance sheets
          b.          as noncurrent liabilities on both fund level balance sheets, but the long-term liabilities for governmental funds are reported only in the "total" column and not in any fund column
          c.          as noncurrent liabilities in the proprietary funds balance sheet; but long-term liabilities are not reported in the governmental funds balance sheet
          d.          long-term liabilities are not reported in the fund level balance sheets of either governmental or proprietary funds

 

     

     34.     What is the general rule for reporting on funds in the fund-level financial statements for fiduciary funds?
          a.          There is no requirement for reporting on fiduciary funds in the fund-level statements.
          b.          All individual major funds must be reported in separate columns of the fund-level financial statements for fiduciary funds; nonmajor funds may be combined in a single column.
          c.          All individual fiduciary funds, whether major or nonmajor, must be reported in separate columns of the fund-level financial statements for fiduciary funds.
          d.          Separate columns should be shown for each fund type, such as Investment Trust Funds(rather than individual funds), in the fund-level financial statements for fiduciary funds.

     35.     Which of the following financial statements or schedules is prepared for all fiduciary funds?
          a.          Statement of fiduciary cash flows
          b.          Budgetary comparison schedule
          c.          Statement of fiduciary net assets
          d.          Reconciliation between fund-level and government-wide level operating activities

 

     36.     Which basis of accounting must be used in presenting the "actual" column of the fund-level budgetary comparison schedules for the General Fund and major Special Revenue Funds?
          a.          the government's budgetary basis of accounting
          b.          the modified accrual basis of accounting
          c.          the full accrual basis of accounting
          d.          the cash basis of accounting

 

     37.     Which information must be presented in budgetary comparison schedules?
          a.          only the original appropriated budget
          b.          only the final appropriated budget
          c.          both the original appropriated budget and the final appropriated budget
          d.          both the original budget submitted by the chief executive officer and the first budget approved by the legislative body

 

 

     
     38.     Which of the following best expresses the kind of information included in notes to the financial statements?
          a.          notes help to explain differences of opinion between the preparer of financial statements and the auditor.
          b.          notes contain information essential to a user's understanding of the reporting unit's financial position and changes in financial position.
          c.          notes contain explanations of why the reporting unit did not follow generally accepted accounting principles.
          d.          notes contain the required management's discussion and analysis.

 

     39.     Statistical tables included in the Comprehensive Annual Financial Report are intended to help users by providing what kind of information?
          a.          detailed data on the financial position and results of operations of each individual fund
          b.          additional financial, economic, and social data helpful in assessing the financial condition of the governmental unit
          c.          data showing whether the entity has delivered public services efficiently and effectively
          d.          an overview of the financial position and results of operations of the entity as a whole

 

     40.     Governmental fund operations are presented in two operating statements, one at the fund level and the other at the government-wide level. Accounting standards require that the statements be reconciled. A staff member says: "In making the reconciliation, (1) we need to be concerned about capital asset acquisitions because they are not capitalized in the funds under modified accrual accounting, but (2) we don't need to be concerned about the proceeds of long-term debt because bond proceeds are reported as liabilities under both bases of accounting.@ To what extent is the staff member correct?
          a.          correct about both (1) and (2)
          b.          wrong about both (1) and (2)
          c.          correct about (1) but wrong about (2)
          d.          wrong about (1) but correct about (2)

 

 


     
     41.     To what extent should economic factors be discussed in Management's Discussion and Analysis (MD&A)?
          a.          major economic factors affecting operating results should be discussed in MD&A
          b.          economic factors affecting operating results should not be discussed in MD&A
          c.          economic factors affecting operating results should be discussed in MD&A, provided the auditor extends his/her opinion to the MD&A
          d.          economic factors should be discussed in MD&A, provided they are also discussed in the notes

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