TEST BANK FOR ACCOUNTING FOR GOVERNMENTAL AND NONPROFIT ENTITIES 16TH EDITION RECK

TEST BANK FOR ACCOUNTING FOR GOVERNMENTAL AND NONPROFIT ENTITIES 16TH EDITION RECK TEST BANK TEST BANK FOR ACCOUNTING FOR GOVERNMENTAL AND NONPROFIT ENTITIES 16TH EDITION RECK Chapter 02 Principles of Accounting and Financial Reporting for State and Local Governments True / False Questions 1. Governmental funds are further classified as governmental or business-type. 2. Governmental funds are identical to governmental activities, proprietary funds are identical to business-type activities, and fiduciary funds are identical to fiduciary activities of a government. 3. An objective of the accounting system for a state or a local government is to make it possible both to present fairly the funds and activities of the government in conformity with generally accepted accounting principles and to demonstrate compliance with finance-related legal and contractual provisions. 4. Individual fund financial information is reported in separate columns of governmental and proprietary fund financial statements for only those funds that meet the GASB size-related criteria as major funds. 5. Economic resources are cash or items expected to be converted into cash during the current period, or soon enough thereafter to pay current period liabilities. 6. Governmental funds account for assets but not the liabilities. 7. The types of funds that may be used in governmental accounting are classified into the three categories of governmental, proprietary, and fiduciary. 8. The governmental funds category includes the General Fund, special revenue funds, debt service funds, capital projects funds, and internal service funds. 9. Governments can, in part, demonstrate operational accountability by reporting proprietary and fiduciary fund financial information, as well as all government-wide financial information, using an economic resources measurement focus and the accrual basis of accounting. 10. All capital assets acquired by or used by a fund should be reported in the fund balance sheet or statement of net position. 11. Because budgetary accounts are used by governments, their financial statements can never be said to be in accord with generally accepted accounting principles. 12. Governments must present three sets of fund financial statements. 13. When revenues are legally restricted by external resource providers or committed by enabling legislation for particular operating purposes, a private purpose trust fund is created. 14. A debt service fund is used to account for financial resources segregated for the purpose of making principal and interest payments on general long-term debt. 15. A deferred inflow is defined as “an acquisition of net assets by the government that is applicable to a future reporting period.” 16. Expenditures are never recorded in governmental funds. Multiple Choice Questions 17. The accounting system used by a state or local government must make it possible 18. Which of the following is a difference between financial reporting for internal service and enterprise funds? 19. Which of the following is not a characteristic of a fund as defined by GASB standards? 20. In accounting for state and local governments the modified accrual basis is required for 21. Under the modified accrual basis of accounting, revenues should be recognized when 22. The accrual basis of accounting applicable to proprietary fund types requires that exchange revenues be recognized when 23. Which of the following funds is a governmental fund-type? 24. Financial resources set aside to pay principal and interest on general long-term debt may be accounted for in which of the following fund types? 25. According to GASB standards transfers should be recognized 26. Generally accepted accounting principles applicable to state and local governments require that 27. Which of the following is a proprietary fund? 28. Which of the following is a fiduciary fund? 29. Which of the following funds would be most appropriate for accounting for an activity that provides goods or services to the public for a fee that is intended to make the activity self-supporting? . 30. Which of the following funds should be used if resources provided by a federal grant must be segregated and used for counseling of youthful offenders? 31. Which of the following funds would be used to account for an activity that provides centralized purchasing and sales of goods or services to other departments or agencies of the governmental, or to other governments, on a cost- reimbursement basis? .........................................continued..............................................