ACCT 4421 EXAM GUIDE #1
QUESTIONS AND ANSWERS
The City of Round Lake receives a contribution of $20 million. The donor stipulates
that the money is to be invested. The principal is to remain intact, and the investment
proceeds are to be used to support a city-owned nature center. The city should
report the contribution in a
Select one:
A.special revenue fund.
B.fiduciary fund.
C.permanent fund.
D.custodial fund. - ANSWER-C
Under GASB Statement No. 54, what is the hierarchy classification of fund
balances?
Select one:
A.nonspendable, unrestricted, committed, assigned, unassigned
B.nonspendable, restricted, committed, assigned, unassigned
C.spendable, restricted, uncommitted, assigned, unassigned
D.spendable, unrestricted, committed, assigned, unassigned - ANSWER-B
Select the best answer.
The FASB is to the GASB as
Select one:
A.a son is to a father.
B.an aunt is to a niece.
C.a father is to a son.
D.a brother is to a sister. - ANSWER-D
Which of the following practices is most likely to undermine interperiod equity?
Select one:
A.paying for a new school building out of current operating funds
B.paying the administrative staff of a school out of current operating funds
C.issuing 20-year bonds to finance construction of a new highway
D.recognizing gains and losses on marketable securities as prices increase and
decrease - ANSWER-A?
The primary objective of a not-for-profit organization or a government is to
Select one:
A.provide services to constituents.
B.minimize expenditures.
C.maximize revenues.
D.All options are correct. - ANSWER-A
In governments, in contrast to businesses,
Select one:
A.the amount of expenditures is independent of the amount of revenues collected.
B.the amount of revenues collected is a signal of the demand for services.
,C.there may not be a direct relationship between revenues raised and the demand
for the entity's services.
D.expenditures are driven mainly by the ability of the entity to raise revenues. -
ANSWER-C
The following relate to the town of Coupland (dollar amounts in thousands):
Item
Amount
Equipment used in a vehicle repair service that provides service to other
departments on a cost-reimbursement basis; the equipment has a 10-year life with
no salvage value
$1,400
Property taxes levied and collected
$6,300
Hotel taxes (restricted to promotion of tourism) collected
$1,200
Proceeds of bonds to build a parking garage that must be repaid from user charges
$4,000
Proceeds of general obligation bonds to finance construction of a new city hall; the
building, which was completed during the year, has a useful life of 30 years with no
salvage value
$9,000
Proceeds of a federal grant to hire additional police officers
$1,000
Fees charged to, and collected from, customers by the electric utility
$8,000
Refer to the list and response bank below. Select the appropriate amounts from the
response bank for each item.
*An amount ma - ANSWER-$8,000
The following relate to the town of Coupland (dollar amounts in thousands):
Item
Amount
Equipment used in a vehicle repair service that provides service to other
departments on a cost-reimbursement basis; the equipment has a 10-year life with
no salvage value
$1,400
Property taxes levied and collected
$6,300
Hotel taxes (restricted to promotion of tourism) collected
$1,200
Proceeds of bonds to build a parking garage that must be repaid from user charges
$4,000
Proceeds of general obligation bonds to finance construction of a new city hall; the
building, which was completed during the year, has a useful life of 30 years with no
salvage value
$9,000
Proceeds of a federal grant to hire additional police officers
$1,000
, Fees charged to, and collected from, customers by the electric utility
$8,000
Refer to the list and response bank below. Select the appropriate amounts from the
response bank for each item.
*An amount ma - ANSWER-$2,200
The following relate to the town of Coupland (dollar amounts in thousands):
Item
Amount
Equipment used in a vehicle repair service that provides service to other
departments on a cost-reimbursement basis; the equipment has a 10-year life with
no salvage value
$1,400
Property taxes levied and collected
$6,300
Hotel taxes (restricted to promotion of tourism) collected
$1,200
Proceeds of bonds to build a parking garage that must be repaid from user charges
$4,000
Proceeds of general obligation bonds to finance construction of a new city hall; the
building, which was completed during the year, has a useful life of 30 years with no
salvage value
$9,000
Proceeds of a federal grant to hire additional police officers
$1,000
Fees charged to, and collected from, customers by the electric utility
$8,000
Refer to the list and response bank below. Select the appropriate amounts from the
response bank for each item.
*An amount ma - ANSWER-$0
The following relate to the town of Coupland (dollar amounts in thousands):
Item
Amount
Equipment used in a vehicle repair service that provides service to other
departments on a cost-reimbursement basis; the equipment has a 10-year life with
no salvage value
$1,400
Property taxes levied and collected
$6,300
Hotel taxes (restricted to promotion of tourism) collected
$1,200
Proceeds of bonds to build a parking garage that must be repaid from user charges
$4,000
Proceeds of general obligation bonds to finance construction of a new city hall; the
building, which was completed during the year, has a useful life of 30 years with no
salvage value
$9,000
QUESTIONS AND ANSWERS
The City of Round Lake receives a contribution of $20 million. The donor stipulates
that the money is to be invested. The principal is to remain intact, and the investment
proceeds are to be used to support a city-owned nature center. The city should
report the contribution in a
Select one:
A.special revenue fund.
B.fiduciary fund.
C.permanent fund.
D.custodial fund. - ANSWER-C
Under GASB Statement No. 54, what is the hierarchy classification of fund
balances?
Select one:
A.nonspendable, unrestricted, committed, assigned, unassigned
B.nonspendable, restricted, committed, assigned, unassigned
C.spendable, restricted, uncommitted, assigned, unassigned
D.spendable, unrestricted, committed, assigned, unassigned - ANSWER-B
Select the best answer.
The FASB is to the GASB as
Select one:
A.a son is to a father.
B.an aunt is to a niece.
C.a father is to a son.
D.a brother is to a sister. - ANSWER-D
Which of the following practices is most likely to undermine interperiod equity?
Select one:
A.paying for a new school building out of current operating funds
B.paying the administrative staff of a school out of current operating funds
C.issuing 20-year bonds to finance construction of a new highway
D.recognizing gains and losses on marketable securities as prices increase and
decrease - ANSWER-A?
The primary objective of a not-for-profit organization or a government is to
Select one:
A.provide services to constituents.
B.minimize expenditures.
C.maximize revenues.
D.All options are correct. - ANSWER-A
In governments, in contrast to businesses,
Select one:
A.the amount of expenditures is independent of the amount of revenues collected.
B.the amount of revenues collected is a signal of the demand for services.
,C.there may not be a direct relationship between revenues raised and the demand
for the entity's services.
D.expenditures are driven mainly by the ability of the entity to raise revenues. -
ANSWER-C
The following relate to the town of Coupland (dollar amounts in thousands):
Item
Amount
Equipment used in a vehicle repair service that provides service to other
departments on a cost-reimbursement basis; the equipment has a 10-year life with
no salvage value
$1,400
Property taxes levied and collected
$6,300
Hotel taxes (restricted to promotion of tourism) collected
$1,200
Proceeds of bonds to build a parking garage that must be repaid from user charges
$4,000
Proceeds of general obligation bonds to finance construction of a new city hall; the
building, which was completed during the year, has a useful life of 30 years with no
salvage value
$9,000
Proceeds of a federal grant to hire additional police officers
$1,000
Fees charged to, and collected from, customers by the electric utility
$8,000
Refer to the list and response bank below. Select the appropriate amounts from the
response bank for each item.
*An amount ma - ANSWER-$8,000
The following relate to the town of Coupland (dollar amounts in thousands):
Item
Amount
Equipment used in a vehicle repair service that provides service to other
departments on a cost-reimbursement basis; the equipment has a 10-year life with
no salvage value
$1,400
Property taxes levied and collected
$6,300
Hotel taxes (restricted to promotion of tourism) collected
$1,200
Proceeds of bonds to build a parking garage that must be repaid from user charges
$4,000
Proceeds of general obligation bonds to finance construction of a new city hall; the
building, which was completed during the year, has a useful life of 30 years with no
salvage value
$9,000
Proceeds of a federal grant to hire additional police officers
$1,000
, Fees charged to, and collected from, customers by the electric utility
$8,000
Refer to the list and response bank below. Select the appropriate amounts from the
response bank for each item.
*An amount ma - ANSWER-$2,200
The following relate to the town of Coupland (dollar amounts in thousands):
Item
Amount
Equipment used in a vehicle repair service that provides service to other
departments on a cost-reimbursement basis; the equipment has a 10-year life with
no salvage value
$1,400
Property taxes levied and collected
$6,300
Hotel taxes (restricted to promotion of tourism) collected
$1,200
Proceeds of bonds to build a parking garage that must be repaid from user charges
$4,000
Proceeds of general obligation bonds to finance construction of a new city hall; the
building, which was completed during the year, has a useful life of 30 years with no
salvage value
$9,000
Proceeds of a federal grant to hire additional police officers
$1,000
Fees charged to, and collected from, customers by the electric utility
$8,000
Refer to the list and response bank below. Select the appropriate amounts from the
response bank for each item.
*An amount ma - ANSWER-$0
The following relate to the town of Coupland (dollar amounts in thousands):
Item
Amount
Equipment used in a vehicle repair service that provides service to other
departments on a cost-reimbursement basis; the equipment has a 10-year life with
no salvage value
$1,400
Property taxes levied and collected
$6,300
Hotel taxes (restricted to promotion of tourism) collected
$1,200
Proceeds of bonds to build a parking garage that must be repaid from user charges
$4,000
Proceeds of general obligation bonds to finance construction of a new city hall; the
building, which was completed during the year, has a useful life of 30 years with no
salvage value
$9,000
