Nonprofit and Governmental Accounting
Final ACTUAL QUESTIONS AND
CORRECT ANSWERS
Accountability - CORRECT ANSWERS✅✅The cornerstone of financial reporting
Agency Trust Fund - CORRECT ANSWERS✅✅A fund used to account for assets that a
government holds temporarily for other parties
American Institute of Certified Public Accountants (AICPA) - CORRECT ANSWERS✅✅A
professional organization for CPAs that is responsible for establishing auditing and related
professional standards
Assigned Fund Balance - CORRECT ANSWERS✅✅The net position of a fund the
government intends to use for a specific purpose
Auxiliary Enterprises - CORRECT ANSWERS✅✅Units of colleges, universities, or other
not-for-profit entities that charge for the services they provide and whose activities are
conducted on a business-type basis (Intercollegiate athletics, bookstores, and dining facilities)
Basis of Accounting - CORRECT ANSWERS✅✅The means of determining the timing of
revenue and expenditure recognition
Business-Type Activities - CORRECT ANSWERS✅✅Activities engaged in by a
government or not-for-profit entity that are similar in nature to those carried out by
businesses; activities that are financed in whole or in part by fees charged to external parties
for goods or services
Capital Projects Funds - CORRECT ANSWERS✅✅A fund to account for financial
resources that are restricted, committed, or assigned to expenditure for capital outlays,
including the acquisition or construction of capital facilities and other capital assets
, Capitation Fee - CORRECT ANSWERS✅✅A fee, paid by an insurance company or other
third-party payor to a healthcare organization, that is based on number of persons covered
rather than on actual services provided
Charity Care - CORRECT ANSWERS✅✅Healthcare services that are provided to patients
and for which no compensation is expected
Committed Fund Balance - CORRECT ANSWERS✅✅The net assets of a fund that can be
used only for the specific purposes determined by the government's highest level of decision-
making authority
Contractual Adjustment - CORRECT ANSWERS✅✅The difference between established
billing rates and third-party-payer payments
Debt Service Funds - CORRECT ANSWERS✅✅A fund to account for financial resources
that are restricted, committed, or assigned to expenditure for principal and interest
Defined Benefit Pension Plan - CORRECT ANSWERS✅✅A pension plan that specifies the
pension benefits to be paid to retirees, usually as a function of factors such as age, years of
service, and compensation
Defined Contribution Pension Plan - CORRECT ANSWERS✅✅A pension plan that
specifies the amount of contributions to an individual's retirement account instead of the
amount of benefits the individual is to receive; the benefits a participant will receive depends
on the amount contributed to the participant's account and the returns earned on investment of
those contributions
Derived Tax Revenues - CORRECT ANSWERS✅✅Tax revenues that are based on
exchange transactions between parties other than the taxing government (sales tax and
income tax)
Endowment - CORRECT ANSWERS✅✅A sum of cash, investments, or other assets,
generally received as gift, of which only the income, not the principal, may be expended
Final ACTUAL QUESTIONS AND
CORRECT ANSWERS
Accountability - CORRECT ANSWERS✅✅The cornerstone of financial reporting
Agency Trust Fund - CORRECT ANSWERS✅✅A fund used to account for assets that a
government holds temporarily for other parties
American Institute of Certified Public Accountants (AICPA) - CORRECT ANSWERS✅✅A
professional organization for CPAs that is responsible for establishing auditing and related
professional standards
Assigned Fund Balance - CORRECT ANSWERS✅✅The net position of a fund the
government intends to use for a specific purpose
Auxiliary Enterprises - CORRECT ANSWERS✅✅Units of colleges, universities, or other
not-for-profit entities that charge for the services they provide and whose activities are
conducted on a business-type basis (Intercollegiate athletics, bookstores, and dining facilities)
Basis of Accounting - CORRECT ANSWERS✅✅The means of determining the timing of
revenue and expenditure recognition
Business-Type Activities - CORRECT ANSWERS✅✅Activities engaged in by a
government or not-for-profit entity that are similar in nature to those carried out by
businesses; activities that are financed in whole or in part by fees charged to external parties
for goods or services
Capital Projects Funds - CORRECT ANSWERS✅✅A fund to account for financial
resources that are restricted, committed, or assigned to expenditure for capital outlays,
including the acquisition or construction of capital facilities and other capital assets
, Capitation Fee - CORRECT ANSWERS✅✅A fee, paid by an insurance company or other
third-party payor to a healthcare organization, that is based on number of persons covered
rather than on actual services provided
Charity Care - CORRECT ANSWERS✅✅Healthcare services that are provided to patients
and for which no compensation is expected
Committed Fund Balance - CORRECT ANSWERS✅✅The net assets of a fund that can be
used only for the specific purposes determined by the government's highest level of decision-
making authority
Contractual Adjustment - CORRECT ANSWERS✅✅The difference between established
billing rates and third-party-payer payments
Debt Service Funds - CORRECT ANSWERS✅✅A fund to account for financial resources
that are restricted, committed, or assigned to expenditure for principal and interest
Defined Benefit Pension Plan - CORRECT ANSWERS✅✅A pension plan that specifies the
pension benefits to be paid to retirees, usually as a function of factors such as age, years of
service, and compensation
Defined Contribution Pension Plan - CORRECT ANSWERS✅✅A pension plan that
specifies the amount of contributions to an individual's retirement account instead of the
amount of benefits the individual is to receive; the benefits a participant will receive depends
on the amount contributed to the participant's account and the returns earned on investment of
those contributions
Derived Tax Revenues - CORRECT ANSWERS✅✅Tax revenues that are based on
exchange transactions between parties other than the taxing government (sales tax and
income tax)
Endowment - CORRECT ANSWERS✅✅A sum of cash, investments, or other assets,
generally received as gift, of which only the income, not the principal, may be expended
