GOVERNMENT ACCOUNTING EXAMINATION QUESTIONS
AND CORRECT ANSWER WITH EXPLANATION|GRADED
A+ STUDY GUIDE SOUTHERN NEW HAMPSHIRE
UNIVERSITY
1. Government accounting is primarily designed to:
A. Maximize shareholder wealth
B. Ensure accountability for public resources
C. Increase private profits
D. Eliminate public reporting
Answer: B
Rationale: Government accounting emphasizes accountability and stewardship.
2. The primary users of governmental financial statements are:
A. Shareholders only
B. Citizens, legislators, and oversight bodies
C. Private investors only
D. Competitors only
Answer: B
Rationale: Governments report to the public and oversight entities.
3. Government accounting standards in the United States are established primarily by:
Governmental Accounting Standards Board
A. FASB
B. GASB
C. IRS
D. SEC
Answer: B
Rationale: GASB establishes standards for state and local governments.
,4. Federal government accounting standards are issued by:
Federal Accounting Standards Advisory Board
A. SEC
B. GASB
C. FASAB
D. PCAOB
Answer: C
Rationale: FASAB establishes federal accounting standards.
5. Fund accounting is used primarily to:
A. Eliminate accountability
B. Separate resources according to legal restrictions and purposes
C. Increase private profits
D. Avoid budgeting requirements
Answer: B
Rationale: Funds track restricted and designated resources.
6. A governmental fund is generally used to account for:
A. Commercial business activities only
B. Tax-supported activities
C. Private investments only
D. Shareholder dividends only
Answer: B
Rationale: Governmental funds support public services.
7. Proprietary funds are used for:
A. Tax-supported services only
B. Business-type government activities
C. Legislative reporting only
D. Pension accounting only
Answer: B
Rationale: Proprietary funds resemble private-sector operations.
, 8. Fiduciary funds account for:
A. Government-owned inventory only
B. Resources held in trust for others
C. Tax revenues only
D. Capital assets only
Answer: B
Rationale: Fiduciary funds manage resources for external parties.
9. The General Fund is used to account for:
A. Permanent endowments only
B. General government operations
C. Enterprise activities only
D. Pension plans only
Answer: B
Rationale: Main operating fund of government.
10. Special Revenue Funds are established to account for:
A. General unrestricted revenues
B. Revenues restricted for specific purposes
C. Debt retirement only
D. Capital projects only
Answer: B
Rationale: Tracks legally restricted revenues.
11. Capital Projects Funds account for:
A. Routine operating expenditures
B. Construction and acquisition of major capital facilities
C. Pension obligations only
D. Inventory purchases only
Answer: B
Rationale: Used for major governmental projects.
AND CORRECT ANSWER WITH EXPLANATION|GRADED
A+ STUDY GUIDE SOUTHERN NEW HAMPSHIRE
UNIVERSITY
1. Government accounting is primarily designed to:
A. Maximize shareholder wealth
B. Ensure accountability for public resources
C. Increase private profits
D. Eliminate public reporting
Answer: B
Rationale: Government accounting emphasizes accountability and stewardship.
2. The primary users of governmental financial statements are:
A. Shareholders only
B. Citizens, legislators, and oversight bodies
C. Private investors only
D. Competitors only
Answer: B
Rationale: Governments report to the public and oversight entities.
3. Government accounting standards in the United States are established primarily by:
Governmental Accounting Standards Board
A. FASB
B. GASB
C. IRS
D. SEC
Answer: B
Rationale: GASB establishes standards for state and local governments.
,4. Federal government accounting standards are issued by:
Federal Accounting Standards Advisory Board
A. SEC
B. GASB
C. FASAB
D. PCAOB
Answer: C
Rationale: FASAB establishes federal accounting standards.
5. Fund accounting is used primarily to:
A. Eliminate accountability
B. Separate resources according to legal restrictions and purposes
C. Increase private profits
D. Avoid budgeting requirements
Answer: B
Rationale: Funds track restricted and designated resources.
6. A governmental fund is generally used to account for:
A. Commercial business activities only
B. Tax-supported activities
C. Private investments only
D. Shareholder dividends only
Answer: B
Rationale: Governmental funds support public services.
7. Proprietary funds are used for:
A. Tax-supported services only
B. Business-type government activities
C. Legislative reporting only
D. Pension accounting only
Answer: B
Rationale: Proprietary funds resemble private-sector operations.
, 8. Fiduciary funds account for:
A. Government-owned inventory only
B. Resources held in trust for others
C. Tax revenues only
D. Capital assets only
Answer: B
Rationale: Fiduciary funds manage resources for external parties.
9. The General Fund is used to account for:
A. Permanent endowments only
B. General government operations
C. Enterprise activities only
D. Pension plans only
Answer: B
Rationale: Main operating fund of government.
10. Special Revenue Funds are established to account for:
A. General unrestricted revenues
B. Revenues restricted for specific purposes
C. Debt retirement only
D. Capital projects only
Answer: B
Rationale: Tracks legally restricted revenues.
11. Capital Projects Funds account for:
A. Routine operating expenditures
B. Construction and acquisition of major capital facilities
C. Pension obligations only
D. Inventory purchases only
Answer: B
Rationale: Used for major governmental projects.
