Accounting for Public Administration
Midterm Exam
Course Introduction
This course introduces students to the fundamental principles and practices of accounting as they apply in the context of public administration. Emphasizing the unique financial environment of government and nonprofit organizations, the course covers budgetary accounting, fund accounting, financial reporting, and auditing standards for public entities. Students will explore the regulatory framework governing public sector financial management and learn to analyze, interpret, and communicate financial information critical for decision-making, transparency, and accountability in governmental operations.
Recommended Textbook
Essentials of Accounting for Governmental and Not for Profit Organizations 10th Edition by Paul
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14 Chapters
1903 Verified Questions
1903 Flashcards
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Page 2
Chapter 1: Introduction to Accounting and Financial
Reporting for Governmental and Not-For-Profit Organizations
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Sample Questions
Q1) Notre Dame University,a private institution,has level "A" GAAP established by the:
A) American Institute of Certified Public Accountants.
B) Governmental Accounting Standards Board.
C) Financial Accounting Standards Board.
D) National Association of College and University Business Officers.
Answer: C
Q2) Financial reports for state and local governments are used for all the following EXCEPT?
A) Assess financial condition and results of operations
B) Measuring the effectiveness of government services such as police and fire protection
C) Compare actual results with the legally adopted budget
D) Assist in determining compliance with finance-related laws and regulations
Answer: B
Q3) Measurement focus refers to those items,such as current and long-term assets,that are being reported on the financial statements.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Overview of Financial Reporting for State and Local Governments
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Sample Questions
Q1) Where in the CAFR would one find the long-term liability for revenue bonds (paid from the revenues of an enterprise fund)?
A) The proprietary funds Statement of Net Assets only.
B) The government-wide Statement of Net Assets only.
C) The government-wide Statement of Net Assets and the proprietary funds Statement of Net Assets.
D) The government-wide Statement of Net Assets and the RSI Schedule of Bonds Payable.
Answer: C
Q2) GASB provides which method(s)for including component unit financial information with that of the primary government?
A) Discrete Presentation
B) Blending
C) A and B
D) None of the above
Answer: C
Q3) List the basic financial statements required by GASB Statement 34 for fiduciary type funds.
Answer: Fiduciary fund financial statements:
Page 4
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Chapter 3: Modified Accrual Accounting: Including the Role of
Fund Balances and Budgetary Authority
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Sample Questions
Q1) The only difference between modified accrual accounting and accrual accounting is the difference in the recognition of long-term assets and liabilities.
A)True
B)False
Answer: False
Q2) When a computer which is to be used by an activity accounted for by the General Fund of a governmental unit is received,it should be recorded in the General Fund as a(an):
A) Expenditure.
B) Appropriation.
C) Encumbrance.
D) Capital asset.
Answer: A
Q3) "Estimated Revenues Not Yet Realized" will commonly have a net debit balance during the year.
A)True
B)False
Answer: True
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Chapter 4: Accounting for the General and Special Revenue Funds
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Sample Questions
Q1) Which of the following is an interfund transaction?
A) Interfund services provided and used
B) Interfund transfers
C) Interfund reimbursement
D) All of the above are interfund transactions
Q2) When closing the books for the General Fund,an excess of revenues over expenditures and encumbrances would be credited to Fund Balance.
A)True
B)False
Q3) What is the effect on the General Fund's fund balance when capital assets are purchased during a year from General Fund revenues?
A) Fund balance is increased.
B) Fund balance is decreased.
C) There is no effect, since one asset (cash) is replaced by another (capital asset).
D) None of the above, capital assets must be purchased through a capital projects fund.
Q4) What is the difference between reciprocal interfund activity and nonreciprocal interfund activity?
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Chapter 5: Accounting for Other Governmental Fund Types:
Capital Projects, debt Service, and Permanent
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Sample Questions
Q1) Which of the following statements is false?
A) Debt service funds are required to report accrued interest and principal payments as current liabilities.
B) All of the governmental funds use the modified accrual basis of accounting.
C) General fixed assets that are acquired with governmental fund resources are recorded as expenditures in the governmental funds but are displayed as capital assets in the governmental-wide financial statements.
D) Permanent funds reflect resources that are legally restricted so that principal may not be expended and earnings are used to benefit the government or its citizenry.
Q2) Budgets are typically recorded for which of the following:
A) Capital Projects Funds.
B) Special Revenue Funds.
C) Debt Service Funds.
D) Permanent Funds
Q3) If a sinking fund is required by creditors or law,the unexpended resources would be classified as Assigned Fund Balance.
A)True
B)False
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Chapter 6: Proprietary Funds
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Sample Questions
Q1) Capital assets constructed by an internal service fund are recorded in a capital projects fund.
A)True
B)False
Q2) Revenue bonds
A) Carry less risk than general obligation bonds.
B) Are no longer in existence.
C) Are intended to be payable from the revenues of an enterprise.
D) Are backed by the full faith and credit of the government in addition to enterprise revenues.
Q3) All of the following are true about proprietary funds EXCEPT:
A) They include Internal Service Funds and Enterprise Funds.
B) The economic resources focus is used.
C) They include the General Fund and Special Revenue Fund.
D) Accrual accounting is used as the basis of accounting.
Q4) When estimating uncollectible accounts,an enterprise fund will record a debit to Bad Debt Expense and a credit to Accumulated Provision for Uncollectible Accounts.
A)True
B)False
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Chapter 7: Fiduciary Trustfunds
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Sample Questions
Q1) The terms used for classification of items on the Statement of Changes in Fiduciary Net Assets are:
A) Revenues and Expenses.
B) Additions and Deductions.
C) Revenues and Expenditures.
D) Contributions and Expenses.
Q2) A fund that is used to account for assets held by a government acting as agent for one or more other governments units or for individuals or private organizations is a(n):
A) Agency fund
B) Private-Purpose Trust Fund
C) Investment Trust Fund
D) Pension Trust Fund
Q3) Agency funds have no fund equity.
A)True
B)False
Q4) Contrast the accounting and reporting of Private-purpose Trust Funds and Permanent Funds.
Q5) Contrast a defined benefit and defined contribution retirement plan.
Q6) Contrast the purpose of Private-purpose Trust Funds and Permanent Funds.
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Chapter 8: Government-Wide Statements, capital Assets,
long-Term Debt
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Sample Questions
Q1) The General Fund of the City of Plymouth purchased a police car in the amount of $25,000.Which of the following would be true?
A) The General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances would report an expenditure of $25,000.
B) The government-wide Statement of Activities would report an expense of $25,000.
C) Both of the above.
D) Neither of the above.
Q2) Which of the following is true regarding the government-wide Statement of Net Assets?
A) A classified approach is required, reflecting current assets separately from noncurrent assets and current liabilities from noncurrent liabilities.
B) Major funds are reported for governmental and enterprise funds.
C) Both of the above.
D) Neither of the above.
Q3) With regard to the government-wide statements,indicate the three categories of net assets that should be reported and describe what would be put into each category.
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Page 10
Chapter 9: Advanced Topics for State and Local Governments
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Sample Questions
Q1) A public college had tuition and fees for the year ended June 30,2012 in the amount of $45,000,000.Scholarships,for which no services were required,amounted to $2,300,000.Graduate assistantships,for which services were required,amounted to $2,500,000.The amount to be reported by the college for net tuition and fee revenue would be:
A) $40,200,000.
B) $42,700,000.
C) $42,500,000.
D) $45,000,000.
Q2) Which of the following is not a special-purpose government?
A) Tollway authority
B) Library district
C) Village government
D) Fire protection districts
Q3) Revenue sources for public colleges include tuition and fees,state appropriations and donations.All other income is reported as unrelated business income.
A)True
B)False
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Chapter 10: Accounting for Private Not-For-Profit Organizations
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Sample Questions
Q1) Which of the following would be a contribution increasing permanently restricted net assets?
A) A contribution by a donor in the amount of $1,000,000, set aside by the governing board as funds not to be expended.
B) A contribution by a donor in the amount of $1,000,000, set aside by the donor as funds not to be expended.
C) Both of the above.
D) Neither of the above.
Q2) In 2012,a major drug company agreed to give a not-for-profit private college $300,000 to perform testing of a new drug.An advance payment of $200,000 was received in 2012.The college was to receive $1,500 per individual test.In 2012,the college completed 100 tests.How much revenue should the college report for 2012?
A) $300,000
B) $100,000
C) $150,000
D) $200,000
Q3) What are the criteria established by Statement of Position 98-02 for allocation of costs that involve fund raising?
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Chapter 11: College and University Accounting
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Sample Questions
Q1) The three classes of net assets required to be presented by a private college or university are:
A) Permanently Restricted, Temporarily Restricted, and Unrestricted.
B) Reserved, Unreserved, and Undesignated.
C) Invested in Capital Assets net of Related Debt, Restricted, and Unrestricted.
D) Educational and General, and Auxiliary Enterprises.
Q2) According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,if both unrestricted and restricted resources are available for a restricted purpose,the FASB requires that the institution recognize the use of unrestricted resources first.
A)True
B)False
Q3) Universities treat athletic scholarships as a reduction in revenue.
A)True
B)False
Q4) Private colleges and universities recognize revenue in the year in which the unconditional pledge is made.
A)True
B)False
Q5) How should the income earned by a private college's endowment be classified?
Page 13
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Chapter 12: Accounting for Hospitals and Other Health Care
Providers
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Sample Questions
Q1) The equity section of the Statement of Net Assets of a private not-for-profit hospital may contain which of the following descriptions?
A) Fiduciary, Proprietary, and General.
B) Reserved, Unreserved, and Undesignated.
C) Invested in Capital Assets Net of Related Debt, Restricted, and Unrestricted.
D) Permanently Restricted, Temporarily Restricted, and Unrestricted.
Q2) Investor owned health care organizations have the following equity section accounts:
A) Paid in capitals and retained earnings.
B) Unrestricted, temporarily restricted, or permanently restricted net assets.
C) Invested in capital assets net of related debt, restricted, and unrestricted net assets.
D) Paid in capital, restricted, and unrestricted net assets.
Q3) The equity section of the Statement of Net Assets of a government-owned hospital may contain which of the following descriptions?
A) Fiduciary, Proprietary, and General.
B) Reserved, Unreserved, and Undesignated.
C) Invested in Capital Assets Net of Related Debt, Restricted, and Unrestricted.
D) Permanently Restricted, Temporarily Restricted, and Unrestricted.
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Chapter 13: Auditing, tax-Exempt Organizations, and Evaluating Performance
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Sample Questions
Q1) What is the objective of the single audit process?
Q2) What are major programs with respect to the Single Audit Act of 1984 and amendment of 1996?
Distinguish between Type A and Type B programs.
Q3) Government financial audits are subject to both GAAS and GAGAS.
A)True
B)False
Q4) The purpose of audits conducted under the Single Audit Act is to provide assurance that federal and state funds are expended in accordance with grant agreements,and with financial management and other standards promulgated by the federal government.
A)True
B)False
Q5) Which of the following is true regarding the Internal Revenue Service's concern regarding tax-exempt organizations?
A) Organizations are charging many of their program expenses to fundraising.
B) Executives of tax-exempt organizations are receiving excessive salaries and benefits.
C) Both (a) and (b)
D) Neither ( a) nor (b)
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Chapter 14: Financial Reporting by the Federal Government
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Sample Questions
Q1) Which of the following is (are)accurate regarding a federal agency's Statement of Changes in Net Position?
A) The statement starts with the beginning of year balances in the net position accounts and reconciles these to the ending balances appearing on the agency's Balance Sheet.
B) Costs are measured using the budgetary basis of accounting.
C) Both (a) and (b) above
D) Neither (a) nor (b) above
Q2) The Federal Accounting Standards Advisory Board was formed by the Secretary of the Treasury,Director of OMB,and Comptroller General.
A)True
B)False
Q3) The account,Fund Balance with Treasury is classified as an asset on a federal agency's balance sheet.
A)True
B)False
Q4) Describe the purpose of the following:
a)Federal government budgetary accounts
b)Federal government proprietary accounts
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