Accounting for Public Organizations Exam Preparation Guide
Course Introduction
Accounting for Public Organizations explores the unique principles and practices of accounting within governmental and nonprofit entities. This course covers the regulatory framework, financial reporting, budgeting processes, and fund accounting methods specific to public sector organizations. Students will learn how to analyze financial statements, manage public funds, and ensure accountability and transparency in financial operations. Emphasis is placed on applying accounting standards such as GASB and understanding the challenges faced in public financial management.
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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Chapter 1: Introduction to Accounting and Financial
Reporting for Governmental and Not-For-Profit Organizations
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Sample Questions
Q1) A city government collects local option sales taxes legally restricted to pay for the hiring of teachers for hearing impaired school children.Which fund should account for the receipt of the sales taxes?
A) Special revenue fund
B) Capital projects fund
C) Private-purpose trust fund
D) General fund
Answer: A
Q2) According to GASB standards relating to Budgetary Accounting,the budget,when adopted according to procedures specified by state laws,is binding upon the administrators of a governmental unit.
A)True
B)False
Answer: True
Q3) Contrast revenue recognition under the accrual and modified accrual bases of accounting.
Answer: Under modified accrual accounting,revenues should be recognized when measurable and available to finance expenditures of the current period.Under accrual accounting,revenues are recognized when earned and realizable.
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Chapter 2: Overview of Financial Reporting for State and Local Governments
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Sample Questions
Q1) The government-wide financial statements present the government as a whole,excluding component units and including fiduciary activities.
A)True
B)False
Answer: False
Q2) Capital assets must be itemized on governmental fund balance sheets.
A)True
B)False
Answer: False
Q3) The fund balance reported in the Governmental Funds Balance Sheet must be reconciled to the total net assets in the governmental activities column of the government-wide Statements of Net Assets.
A)True
B)False
Answer: True
Q4) List the basic financial statements required by GASB Statement 34 for fiduciary type funds.
Answer: Fiduciary fund financial statements:
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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) What would be the total Committed fund balance?
A) $375,000
B) $290,000
C) $525,000
D) $455,000
Answer: C
Q2) Which of the following results in an expenditure?
A) Place a purchase order.
B) Receive goods previously ordered.
C) Receive an invoice on goods previously received.
D) Payment of an invoice previously received.
Answer: B
Q3) A donation received is considered a voluntary nonexchange transaction only if it is unrestricted.
A)True
B)False
Answer: False
Q4) What are the four classes of nonexchange revenues?
Answer: Imposed nonexchange transactions Derived tax revenues Government-mandated nonexchange transactions Voluntary nonexchange transactions
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Chapter 4: Accounting for the General and Special Revenue Funds
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Sample Questions
Q1) Which account would be debited when the City of Corfu issued purchase orders for materials and supplies?
A) Budgetary Fund Balance -- Reserve for Encumbrance.
B) Encumbrances Control.
C) Expenditures.
D) Materials and supplies expense.
Q2) Moving cash from the General Fund to a debt service fund for payment of debt service is an example of a (an)
A) Inter-fund transfer.
B) Inter-fund loan.
C) Inter-fund reimbursement.
D) Cash payment.
Q3) Center City's General Fund has the following net resources at year end: Required:
Prepare the fund balance section of the Balance Sheet.
Q4) The journal entry to record an encumbrance would include:
A) A debit to Encumbrance Control
B) A debit to Budgetary Fund Balance - Reserve for Encumbrances
C) A credit to Budgetary Fund Balance - Reserve for Encumbrances
D) A and C would both be included in the journal entry
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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) What amount would be reported as debt service expenditures in the year ended June 30,2012?
A) $350,000.
B) $175,000.
C) $87,500.
D) $-0-.
Q2) Fixed assets of completed projects are recorded in the accounts of capital projects funds.
A)True
B)False
Q3) Special assessments are levied to finance long-term construction projects that benefit the general population.
A)True
B)False
Q4) All of the governmental funds use the modified accrual basis of accounting.
A)True
B)False
Q5) Write yes or no in each box to indicate whether each property applies to the following funds:
Q6) What is the difference between Permanent Funds and Private Purpose Trust Funds? Page 7
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Page 8
Chapter 6: Proprietary Funds
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Sample Questions
Q1) When governments operate landfills,which of the following is correct?
A) GASB requires that certain postclosure costs be estimated and accrued during the period the landfills receive solid waste.
B) GASB requires that a portion of future estimated costs be charged as an expense and liability of the landfill using units-of-production method as waste is accepted.
C) The purpose of recording postclosure expenses and liabilities is to match the estimated costs with the revenues during the period of time the waste is accepted.
D) All of the above are correct
Q2) Proprietary funds use the economic resources measurement focus and accrual basis of accounting.
A)True
B)False
Q3) The Balance Sheet and the Statement of Revenues,Expenditures,and Changes in Fund Balances are required for Proprietary funds.
A)True
B)False
Q4) Why might it be desirable for an enterprise fund to operate at a profit?
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Chapter 7: Fiduciary Trustfunds
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Sample Questions
Q1) When a contributor and a government agree that the principal and/or income of trust assets is for the benefit of individuals,organizations,or other governments,which fund is formed?
A) Private-purpose trust.
B) Agency.
C) Investment trust.
D) Pension trust.
Q2) When a government is the sponsor of a multi-government investment pool and accounts for the external portion of those trust assets it is a(n):
A) Pension Trust Fund.
B) Investment Trust Fund.
C) Private-Purpose Trust Fund.
D) Agency Fund.
Q3) What is a defined benefit pension plan?
Q4) An endowment that is for the benefit of individuals and not the government controlling the funds,should be accounted for using a private-purpose trust fund.
A)True
B)False
Q5) Contrast a defined benefit and defined contribution retirement plan.
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Chapter 8: Government-Wide Statements, capital Assets,
long-Term Debt
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Sample Questions
Q1) A governmental fund Statement of Revenues,Expenditures,and Changes in Fund Balances reported expenditures of $30 million,including capital outlay expenditures of $5 million.Capital assets for that government cost $90 million,including land of $10 million.Depreciable assets are amortized over 20 years,on average.The reconciliation from governmental changes in fund balances to governmental activities changes in net assets would reflect a(an):
A) Decrease of $1 million.
B) Increase of $l million.
C) Decrease of $5 million.
D) Increase of $4 million.
Q2) Internal Service funds use the accrual basis of accounting. A)True B)False
Q3) Fiduciary activities are not reported in the government-wide statements. A)True
B)False
Q4) Governments must capitalize infrastructure assets under GASB Statement 34. A)True B)False
Q5) With regard to the government-wide statements,list the required statements.
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Chapter 9: Advanced Topics for State and Local Governments
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Sample Questions
Q1) Public colleges must depreciate infrastructure and may not use the modified approach.
A)True
B)False
Q2) Answer the following related to accounting and financial reporting for public colleges and universities:
a.What choices exist for financial reporting by public colleges and universities,according to GASB Statement 35?
b.Indicate the contents required for a financial report for those public colleges and universities that choose to report as special-purpose entities engaged only in business-type activities.
Q3) According to GASB Statement 33,with respect to public colleges and universities,pledges receivable are recognized as assets and revenues when eligibility requirements are met.
A)True
B)False
Q4) The Implementation Guide for GASB Statement No.34 provides a distinction between general-purpose governments and special-purpose governments.Discuss the difference between the two.
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Chapter 10: Accounting for Private Not-For-Profit Organizations
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Sample Questions
Q1) In 2012,Susan tells The Art Museum,a private not-for-profit organization,that she has named the museum in her will.When should the organization recognize the contribution revenue?
A) When Susan dies and the will is declared valid.
B) Ratably over a five year period beginning in 2013.
C) All in 2012.
D) When the Museum receives the contribution.
Q2) A private not-for-profit organization received a gift of $460,000 with purpose restrictions in 2011.In 2012 funds were expended for the purpose outlined in the gift,however,it was not possible to determine whether the restricted funds or unrestricted funds were used.The presumption should be:
A) The restricted funds would have been used first.
B) The unrestricted funds would have been used first.
C) The restricted funds and unrestricted funds would have been used equally.
D) The restricted funds and unrestricted funds would have been used, based on a weighted average of the amounts.
Q3) A Statement of Functional Expenses is required for state governments.
A)True
B)False
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Chapter 11: College and University Accounting
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Sample Questions
Q1) The private college would:
A) Record interest revenue of $3,033 in 2011.
B) Record interest revenue of $3,033 in 2012.
C) Record contribution revenue of $3,033 in 2011.
D) Record contribution revenue of $3,033 in 2012.
Q2) Which of the following is a required statement for a private college?
A) Statement of Changes in Fund Balance.
B) Statement of Revenues and Expenditures.
C) Budgetary Comparison Statement.
D) None of the above is a required statement.
Q3) In addition to a Statement of Financial Position and a Statement of Activities,a private college or university is required to present:
A) A Statement of Functional Expense.
B) A Statement of Cash Flows.
C) Both (a) and (c).
D) Neither (a) nor (c).
Q4) Universities treat athletic scholarships as a reduction in revenue.
A)True
B)False
Q5) How should the income earned by a private college's endowment be classified?
Page 14
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Chapter 12: Accounting for Hospitals and Other Health Care
Providers
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99 Flashcards
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Sample Questions
Q1) Sam Smith died,leaving a will that provided that $1,000,000 be transferred to a not-for-profit hospital.The hospital is to invest the funds for 10 years and give $40,000 each year to the granddaughter.At the end of the 10 years,the $1,000,000 can be used for any purpose desired by the hospital.Which of the following is true?
A) The hospital would record revenue in the amount of $1,000,000, increasing temporarily restricted net assets.
B) The hospital would record revenue in an amount equal to the present value of the 10 payments to the granddaughter.
C) The hospital would record revenue in an amount equal to the $1,000,000 less the present value of the 10 payments to the granddaughter.
D) The hospital would not record revenue for 10 years; then a revenue would be recorded, increasing unrestricted net assets.
Q2) Because they are engaged in business-type activities,governmental health care organizations use the accrual basis and economic resources measurement focus. A)True B)False
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Chapter 13: Auditing, tax-Exempt Organizations, and Evaluating Performance
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Sample Questions
Q1) The program expense ratio is calculated as (Program service expenses + supporting service expenses)/ Total expenses.
A)True
B)False
Q2) All of the following are examples of service outputs,except:
A) Enrollment increases
B) Dropout rates
C) The number of gifted or alternative programs
D) Degrees conferred
Q3) Which of the following is true regarding the Single Audit Act and its amendments?
A) An auditor is expected to express an opinion on "major programs," which are chosen based on size.
B) An auditor is required to select all "Type A" programs as major programs.
C) Both of the above.
D) Neither of the above.
Q4) Governmental Audit Reports are due nine months after the end of the fiscal year.
A)True
B)False
Q5) What is required for an organization to qualify for tax-exempt status?
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Chapter 14: Financial Reporting by the Federal Government
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Q1) Accounting standards for the federal government and its agencies are established by the Governmental Accounting Standards Board.
A)True
B)False
Q2) Which of the following are included in the Financial Snapshot section of the federal government's Citizens' Guide to the Financial Report of the US Government?
A) The Net Operating Cost of the federal government
B) The Net Position (assets minus liabilities) of the federal government
C) Both (a) and (b) above
D) Neither (a) nor (b) above
Q3) Which of the following steps in the budgetary authority process occurs when Congress passes a spending bill which is signed by the President?
A) Appropriation
B) Apportionment
C) Allotment
D) Obligation
Q4) Identify (in order of occurrence)the steps in the federal budgetary authority process.
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