AICPA Governmental & Not-for-Profit Accounting 2

Question 1

How are capital assets (e.g., buildings, equipment) reported in government-wide financial statements?

Accepted Answer

Capitalized and depreciated over their useful lives

Answer

Expensed in the period of acquisition

Answer

Reported at fair value each year

Answer

Recorded as fund balance reserves

Question 2

A special revenue fund is used to account for:

Accepted Answer

Resources legally restricted or committed for specific purposes other than debt service or capital projects

Answer

Proceeds from the issuance of long-term debt

Answer

Assets held in a trustee capacity

Answer

General operating revenues of the government

Question 3

What is an encumbrance in governmental accounting?

Accepted Answer

A commitment of fund resources against an approved appropriation for a purchase order or contract

Answer

A long-term liability for pension obligations

Answer

Accrued interest payable on municipal bonds

Answer

A lien placed on government property

Question 4

Under GASB, enterprise funds are used to report activities that are financed primarily through:

Accepted Answer

User fees and charges for services to external parties

Answer

Property taxes and intergovernmental grants

Answer

Investment income and endowment principal

Answer

Legislative appropriations from the general fund

Question 5

The Management's Discussion and Analysis (MD&A) in a government's annual report is classified as:

Accepted Answer

Required supplementary information (RSI)

Answer

Basic financial statements

Answer

Notes to the financial statements

Answer

Statistical section

Question 6

A permanent fund is a governmental fund used to report resources that are legally restricted so that:

Accepted Answer

Only income may be expended for the government's programs, not principal

Answer

Both principal and income may be used for any governmental purpose

Answer

Resources are held for outside beneficiaries such as pension recipients

Answer

Capital assets are purchased and maintained

Question 7

Which GASB pronouncement established infrastructure asset reporting requirements and introduced the modified approach as an alternative to depreciation?

Accepted Answer

GASB Statement No. 34

Answer

GASB Statement No. 14

Answer

GASB Statement No. 45

Answer

GASB Statement No. 68