Certified Public Accountant Governmental & Not-for-Profit Accounting 3

Question 1

Under modified accrual accounting, property tax revenues are generally considered 'available' if collected within how many days after fiscal year-end?

Accepted Answer

60 days

Answer

Under modified accrual, property tax revenues must be collected within 60 days after fiscal year-end to be considered available and recognized in the current period.

Question 2

Under GASB standards, which funds must always be separately reported as major funds?

Accepted Answer

The General Fund and any fund meeting the 10% and 5% quantitative thresholds

Answer

GASB requires the General Fund to always be reported as a major fund, plus any other fund meeting both the 10% (of its fund category) and 5% (of all funds) quantitative thresholds.

Question 3

A not-for-profit hospital receives a pledge of $90,000 to be paid in three equal annual installments. How should this pledge be initially recorded?

Accepted Answer

As contributions receivable at the present value of future cash flows

Answer

Unconditional multi-year pledges are recorded immediately as contribution revenue and contributions receivable at their present value, discounting future payments for the time value of money.

Question 4

Under GASB, a government using the modified approach for infrastructure assets (instead of depreciation) must meet which key requirement?

Accepted Answer

The government must maintain assets at or above a documented condition level

Answer

The modified approach allows governments to expense maintenance costs rather than depreciate infrastructure, but requires periodic condition assessments and maintaining assets at a predetermined condition level.

Question 5

Which of the following statements about Internal Service Funds is correct?

Accepted Answer

They primarily serve other departments within the same government

Answer

Internal Service Funds account for activities that provide goods or services to other departments or agencies of the same government on a cost-reimbursement basis.

Certified Public Accountant Practice Test

Certified Public Accountant Practice Test

Certified Public Accountant Governmental & Not-for-Profit Accounting 3