CGA Public Sector & Not-for-Profit Accounting 2

Question 1

Under PSAB, tangible capital assets acquired by government entities are:

Accepted Answer

Capitalized and amortized over their useful lives

Answer

Expensed immediately in the period of acquisition

Answer

Capitalized but never amortized

Answer

Recorded off-balance-sheet in a memorandum account

Question 2

Which concept explains why a government's budget document is considered a legally binding authorization for expenditures?

Accepted Answer

Legislative appropriation

Answer

Going concern principle

Answer

Matching principle

Answer

Fiscal neutrality

Question 3

A municipality receives a $2 million provincial grant restricted to road repairs. Under the deferral method, when is this grant recognized as revenue?

Accepted Answer

As the related road repair expenditures are incurred

Answer

When the grant agreement is signed

Answer

When cash is received from the province

Answer

At fiscal year-end regardless of spending

Question 4

What is the primary purpose of the Statement of Operations in a public sector entity's financial statements?

Accepted Answer

To report the annual surplus or deficit and cumulative accumulated surplus/deficit

Answer

To present changes in net debt

Answer

To reconcile budget to actual results

Answer

To disclose all contingent liabilities

Question 5

In public sector accounting, 'net debt' is defined as:

Accepted Answer

Financial liabilities minus financial assets

Answer

Total liabilities minus total assets

Answer

Long-term debt minus current assets

Answer

Total debt minus cash and equivalents

Question 6

Which of the following is NOT a characteristic of a not-for-profit organization under Canadian accounting standards?

Accepted Answer

Its primary purpose is to provide goods or services at a profit

Answer

It is a nonprofit entity

Answer

It has no individual ownership interests

Answer

Surpluses are not distributable to members

Question 7

Under PSAB, which of the following would be classified as a financial asset on a government's Statement of Financial Position?

Accepted Answer

Taxes receivable from citizens

Answer

Land held for a public park

Answer

Equipment used by a government department

Answer

Prepaid expenses