CPA Governmental & Not-for-Profit Accounting 1

Question 1

Which accounting standard-setting body establishes accounting and financial reporting standards for state and local governments in the United States?

Accepted Answer

GASB

Answer

The Governmental Accounting Standards Board (GASB) is the authoritative standard-setter for state and local government financial reporting in the U.S.

Question 2

Under GASB standards, what is the primary measurement focus for governmental fund financial statements?

Accepted Answer

Current financial resources

Answer

Governmental fund statements use the current financial resources measurement focus, reporting only current assets and current liabilities.

Question 3

Which basis of accounting is used for governmental fund financial statements?

Accepted Answer

Modified accrual basis

Answer

Governmental fund statements use the modified accrual basis, recognizing revenues when measurable and available, and expenditures when the related liability is incurred.

Question 4

A city receives a grant that can only be used for road repairs. How should this grant be reported in governmental fund accounting?

Accepted Answer

Special Revenue Fund revenue

Answer

Restricted grants designated for a specific purpose are reported in a Special Revenue Fund, which accounts for resources legally restricted to particular purposes.

Question 5

Under GASB Statement No. 34, government-wide financial statements are presented using which basis of accounting?

Accepted Answer

Full accrual

Answer

GASB 34 requires government-wide statements to use the full accrual basis and economic resources measurement focus, similar to business-type accounting.

(CPA) Certified Practicing Accountant Practice Test

(CPA) Certified Practicing Accountant Practice Test

CPA Governmental & Not-for-Profit Accounting 1