GAC GAC Public Sector Fund Accounting 1 — Questions and Answers
Question 1: Under GASB standards, which fund type is used to account for resources that are legally restricted to expenditure for specific purposes, such as debt service?
- General Fund
- Debt Service Fund (Correct answer)
- Enterprise Fund
- Internal Service Fund
Correct answer: Debt Service Fund
Debt Service Funds account for the accumulation of resources for, and the payment of, long-term debt principal and interest.
Question 2: Which basis of accounting is required for governmental fund types under GASB standards?
- Full accrual basis
- Cash basis
- Modified accrual basis (Correct answer)
- Budgetary basis
Correct answer: Modified accrual basis
Governmental funds use the modified accrual basis, recognizing revenues when measurable and available and expenditures when the liability is incurred.
Question 3: Which of the following is classified as a proprietary fund under GASB?
- Special Revenue Fund
- Capital Projects Fund
- Enterprise Fund (Correct answer)
- Permanent Fund
Correct answer: Enterprise Fund
Enterprise Funds are proprietary funds used to report activities for which fees are charged to external users, similar to private-sector businesses.
Question 4: A government operates a central motor pool that charges other departments for vehicle use. This activity should be reported in which fund type?
- General Fund
- Special Revenue Fund
- Internal Service Fund (Correct answer)
- Debt Service Fund
Correct answer: Internal Service Fund
Internal Service Funds account for activities that provide goods or services to other departments within the same government on a cost-reimbursement basis.
Question 5: Under GASB, the General Fund is used to account for which of the following?
- All capital project expenditures
- All legally restricted grant revenues
- All financial resources except those required to be in another fund (Correct answer)
- All proprietary activities of the government
Correct answer: All financial resources except those required to be in another fund
The General Fund is the chief operating fund of a government, accounting for all financial resources not required to be accounted for in another fund.
Question 6: Which GASB standard establishes the financial reporting model for state and local governments, requiring government-wide and fund financial statements?
- GASB Statement No. 34 (Correct answer)
- GASB Statement No. 54
- GASB Statement No. 63
- GASB Statement No. 68
Correct answer: GASB Statement No. 34
GASB Statement No. 34 established the current financial reporting model, requiring both government-wide statements and fund-level statements.
GAC GAC Public Sector Fund Accounting 1
Under GASB standards, which fund type is used to account for resources that are legally restricted to expenditure for specific purposes, such as debt service?