Chapter 2: The Use of Funds in Governmental Accounting

Chapter 2: The Use of Funds in Governmental Accounting

Multiple Choice

• To what does basis of accounting refer?
• whether an entity is trying to measure the excess of inflows over outflows
• how much cash an entity received in a particular reporting period
• the timing of recognition of assets, liabilities, revenues, and

expenditures/expenses in financial statements

• the ownership of the assets, liabilities, and equities reported in a balance

sheet

Answer: c

• Governmental accounting normally does not
• use separate funds to account for various activities
• incorporate budgetary accounts into the accounting system
• measure the amount of profit earned during a fiscal year
• focus on flows of current financial resources

Answer: c

3. In governmental accounting, a fund is best defined as:

• a sum of cash set aside to attain certain objectives
• a fiscal entity that has both financial and capital resources
• a fiscal entity that has cash resources only
• a fiscal and accounting entity with a self-balancing set of accounts

Answer: d

• Which of the following funds all use the current financial resources measurement

focus?

• Debt Service Fund, Special Revenue Fund, and Capital Projects Fund
• General Fund, Debt Service Fund, and Internal Service Fund
• Debt Service Fund, Investment Trust Fund, and Capital Projects Fund
• General Fund, Debt Service Fund, and Pension Trust Fund

Answer: a

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5. The three broad categories of funds used by governmental entities are:

• Governmental, Proprietary, and Fiduciary
• Unrestricted, Partially Restricted, and Fully Restricted
• General, Special, and Fiduciary
• General, Enterprise, and Agency

Answer: a

• Which category of funds is used to account for most of the day-to-day public

services provided by a government?

• Fiduciary-type funds
• Enterprise-type funds
• Proprietary-type funds
• Governmental-type funds

Answer: d

• Which category of funds focuses on financial resources available for current

spending?

• Enterprise-type funds
• Proprietary-type funds
• Governmental-type funds
• Fiduciary-type funds

Answer: c

• The broad categories of funds used in government accounting do not include which one

of the following?

• revolving
• governmental
• proprietary
• fiduciary

Answer: a

• Within a fund, which of the following results from using the current financial

resources measurement focus?

• capital assets will be depreciated
• property taxes will be recognized on the cash basis of accounting
• a liability must be reported for unsettled claims, provided payment

ultimately will be made

• long-term assets and liabilities will not be recorded in the fund

Answer: d

• Which of the following set of funds use the economic resources measurement

focus?

• Enterprise Fund, Special Revenue Fund, and General Fund
• Internal Service Fund, Pension Trust Fund, and Enterprise Fund
• Debt Service Fund, Internal Service Fund, and Pension Trust Fund
• Enterprise Fund, Internal Service Fund, and Capital Projects Fund

Answer: b

• Which basis of accounting is used by funds that have a current financial resources

measurement focus?

• full accrual basis
• cash basis
• modified accrual basis
• modified cash basis

Answer: c

• Which of the following are fiduciary-type funds?
• Pension Trust Fund, Agency Fund, and Permanent Fund
• Investment Trust Fund, Special Revenue Fund, and Internal Service Fund
• Agency Fund, Internal Service Fund, and Pension Trust Fund
• Pension Trust Fund, Investment Trust Fund, and Agency Fund

Answer: d

• The General Fund levies property taxes in the amount of $1,000,000 for calendar

year 2009. It expects to collect $950,000 during the year, $30,000 in the first 60 days of the next year, and $15,000 during the rest of the next year. It does not expect to collect the remaining $5,000. How much property tax revenue should it recognize for the year 2009?

• $1,000,000
• $980,000
• $995,000
• $990,000

Answer: b

• Under modified accrual accounting, when are revenues considered to be

"available?"

• when cash has been collected
• when cash is collectible within the current period or soon enough

thereafter to be used to pay liabilities of the current period

• when cash is on hand or reasonably expected to be collected at any time in

the future so they can pay liabilities incurred in the current period

• when property tax bills have been mailed

Answer: b

• Which of the following is an example of activities that are likely to be accounted

for in a government's general fund?

• business-type activities of government that are financed by user charges
• sales taxes collected by a state on behalf of counties within the state
• property taxes to be used to provide basic government services
• donations that must be kept intact, but whose income must be used to

beautify parks

Answer: c

• Which of the following terms best describes the types of assets accounted for in

governmental-type funds?

• any resource that can be used to provide service to the citizenry
• financial assets and capital assets
• current assets and movable fixed assets
• financial assets

Answer: d

• For financial reporting purposes, a government may have only one
• Capital projects fund
• Enterprise fund
• General fund
• Permanent fund

Answer: c