Governmental Exam 1 Multiple Choice
questions with actual answers.
1. The private sector organization that has been given primary authority to set accounting and financial
reporting standards for state and local governments is the:
a. Financial Accounting Standards Board.
b. Governmental Accounting Standards Board.
c. Federal Accounting Standards Advisory Board.
d. American Institute of Certified Public Accountants ANS -b. (Governmental Accounting Standards
Board)
2. In comparing internal service funds to enterprise funds, which of the following is (are) true?
a. Internal service funds use modified accrual and enterprise funds use accrual accounting.
b. Internal service funds account for the sale of services and enterprise funds account for the sale of
goods.
c. Internal service funds sell predominantly to other government departments and enterprise funds sell
predominantly to external parties.
d. Internal service funds use the current financial resources measurement focus, while enterprise funds
use the economic resources measurement focus. ANS -c. (Internal service funds sell predominantly to
other government departments and enterprise funds sell predominantly to external parties.)
3. The government-wide financial statements include a:
a. Statement of net position and a statement of activities.
b. Statement of net position and a statement of changes in net position.
c. Statement of net position and a statement of revenues, expenditures, and changes in fund balances.
d. Balance sheet, an income statement, and a statement of cash flows. ANS -a. (Statement of net
position and a statement of activities.)
4. Governmental funds use the:
a. Economic resources measurement focus and modified accrual basis of accounting.
b. Current financial resources measurement focus and accrual basis of accounting.
, c. Economic resources measurement focus and accrual basis of accounting.
d. Current financial resources measurement focus and modified accrual basis of accounting. ANS -d.
(Current financial resources measurement focus and modified accrual basis of accounting.)
5. Which of the following is true regarding accounting for fixed assets of state and local governmental
units?
a. Fixed assets are to be recorded at historical cost
b. Fixed assets are to be reported and depreciated in the government-wide financial statements.
c. Fixed assets are to be reported and depreciated in the proprietary fund financial statements but not in
the governmental fund financial statements.
d. All of the above are true. ANS -d. (All of the above are true.)
6. Proprietary fund financial statements include:
a. Statement of net position; statement of revenues, expenses, and changes in net position; and
statement of cash flows.
b. Statement of net position; statement of revenues, expenditures, and changes in fund balances; and
statement of cash flows.
c. Statement of net position and statement of changes in net position.
d. Statement of net position and statement of revenues, expenditures, and changes in fund balances.
ANS -a. (Statement of net position; statement of revenues, expenses, and changes in net position; and
statement of cash flows.)
7. Which of the following is not a governmental fund?
a. General
b. Private-purpose
c. Special revenue
d. Debt service ANS -b. (Private purpose)
8. Which of the following fund types uses the same measurement focus and basis of accounting as the
General Fund?
a. Enterprise.
b. Pension and other employee benefit
questions with actual answers.
1. The private sector organization that has been given primary authority to set accounting and financial
reporting standards for state and local governments is the:
a. Financial Accounting Standards Board.
b. Governmental Accounting Standards Board.
c. Federal Accounting Standards Advisory Board.
d. American Institute of Certified Public Accountants ANS -b. (Governmental Accounting Standards
Board)
2. In comparing internal service funds to enterprise funds, which of the following is (are) true?
a. Internal service funds use modified accrual and enterprise funds use accrual accounting.
b. Internal service funds account for the sale of services and enterprise funds account for the sale of
goods.
c. Internal service funds sell predominantly to other government departments and enterprise funds sell
predominantly to external parties.
d. Internal service funds use the current financial resources measurement focus, while enterprise funds
use the economic resources measurement focus. ANS -c. (Internal service funds sell predominantly to
other government departments and enterprise funds sell predominantly to external parties.)
3. The government-wide financial statements include a:
a. Statement of net position and a statement of activities.
b. Statement of net position and a statement of changes in net position.
c. Statement of net position and a statement of revenues, expenditures, and changes in fund balances.
d. Balance sheet, an income statement, and a statement of cash flows. ANS -a. (Statement of net
position and a statement of activities.)
4. Governmental funds use the:
a. Economic resources measurement focus and modified accrual basis of accounting.
b. Current financial resources measurement focus and accrual basis of accounting.
, c. Economic resources measurement focus and accrual basis of accounting.
d. Current financial resources measurement focus and modified accrual basis of accounting. ANS -d.
(Current financial resources measurement focus and modified accrual basis of accounting.)
5. Which of the following is true regarding accounting for fixed assets of state and local governmental
units?
a. Fixed assets are to be recorded at historical cost
b. Fixed assets are to be reported and depreciated in the government-wide financial statements.
c. Fixed assets are to be reported and depreciated in the proprietary fund financial statements but not in
the governmental fund financial statements.
d. All of the above are true. ANS -d. (All of the above are true.)
6. Proprietary fund financial statements include:
a. Statement of net position; statement of revenues, expenses, and changes in net position; and
statement of cash flows.
b. Statement of net position; statement of revenues, expenditures, and changes in fund balances; and
statement of cash flows.
c. Statement of net position and statement of changes in net position.
d. Statement of net position and statement of revenues, expenditures, and changes in fund balances.
ANS -a. (Statement of net position; statement of revenues, expenses, and changes in net position; and
statement of cash flows.)
7. Which of the following is not a governmental fund?
a. General
b. Private-purpose
c. Special revenue
d. Debt service ANS -b. (Private purpose)
8. Which of the following fund types uses the same measurement focus and basis of accounting as the
General Fund?
a. Enterprise.
b. Pension and other employee benefit
