ACCT 4421 - Exam 1 UPDATED Exam
Questions and CORRECT Answers
1. Which of the following is not an overriding objective of financial reporting by state and local
governments?
a. Reliability
b. Service Efforts and Cost Accomplishments
c. Budgetary and Fiscal Compliance
d. Inter-period Equity - CORRECT ANSWER - a. Reliability
1. Which of the following rule-making authorities would establish accounting standards for the
Red Cross?
a. The AICPA
b. The FASAB
c. The GASB
d. The FASB - CORRECT ANSWER - d. The FASB
1. Which of the following rule-making authorities would establish accounting standards for
LSU?
a. The AICPA
b. The FASAB
c. The GASB
d. The FASB - CORRECT ANSWER - c. The GASB
1. Which of the following statements is true:
a. Different types of not-for-profit organizations may fall under the rule making authority of
GASB or FASB.
,b. Not-for-profit organizations may not make a profit.
c. Businesses have scarce resources that must be allocated to different uses, governments and
not-for-profits are able to command sufficient resources to avoid the need for such allocations.
d. Governments and not-for-profits do not have restricted resources. - CORRECT
ANSWER - a. Different types of not-for-profit organizations may fall under the rule
making authority of GASB or FASB.
1. Which of the following practice is most likely to undermine budgetary compliance?
a. Delay the recognition of expenses incurred to fund a project until a future period in which
payment is made.
b. Issuing bonds to pay for a capital project.
c. Paying salaries out of a current year's budget.
d. Recognizing revenue earned but not yet received. - CORRECT ANSWER - d.
Recognizing revenue earned but not yet received.
1) Purchase of computers for the city's clerk's office - CORRECT ANSWER - General
Fund
Collection of landing fees at the city owned airport - CORRECT ANSWER - Enterprise
Fund
Earnings on investments set aside to make principal payments on outstanding bonds issued to
finance improvements to the city's bridges - CORRECT ANSWER - Debt service fund
Salaries paid to fire fighters - CORRECT ANSWER - General Fund
Payment to a contractor for work on a bridge - CORRECT ANSWER - Capital projects
fund
, Parish library operations are financed by a portion of the tax levy restricted for that purpose -
CORRECT ANSWER - Special revenue fund
The city purchases stationary from an outside supplier that will be sold to its various operating
departments - CORRECT ANSWER - Internal service fund
Bonds issued to finance expansion of the city-owned electric utility company - CORRECT
ANSWER - Enterprise Fund
The city receives a contribution of $5M. The donor stipulates the money is to be invested in
marketable securities and the interest from the securities can be used to maintain the city park -
CORRECT ANSWER - Permanent Fund
The city pays interest on bonds issued to finance a new library building - CORRECT
ANSWER - Debt service fund
Pension benefits are paid to State Police Officers - CORRECT ANSWER - Pension trust
fund
The City of Brusly, the Town of Walker and the Village of Killian pool their idle cash to obtain
higher interest income - CORRECT ANSWER - Investment trust fund
The State receives escheat money from local banks - CORRECT ANSWER - Private
purpose trust fund
The City collects taxes on behalf of the parish in which it is located. Holds for a temporary
period - CORRECT ANSWER - Custodial fund
Services are provided to the general public, and the costs of providing the services are financed
by user charges - CORRECT ANSWER - Enterprise Fund
Questions and CORRECT Answers
1. Which of the following is not an overriding objective of financial reporting by state and local
governments?
a. Reliability
b. Service Efforts and Cost Accomplishments
c. Budgetary and Fiscal Compliance
d. Inter-period Equity - CORRECT ANSWER - a. Reliability
1. Which of the following rule-making authorities would establish accounting standards for the
Red Cross?
a. The AICPA
b. The FASAB
c. The GASB
d. The FASB - CORRECT ANSWER - d. The FASB
1. Which of the following rule-making authorities would establish accounting standards for
LSU?
a. The AICPA
b. The FASAB
c. The GASB
d. The FASB - CORRECT ANSWER - c. The GASB
1. Which of the following statements is true:
a. Different types of not-for-profit organizations may fall under the rule making authority of
GASB or FASB.
,b. Not-for-profit organizations may not make a profit.
c. Businesses have scarce resources that must be allocated to different uses, governments and
not-for-profits are able to command sufficient resources to avoid the need for such allocations.
d. Governments and not-for-profits do not have restricted resources. - CORRECT
ANSWER - a. Different types of not-for-profit organizations may fall under the rule
making authority of GASB or FASB.
1. Which of the following practice is most likely to undermine budgetary compliance?
a. Delay the recognition of expenses incurred to fund a project until a future period in which
payment is made.
b. Issuing bonds to pay for a capital project.
c. Paying salaries out of a current year's budget.
d. Recognizing revenue earned but not yet received. - CORRECT ANSWER - d.
Recognizing revenue earned but not yet received.
1) Purchase of computers for the city's clerk's office - CORRECT ANSWER - General
Fund
Collection of landing fees at the city owned airport - CORRECT ANSWER - Enterprise
Fund
Earnings on investments set aside to make principal payments on outstanding bonds issued to
finance improvements to the city's bridges - CORRECT ANSWER - Debt service fund
Salaries paid to fire fighters - CORRECT ANSWER - General Fund
Payment to a contractor for work on a bridge - CORRECT ANSWER - Capital projects
fund
, Parish library operations are financed by a portion of the tax levy restricted for that purpose -
CORRECT ANSWER - Special revenue fund
The city purchases stationary from an outside supplier that will be sold to its various operating
departments - CORRECT ANSWER - Internal service fund
Bonds issued to finance expansion of the city-owned electric utility company - CORRECT
ANSWER - Enterprise Fund
The city receives a contribution of $5M. The donor stipulates the money is to be invested in
marketable securities and the interest from the securities can be used to maintain the city park -
CORRECT ANSWER - Permanent Fund
The city pays interest on bonds issued to finance a new library building - CORRECT
ANSWER - Debt service fund
Pension benefits are paid to State Police Officers - CORRECT ANSWER - Pension trust
fund
The City of Brusly, the Town of Walker and the Village of Killian pool their idle cash to obtain
higher interest income - CORRECT ANSWER - Investment trust fund
The State receives escheat money from local banks - CORRECT ANSWER - Private
purpose trust fund
The City collects taxes on behalf of the parish in which it is located. Holds for a temporary
period - CORRECT ANSWER - Custodial fund
Services are provided to the general public, and the costs of providing the services are financed
by user charges - CORRECT ANSWER - Enterprise Fund
