NFP 2 Exam UPDATED ACTUAL Exam
Questions and CORRECT Answers
General Fund - CORRECT ANSWER - Accounts for and reports all financial resources no
account for and reported in another fund
o Record budgets and encumbrances
Special Revenue Funds - CORRECT ANSWER - o Record budgets and encumbrances
o If its determined that the funds are no longer restricted or committed it should be moved to the
general fund
o Restricted, Committed (can use Assigned for encumbrances, however "Assignment" of funds is
not enough to start a Special Revenue fund
Debt service funds - CORRECT ANSWER - - Accounts for financial resources to
expenditure for principle and interest on general long term debt
o Don't have to record budgets and encumbrances
o Restricted, Committed, Assigned
o Debt service expenditures are not accrued, but recognized and fund liabilities are recorded on
the maturity date
Capital Projects Funds- - CORRECT ANSWER - • Capital Projects Funds- Accounts for
resources to be used for acquisition or construction of major capital facilities that are restricted,
committed, or assigned to expenditure for capital outlays
o Record encumbrances but not budgets
Permanent Fund - CORRECT ANSWER - Accounts for resources that are legally
restricted to the extent earnings (but not principal) may be used to support government programs
o Do not record budgets and encumbrances
o Nonspendable, Restricted, Committed, Assigned
, Restricted - CORRECT ANSWER - Externally imposed on us-creditors, bond creditors,
grant
o Imposed by law-regulations, ordinances
Committed - CORRECT ANSWER - Formal action of governments highest level of
decision making authority "internal"
o "Rainy day fund"
Assigned - CORRECT ANSWER - Intent of the government
Fund Accounting - CORRECT ANSWER - Segregate those financial resources that have
constraints or limitations on their use so that the government may demonstrate compliance with
those limitations
Measurable - CORRECT ANSWER - Government is able to determine or reasonably
estimate the amount
Available - CORRECT ANSWER - The amount is expected to be collected within the
current period or soon enough thereafter
Expenditure - CORRECT ANSWER - Decreases in net financial resources and are
generally recognized when its related liability is incurred
o Debt service expenditures are not accrued, but recognized and fund liabilities are recorded on
the maturity date
Inter-fund loans - CORRECT ANSWER - Short term one month
o Fund providing the resources records an inter-fund as a receivable (due from other funds)
o Fund receiving the resources records an inter-fund payable (due to other funds)
• Longer term note 12 months
o Advances
Questions and CORRECT Answers
General Fund - CORRECT ANSWER - Accounts for and reports all financial resources no
account for and reported in another fund
o Record budgets and encumbrances
Special Revenue Funds - CORRECT ANSWER - o Record budgets and encumbrances
o If its determined that the funds are no longer restricted or committed it should be moved to the
general fund
o Restricted, Committed (can use Assigned for encumbrances, however "Assignment" of funds is
not enough to start a Special Revenue fund
Debt service funds - CORRECT ANSWER - - Accounts for financial resources to
expenditure for principle and interest on general long term debt
o Don't have to record budgets and encumbrances
o Restricted, Committed, Assigned
o Debt service expenditures are not accrued, but recognized and fund liabilities are recorded on
the maturity date
Capital Projects Funds- - CORRECT ANSWER - • Capital Projects Funds- Accounts for
resources to be used for acquisition or construction of major capital facilities that are restricted,
committed, or assigned to expenditure for capital outlays
o Record encumbrances but not budgets
Permanent Fund - CORRECT ANSWER - Accounts for resources that are legally
restricted to the extent earnings (but not principal) may be used to support government programs
o Do not record budgets and encumbrances
o Nonspendable, Restricted, Committed, Assigned
, Restricted - CORRECT ANSWER - Externally imposed on us-creditors, bond creditors,
grant
o Imposed by law-regulations, ordinances
Committed - CORRECT ANSWER - Formal action of governments highest level of
decision making authority "internal"
o "Rainy day fund"
Assigned - CORRECT ANSWER - Intent of the government
Fund Accounting - CORRECT ANSWER - Segregate those financial resources that have
constraints or limitations on their use so that the government may demonstrate compliance with
those limitations
Measurable - CORRECT ANSWER - Government is able to determine or reasonably
estimate the amount
Available - CORRECT ANSWER - The amount is expected to be collected within the
current period or soon enough thereafter
Expenditure - CORRECT ANSWER - Decreases in net financial resources and are
generally recognized when its related liability is incurred
o Debt service expenditures are not accrued, but recognized and fund liabilities are recorded on
the maturity date
Inter-fund loans - CORRECT ANSWER - Short term one month
o Fund providing the resources records an inter-fund as a receivable (due from other funds)
o Fund receiving the resources records an inter-fund payable (due to other funds)
• Longer term note 12 months
o Advances
