NFP EXAM 2 QUESTIONS AND
ANSWERS 100% PASS
Which of the following type of entities follows FASAB standards when
preparing financial statements? - ✔✔Federal government
Why do governments use fund accounting? - ✔✔To help ensure restricted
resources are spent for their intended purposes.
Which of the following type of entities prepares financial statements using
both the modified accrual basis of accounting and the accrual basis of
accounting? - ✔✔State and local governments
How should a transfer out of the General Fund into the Debt Service Fund
be reported in the fund financial statements? - ✔✔As an Other Financing
Use in the General Fund and an Other Financing Source in the Debt Service
Fund.
1
Katelyn Whitman, All Rights Reserved © 2025
, Which of the following type of entities prepares both entity-wide and fund
financial statements? - ✔✔State and local governments
Which of the following statements is not true? - ✔✔Both government and
nonprofit entities assess taxes
Which of the following type of entities follows GASB standards when
preparing financial statements? - ✔✔State and local governments
Which of the following is generally the major source of revenues for
governments? - ✔✔Taxes
Under the modified accrual basis of accounting for a government, property
tax revenues should be recognized in the accounting period in which they -
✔✔Are levied and become measurable and available
Which of the following types of entities follow FASB standards when
preparing financial statements? - ✔✔Nonprofit entities and business
enterprises
When preparing the General Fund budget for the next fiscal year, which of
the following are important to consider in estimating the amount of
2
Katelyn Whitman, All Rights Reserved © 2025
ANSWERS 100% PASS
Which of the following type of entities follows FASAB standards when
preparing financial statements? - ✔✔Federal government
Why do governments use fund accounting? - ✔✔To help ensure restricted
resources are spent for their intended purposes.
Which of the following type of entities prepares financial statements using
both the modified accrual basis of accounting and the accrual basis of
accounting? - ✔✔State and local governments
How should a transfer out of the General Fund into the Debt Service Fund
be reported in the fund financial statements? - ✔✔As an Other Financing
Use in the General Fund and an Other Financing Source in the Debt Service
Fund.
1
Katelyn Whitman, All Rights Reserved © 2025
, Which of the following type of entities prepares both entity-wide and fund
financial statements? - ✔✔State and local governments
Which of the following statements is not true? - ✔✔Both government and
nonprofit entities assess taxes
Which of the following type of entities follows GASB standards when
preparing financial statements? - ✔✔State and local governments
Which of the following is generally the major source of revenues for
governments? - ✔✔Taxes
Under the modified accrual basis of accounting for a government, property
tax revenues should be recognized in the accounting period in which they -
✔✔Are levied and become measurable and available
Which of the following types of entities follow FASB standards when
preparing financial statements? - ✔✔Nonprofit entities and business
enterprises
When preparing the General Fund budget for the next fiscal year, which of
the following are important to consider in estimating the amount of
2
Katelyn Whitman, All Rights Reserved © 2025
