GOV & NFP - EXAM II - Ch 10
Questions and Answers 100% Pass
1. Per GASB Statement No. 34, permanent funds are classified as fiduciary
funds.
T/F - ✔✔F
2. In accounting for permanent funds only the income can be spent; the
principal must be preserved intact.
T/F - ✔✔T
3. Fiduciary funds focus on current financial resources and use the full
accrual basis of accounting.
T/F - ✔✔F
4. Fiduciary funds are excluded from the government-wide financial
statements.
1
Katelyn Whitman, All Rights Reserved © 2025
,T/F - ✔✔T
5. The concept of major versus nonmajor funds does not apply to
permanent funds, as it does to governmental and proprietary funds.
T/F - ✔✔F
6. Accounting for the employer's contribution to a defined contribution
pension plan is straight forward, because the employer is obligated only to
make annual contributions in the amount specified in the plan terms.
T/F - ✔✔T
7. Accounting for the employer's contribution to a defined benefit pension
plan is straight forward, because the employer is obligated only to make
annual contributions in the amount specified in the plan terms.
T/F - ✔✔F
8. Not-for-profits report all investment gains and losses on endowments as
additions to temporarily restricted net assets, regardless of donor-imposed
restrictions.
T/F - ✔✔F
2
Katelyn Whitman, All Rights Reserved © 2025
, 9. An employer may have a liability to a defined benefit pension plan other
than for its annual required contributions, depending on the future
financial health of the plan.
T/F - ✔✔T
10. In an agency fund, assets always equal fund balances because there are
no liabilities.
T/F - ✔✔F
1. A governmental entity receives a gift of cash and investments with a fair
value of $200,000. The donor specified that the earnings from the gift must
be used to beautify city-owned parks and the principal must be re-
invested. The $200,000 gift should be accounted for in which of the
following funds?
a) General fund.
b) Private-purpose trust fund.
c) Agency fund.
d) Permanent fund. - ✔✔D
3
Katelyn Whitman, All Rights Reserved © 2025
Questions and Answers 100% Pass
1. Per GASB Statement No. 34, permanent funds are classified as fiduciary
funds.
T/F - ✔✔F
2. In accounting for permanent funds only the income can be spent; the
principal must be preserved intact.
T/F - ✔✔T
3. Fiduciary funds focus on current financial resources and use the full
accrual basis of accounting.
T/F - ✔✔F
4. Fiduciary funds are excluded from the government-wide financial
statements.
1
Katelyn Whitman, All Rights Reserved © 2025
,T/F - ✔✔T
5. The concept of major versus nonmajor funds does not apply to
permanent funds, as it does to governmental and proprietary funds.
T/F - ✔✔F
6. Accounting for the employer's contribution to a defined contribution
pension plan is straight forward, because the employer is obligated only to
make annual contributions in the amount specified in the plan terms.
T/F - ✔✔T
7. Accounting for the employer's contribution to a defined benefit pension
plan is straight forward, because the employer is obligated only to make
annual contributions in the amount specified in the plan terms.
T/F - ✔✔F
8. Not-for-profits report all investment gains and losses on endowments as
additions to temporarily restricted net assets, regardless of donor-imposed
restrictions.
T/F - ✔✔F
2
Katelyn Whitman, All Rights Reserved © 2025
, 9. An employer may have a liability to a defined benefit pension plan other
than for its annual required contributions, depending on the future
financial health of the plan.
T/F - ✔✔T
10. In an agency fund, assets always equal fund balances because there are
no liabilities.
T/F - ✔✔F
1. A governmental entity receives a gift of cash and investments with a fair
value of $200,000. The donor specified that the earnings from the gift must
be used to beautify city-owned parks and the principal must be re-
invested. The $200,000 gift should be accounted for in which of the
following funds?
a) General fund.
b) Private-purpose trust fund.
c) Agency fund.
d) Permanent fund. - ✔✔D
3
Katelyn Whitman, All Rights Reserved © 2025
