AICPA Midterm Exam – Questions And Answers
What basis of accounting should be used when preparing a governmental
funds statement of revenues, expenditures, and changes in fund balances?
A. Accrual basis of accounting.
B. Modified accrual basis of accounting.
C. Modified cash basis of accounting.
D. Cash basis of accounting. Correct Ans - B. Modified accrual basis
of accounting.
A city received a $9,000,000 federal grant to finance the construction of a
homeless shelter. In which fund should the proceeds be recorded?
A. Permanent.
B. General.
C. Capital project.
D. Special revenue. Correct Ans - C. Capital project.
Palm City uses the modified approach for reporting eligible infrastructure
assets. In which of the following components of its basic financial
statements, if any, would Palm report this information?
A. Letter of transmittal.
B. Statement of activities.
C. Notes to the financial statements.
D. Not required to report. Correct Ans - C. Notes to the financial
statements.
Kind Nurses Assoc. is a voluntary health and welfare organization. Nurses
are paid to visit homes of elderly people and are reimbursed for mileage
and supplies. Which of the following items should Kind record as a support
activity expense in its statement of functional expense?
A. Nurses' mileage expense.
B. Payment for nurses' employee benefits.
C. Payment for nurses' supplies.
D. Fundraising costs. Correct Ans - D. Fundraising costs.
A government's assets include inventory of $2 million, roads constructed
for $25 million with accumulated depreciation of $10 million, and
equipment acquired for $5 million with accumulated depreciation of $1
million. Its liabilities include an outstanding balance of $5 million for
, bonds payable issued to construct the roads and a $1 million short-term
loan for inventory purchases. What amount should be reported as the net
investment in capital assets in the government-wide statement of net
position?
A. $26 million.
B. $25 million.
C. $14 million.
D. $10 million. Correct Ans - C. $14 million.
Which of the following financial statements would provide information
about the ongoing revenues and expenses associated with a voluntary
health and welfare organization?
A. The statement of activities.
B. The statement of cash flows.
C. The statement of functional expenses.
D. The statement of financial position. Correct Ans - A. The
statement of activities.
A government-wide statement of net position must include which of the
following?
A. Prior-year comparative financial data.
B. Primary government fiduciary fund data.
C. A consolidation of all government-wide activities.
D. A distinction between governmental and business-type activities.
Correct Ans - D. A distinction between governmental and business-type
activities.
Which of the following should be considered part of one of the three
primary user groups of the external financial reports of a state
government?
A. Citizens of a neighboring state.
B. Advocate groups within the state.
C. Preparers of state government financial reports.
D. Internal managers in the executive branch of the state government.
Correct Ans - B. Advocate groups within the state.
Which of the following is a governmental fund that uses the current
financial resources measurement focus?
A. Enterprise fund.
What basis of accounting should be used when preparing a governmental
funds statement of revenues, expenditures, and changes in fund balances?
A. Accrual basis of accounting.
B. Modified accrual basis of accounting.
C. Modified cash basis of accounting.
D. Cash basis of accounting. Correct Ans - B. Modified accrual basis
of accounting.
A city received a $9,000,000 federal grant to finance the construction of a
homeless shelter. In which fund should the proceeds be recorded?
A. Permanent.
B. General.
C. Capital project.
D. Special revenue. Correct Ans - C. Capital project.
Palm City uses the modified approach for reporting eligible infrastructure
assets. In which of the following components of its basic financial
statements, if any, would Palm report this information?
A. Letter of transmittal.
B. Statement of activities.
C. Notes to the financial statements.
D. Not required to report. Correct Ans - C. Notes to the financial
statements.
Kind Nurses Assoc. is a voluntary health and welfare organization. Nurses
are paid to visit homes of elderly people and are reimbursed for mileage
and supplies. Which of the following items should Kind record as a support
activity expense in its statement of functional expense?
A. Nurses' mileage expense.
B. Payment for nurses' employee benefits.
C. Payment for nurses' supplies.
D. Fundraising costs. Correct Ans - D. Fundraising costs.
A government's assets include inventory of $2 million, roads constructed
for $25 million with accumulated depreciation of $10 million, and
equipment acquired for $5 million with accumulated depreciation of $1
million. Its liabilities include an outstanding balance of $5 million for
, bonds payable issued to construct the roads and a $1 million short-term
loan for inventory purchases. What amount should be reported as the net
investment in capital assets in the government-wide statement of net
position?
A. $26 million.
B. $25 million.
C. $14 million.
D. $10 million. Correct Ans - C. $14 million.
Which of the following financial statements would provide information
about the ongoing revenues and expenses associated with a voluntary
health and welfare organization?
A. The statement of activities.
B. The statement of cash flows.
C. The statement of functional expenses.
D. The statement of financial position. Correct Ans - A. The
statement of activities.
A government-wide statement of net position must include which of the
following?
A. Prior-year comparative financial data.
B. Primary government fiduciary fund data.
C. A consolidation of all government-wide activities.
D. A distinction between governmental and business-type activities.
Correct Ans - D. A distinction between governmental and business-type
activities.
Which of the following should be considered part of one of the three
primary user groups of the external financial reports of a state
government?
A. Citizens of a neighboring state.
B. Advocate groups within the state.
C. Preparers of state government financial reports.
D. Internal managers in the executive branch of the state government.
Correct Ans - B. Advocate groups within the state.
Which of the following is a governmental fund that uses the current
financial resources measurement focus?
A. Enterprise fund.
