BUS-A 335 Fund Accounting
BUS-A 335 - FUND ACCOUNTING | EXAM QUESTIONS AND
CORRECT ANSWERS | LATEST VERSION 2026/2027
BUS-A 335 Fund Accounting
1. Which body is responsible for establishing generally accepted accounting
principles for state and local governments in the United States?
A. American Institute of Certified Public Accountants (AICPA)
B. Federal Accounting Standards Advisory Board (FASAB)
C. Financial Accounting Standards Board (FASB)
D. Governmental Accounting Standards Board (GASB)
D. Governmental Accounting Standards Board (GASB)
The GASB was created in 1984 under the Financial Accounting Foundation and
sets GAAP for state and local governmental entities.
2. The Federal Accounting Standards Advisory Board (FASAB) issues
accounting standards for which type of entity?
A. State governments and their component units
B. Public colleges and universities
C. Private not-for-profit organizations
D. Agencies and departments of the U.S. federal government
D. Agencies and departments of the U.S. federal government
FASAB standards apply to federal reporting entities; state and local
governments follow GASB.
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, BUS-A 335 Fund Accounting
3. A privately sponsored not-for-profit hospital follows accounting standards
issued by:
A. The International Accounting Standards Board
B. FASAB
C. The FASB
D. The GASB
C. The FASB
Private (nongovernmental) not-for-profit entities follow FASB standards,
mainly ASC 958 and the health care guidance in ASC 954.
4. A state university that is a component unit of the state government prepares
its financial statements in accordance with standards issued by:
A. The GASB
B. The FASB, because it is an educational institution
C. Either the GASB or the FASB, at the university's option
D. FASAB, because it receives federal grants
A. The GASB
Public colleges are governmental entities, so GASB standards apply regardless
of the type of service they provide.
5. Under GASB Statement No. 76, Category A authoritative GAAP for state
and local governments consists of:
A. GASB Concepts Statements
B. GASB Statements
C. GASB Implementation Guides
D. AICPA audit and accounting guides cleared by the GASB
B. GASB Statements
Category A is limited to GASB Statements; Implementation Guides, Technical
Bulletins and cleared AICPA literature fall in Category B, and Concepts
Statements are nonauthoritative.
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, BUS-A 335 Fund Accounting
6. The concept of interperiod equity is best described as:
A. Whether the budget is balanced between funds
B. Whether taxes are equally distributed among taxpayers
C. Whether expenses are matched with revenues across all funds
D. Whether current-year revenues are sufficient to pay for current-year services
D. Whether current-year revenues are sufficient to pay for current-year
services
Interperiod equity asks whether today's citizens are paying for the services they
receive or shifting the burden to future taxpayers.
7. GASB Concepts Statement No. 1 identifies the primary users of
governmental external financial reports as:
A. Bond rating agencies exclusively
B. Department managers, internal auditors, and employees
C. Citizens, legislative and oversight bodies, and investors and creditors
D. The Internal Revenue Service and federal grantors only
C. Citizens, legislative and oversight bodies, and investors and creditors
The three primary user groups are the citizenry, legislative and oversight
officials, and those who lend or invest in the government.
8. Which of the following best defines a fund in governmental accounting?
A. A cash account maintained in a separate bank
B. A separate legal entity created by a state constitution
C. A fiscal and accounting entity with a self-balancing set of accounts
segregated for specific activities or objectives
D. A budget line item approved by the legislature
C. A fiscal and accounting entity with a self-balancing set of accounts
segregated for specific activities or objectives
A fund records resources, related liabilities and residual balances that are set
apart to carry on specific activities under legal or other restrictions.
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, BUS-A 335 Fund Accounting
9. GASB Statement No. 34 groups funds into how many broad categories?
A. Four: general, special, enterprise, and trust
B. Two: governmental and business-type
C. Three: governmental, proprietary, and fiduciary
D. Eleven, one for each fund type
C. Three: governmental, proprietary, and fiduciary
All funds fall under governmental, proprietary or fiduciary categories, each
with its own fund types.
10. Which of the following is NOT a governmental fund type?
A. Special revenue fund
B. Debt service fund
C. Permanent fund
D. Internal service fund
D. Internal service fund
Internal service funds are proprietary funds; the governmental fund types are
general, special revenue, capital projects, debt service and permanent.
11. A permanent fund is used to account for:
A. Resources legally restricted so that only earnings, not principal, may be used
to support the government's programs
B. Resources accumulated to pay employee retirement benefits
C. Resources used for business-like activities charged to the public
D. Resources held in trust for the benefit of specific individuals
A. Resources legally restricted so that only earnings, not principal, may be
used to support the government's programs
Permanent funds hold principal intact for programs that benefit the government
or its citizens; trusts benefiting individuals are private-purpose trust funds.
12. How many general funds may a government report?
A. As many as the governing body authorizes
B. Only one
C. One for each major function
D. Two, one operating and one capital
B. Only one
There is a single general fund that accounts for all financial resources not
required to be reported in another fund.
Page 4 of 65
BUS-A 335 - FUND ACCOUNTING | EXAM QUESTIONS AND
CORRECT ANSWERS | LATEST VERSION 2026/2027
BUS-A 335 Fund Accounting
1. Which body is responsible for establishing generally accepted accounting
principles for state and local governments in the United States?
A. American Institute of Certified Public Accountants (AICPA)
B. Federal Accounting Standards Advisory Board (FASAB)
C. Financial Accounting Standards Board (FASB)
D. Governmental Accounting Standards Board (GASB)
D. Governmental Accounting Standards Board (GASB)
The GASB was created in 1984 under the Financial Accounting Foundation and
sets GAAP for state and local governmental entities.
2. The Federal Accounting Standards Advisory Board (FASAB) issues
accounting standards for which type of entity?
A. State governments and their component units
B. Public colleges and universities
C. Private not-for-profit organizations
D. Agencies and departments of the U.S. federal government
D. Agencies and departments of the U.S. federal government
FASAB standards apply to federal reporting entities; state and local
governments follow GASB.
Page 1 of 65
, BUS-A 335 Fund Accounting
3. A privately sponsored not-for-profit hospital follows accounting standards
issued by:
A. The International Accounting Standards Board
B. FASAB
C. The FASB
D. The GASB
C. The FASB
Private (nongovernmental) not-for-profit entities follow FASB standards,
mainly ASC 958 and the health care guidance in ASC 954.
4. A state university that is a component unit of the state government prepares
its financial statements in accordance with standards issued by:
A. The GASB
B. The FASB, because it is an educational institution
C. Either the GASB or the FASB, at the university's option
D. FASAB, because it receives federal grants
A. The GASB
Public colleges are governmental entities, so GASB standards apply regardless
of the type of service they provide.
5. Under GASB Statement No. 76, Category A authoritative GAAP for state
and local governments consists of:
A. GASB Concepts Statements
B. GASB Statements
C. GASB Implementation Guides
D. AICPA audit and accounting guides cleared by the GASB
B. GASB Statements
Category A is limited to GASB Statements; Implementation Guides, Technical
Bulletins and cleared AICPA literature fall in Category B, and Concepts
Statements are nonauthoritative.
Page 2 of 65
, BUS-A 335 Fund Accounting
6. The concept of interperiod equity is best described as:
A. Whether the budget is balanced between funds
B. Whether taxes are equally distributed among taxpayers
C. Whether expenses are matched with revenues across all funds
D. Whether current-year revenues are sufficient to pay for current-year services
D. Whether current-year revenues are sufficient to pay for current-year
services
Interperiod equity asks whether today's citizens are paying for the services they
receive or shifting the burden to future taxpayers.
7. GASB Concepts Statement No. 1 identifies the primary users of
governmental external financial reports as:
A. Bond rating agencies exclusively
B. Department managers, internal auditors, and employees
C. Citizens, legislative and oversight bodies, and investors and creditors
D. The Internal Revenue Service and federal grantors only
C. Citizens, legislative and oversight bodies, and investors and creditors
The three primary user groups are the citizenry, legislative and oversight
officials, and those who lend or invest in the government.
8. Which of the following best defines a fund in governmental accounting?
A. A cash account maintained in a separate bank
B. A separate legal entity created by a state constitution
C. A fiscal and accounting entity with a self-balancing set of accounts
segregated for specific activities or objectives
D. A budget line item approved by the legislature
C. A fiscal and accounting entity with a self-balancing set of accounts
segregated for specific activities or objectives
A fund records resources, related liabilities and residual balances that are set
apart to carry on specific activities under legal or other restrictions.
Page 3 of 65
, BUS-A 335 Fund Accounting
9. GASB Statement No. 34 groups funds into how many broad categories?
A. Four: general, special, enterprise, and trust
B. Two: governmental and business-type
C. Three: governmental, proprietary, and fiduciary
D. Eleven, one for each fund type
C. Three: governmental, proprietary, and fiduciary
All funds fall under governmental, proprietary or fiduciary categories, each
with its own fund types.
10. Which of the following is NOT a governmental fund type?
A. Special revenue fund
B. Debt service fund
C. Permanent fund
D. Internal service fund
D. Internal service fund
Internal service funds are proprietary funds; the governmental fund types are
general, special revenue, capital projects, debt service and permanent.
11. A permanent fund is used to account for:
A. Resources legally restricted so that only earnings, not principal, may be used
to support the government's programs
B. Resources accumulated to pay employee retirement benefits
C. Resources used for business-like activities charged to the public
D. Resources held in trust for the benefit of specific individuals
A. Resources legally restricted so that only earnings, not principal, may be
used to support the government's programs
Permanent funds hold principal intact for programs that benefit the government
or its citizens; trusts benefiting individuals are private-purpose trust funds.
12. How many general funds may a government report?
A. As many as the governing body authorizes
B. Only one
C. One for each major function
D. Two, one operating and one capital
B. Only one
There is a single general fund that accounts for all financial resources not
required to be reported in another fund.
Page 4 of 65
