EXAM 4 ACCT 403 FREQUENTLY TESTED ACTUAL
QUESTIONS WITH CORRECT ANSWERS
Question 1.
Which account should be credited to record a gift of cash which is from an outside party to an animal
rescue agency and is used for expenses to care for the animals?
ANSWER
unrestricted net assets -contributions
Question 2.
When a city received a federal grant designated for books to be purchased for a library, the money
should have been recorded in:
ANSWER
a special revenue fund
Question 3.
Drye Township has received a donation of a rare painting worth $1,000,000. For Drye's
government-wide financial statements, three criteria must be met before Drye can opt not to
recognize the painting as an asset. Which of the following is not one of the three criteria? The
painting is held for public exhibition, education, or research in furtherance of public service, rather
than financial gain.
The painting is scheduled to be sold immediately at auction.
The painting is protected, kept unencumbered, cared for, and preserved.
ANSWER
item 2 is not one of the three criteria
Question 4.
Reciprocal transfers where both parties give and receive something of value are
ANSWER
exchange transactions
,Question 5.
A local government's basic financial statements would include a statement of cash flows for all
ANSWER
proprietary fund types
Question 6.
All of the following about tax abatement agreements must be disclosed by state and local
governments except:
ANSWER
identify the companies receiving the abatements
Question 7.
Which statement most accurately reflects property taxes?
ANSWER
property taxes the revenue is recognized in the period it can be used
Question 8.
Which of the following is a financial statement of a proprietary fund?
ANSWER
statement of net position
Question 9.
What is the appropriate account to credit when estimating a portion of health care entity's
receivables that will prove to be uncollectible?
ANSWER
allowance for uncollectable accounts
, Question 10.
Trapper City issued 30-year bonds for the purpose of building a new City Hall. The proceeds of the
bonds are deposited in the General Fund. For the governmental fund financial statements, in what
fund will Bonds Payable appear?
ANSWER
bonds payable do not appear
Question 11.
Which of the following is not a true statement regarding revenues from various types of
nonexchange transactions?
ANSWER
imposed nonexchange revenue consist only of fines and penalties
Question 12.
Revenue from property taxes should be recorded in the General Fund:
ANSWER
in the period for which the resulting resources are required or permitted to be used
Question 13.
Which one of the following is a criterion for identifying a primary government?
ANSWER
it has a separately elected governing board
Question 14.
If the total acquisition value of an acquired not-for-profit entity is greater than the fair value of all
identifiable net assets of the entity, and that entity's revenues are not generated by rendering goods
or services or from membership dues, then the excess of acquisition value over identifiable net
assets is immediately reported:
ANSWER
as a reduction in unrestricted net assets on the statement of activities
QUESTIONS WITH CORRECT ANSWERS
Question 1.
Which account should be credited to record a gift of cash which is from an outside party to an animal
rescue agency and is used for expenses to care for the animals?
ANSWER
unrestricted net assets -contributions
Question 2.
When a city received a federal grant designated for books to be purchased for a library, the money
should have been recorded in:
ANSWER
a special revenue fund
Question 3.
Drye Township has received a donation of a rare painting worth $1,000,000. For Drye's
government-wide financial statements, three criteria must be met before Drye can opt not to
recognize the painting as an asset. Which of the following is not one of the three criteria? The
painting is held for public exhibition, education, or research in furtherance of public service, rather
than financial gain.
The painting is scheduled to be sold immediately at auction.
The painting is protected, kept unencumbered, cared for, and preserved.
ANSWER
item 2 is not one of the three criteria
Question 4.
Reciprocal transfers where both parties give and receive something of value are
ANSWER
exchange transactions
,Question 5.
A local government's basic financial statements would include a statement of cash flows for all
ANSWER
proprietary fund types
Question 6.
All of the following about tax abatement agreements must be disclosed by state and local
governments except:
ANSWER
identify the companies receiving the abatements
Question 7.
Which statement most accurately reflects property taxes?
ANSWER
property taxes the revenue is recognized in the period it can be used
Question 8.
Which of the following is a financial statement of a proprietary fund?
ANSWER
statement of net position
Question 9.
What is the appropriate account to credit when estimating a portion of health care entity's
receivables that will prove to be uncollectible?
ANSWER
allowance for uncollectable accounts
, Question 10.
Trapper City issued 30-year bonds for the purpose of building a new City Hall. The proceeds of the
bonds are deposited in the General Fund. For the governmental fund financial statements, in what
fund will Bonds Payable appear?
ANSWER
bonds payable do not appear
Question 11.
Which of the following is not a true statement regarding revenues from various types of
nonexchange transactions?
ANSWER
imposed nonexchange revenue consist only of fines and penalties
Question 12.
Revenue from property taxes should be recorded in the General Fund:
ANSWER
in the period for which the resulting resources are required or permitted to be used
Question 13.
Which one of the following is a criterion for identifying a primary government?
ANSWER
it has a separately elected governing board
Question 14.
If the total acquisition value of an acquired not-for-profit entity is greater than the fair value of all
identifiable net assets of the entity, and that entity's revenues are not generated by rendering goods
or services or from membership dues, then the excess of acquisition value over identifiable net
assets is immediately reported:
ANSWER
as a reduction in unrestricted net assets on the statement of activities
