FAR Governmental Accounting
questions with actual answers.
What is the minimal number of funds in Gov accounting? Additionally what is the name of the funds ANS
-1, The general fund
However, the government should set up enough funds to be financially responsible and comply with
laws
How many possible funds are there in Government accounting? Name them ANS -5 funds
General
Special Revenue
Capital Projects
Permanent
Debt Service
Purchases of long term assets are treated as what in Gov accounting? ANS -Expenditure or expense, they
are not capitalized and depreciated over their useful lives
All payments out of the government are expenditures
Name the 3 primary users of government financial statements? ANS -for short
1. Citizens of the government
2. People within the goverment or employees and schools
3. creditors and investors, lobbyists
(1) the citizenry to whom the government is primarily accountable, including taxpayers, voters, service
recipients, the media, advocate groups, and public finance researchers; (2) legislative and oversight
bodies, including members of state legislatures, county commissions, city councils, boards of trustees
, and school boards, and executive branch officials with oversight responsibility over other levels of
government; and (3) investors and creditors, including individual and institutional investors and
creditors, municipal security underwriters, bond rating agencies, bond insurers, and financial
institutions.
Which type of governmental expenses needs to be broken down by the function in the financial
statements? ANS -The government-wide statement of activities should present direct operating
expenses by function
Governmental accounting uses what kind of accouting method? ANS -Modified accrual
How would a municipality that uses modified accrual and encumbrance accounting record the
transaction of approved purchase orders issued for supplies? ANS -Debit Encumbrances Control
Credit Fund Balance- Reserve for encumbrances
According to the GASB the primary characteristics of governmental structure are: ANS -1. Tax payer to
services recieved relationship
2.The federal system of government and the prevalence of intergovernmental revenues
3. The representative form of government and the separation of powers
How would a municipality that uses modified accrual and encumbrance accounting record the condition
of an excess of estimated inflows over estimated outflows? ANS -Credit budgetary fund balance
When one muni collects funds to be given to another, ,what is the name of the fund to hold this money
ANS -Custodial Fund
Expenditures of a governmental unit for insurance extending over more than one accounting period:
ANS -may be allocated between or among accounting periods or may be accounted for as expenditures
of the period of acquisition.
It is inappropriate to record depreciation expenses in: ANS -Depreciation expense is not recorded in any
governmental fund since governmental funds account for neither depreciable assets nor expenses (the
measurement focus of governmental funds is on expenditures, not expenses). Capital assets and related
depreciation expenses are accounted for in proprietary funds and fiduciary funds. The only
questions with actual answers.
What is the minimal number of funds in Gov accounting? Additionally what is the name of the funds ANS
-1, The general fund
However, the government should set up enough funds to be financially responsible and comply with
laws
How many possible funds are there in Government accounting? Name them ANS -5 funds
General
Special Revenue
Capital Projects
Permanent
Debt Service
Purchases of long term assets are treated as what in Gov accounting? ANS -Expenditure or expense, they
are not capitalized and depreciated over their useful lives
All payments out of the government are expenditures
Name the 3 primary users of government financial statements? ANS -for short
1. Citizens of the government
2. People within the goverment or employees and schools
3. creditors and investors, lobbyists
(1) the citizenry to whom the government is primarily accountable, including taxpayers, voters, service
recipients, the media, advocate groups, and public finance researchers; (2) legislative and oversight
bodies, including members of state legislatures, county commissions, city councils, boards of trustees
, and school boards, and executive branch officials with oversight responsibility over other levels of
government; and (3) investors and creditors, including individual and institutional investors and
creditors, municipal security underwriters, bond rating agencies, bond insurers, and financial
institutions.
Which type of governmental expenses needs to be broken down by the function in the financial
statements? ANS -The government-wide statement of activities should present direct operating
expenses by function
Governmental accounting uses what kind of accouting method? ANS -Modified accrual
How would a municipality that uses modified accrual and encumbrance accounting record the
transaction of approved purchase orders issued for supplies? ANS -Debit Encumbrances Control
Credit Fund Balance- Reserve for encumbrances
According to the GASB the primary characteristics of governmental structure are: ANS -1. Tax payer to
services recieved relationship
2.The federal system of government and the prevalence of intergovernmental revenues
3. The representative form of government and the separation of powers
How would a municipality that uses modified accrual and encumbrance accounting record the condition
of an excess of estimated inflows over estimated outflows? ANS -Credit budgetary fund balance
When one muni collects funds to be given to another, ,what is the name of the fund to hold this money
ANS -Custodial Fund
Expenditures of a governmental unit for insurance extending over more than one accounting period:
ANS -may be allocated between or among accounting periods or may be accounted for as expenditures
of the period of acquisition.
It is inappropriate to record depreciation expenses in: ANS -Depreciation expense is not recorded in any
governmental fund since governmental funds account for neither depreciable assets nor expenses (the
measurement focus of governmental funds is on expenditures, not expenses). Capital assets and related
depreciation expenses are accounted for in proprietary funds and fiduciary funds. The only
