ACG 5505
Governmental Accounting
Midterms Exam Review (Qns & Ans)
2025
1. Which of the following fund types is used to account for
government resources that are restricted, committed, or assigned
to expenditures for specific purposes other than debt service or
capital projects?
- A. General Fund
- B. Special Revenue Fund
- C. Capital Projects Fund
- D. Debt Service Fund
©/2025
, ANS: B. Special Revenue Fund
Rationale: Special Revenue Funds are used to account for
government resources that are restricted, committed, or assigned
to expenditures for specific purposes other than debt service or
capital projects.
2. What is the primary objective of the Governmental
Accounting Standards Board (GASB)?
- A. To regulate private sector accounting
- B. To establish and improve standards of accounting and
financial reporting for U.S. state and local governments
- C. To monitor corporate financial reporting
- D. To oversee tax compliance
ANS: B. To establish and improve standards of accounting
and financial reporting for U.S. state and local governments
Rationale: The primary objective of GASB is to establish and
improve standards of accounting and financial reporting for U.S.
state and local governments.
Fill-in-the-Blank Questions
©/2025
,3. The __________ basis of accounting recognizes revenues
when they are earned and expenses when they are incurred,
regardless of when cash is received or paid.
ANS: Accrual
Rationale: The accrual basis of accounting recognizes
revenues when they are earned and expenses when they are
incurred, providing a more accurate representation of financial
performance.
4. A __________ Fund is used to account for resources
restricted to the extent that only earnings, and not principal, may
be used for purposes that support the reporting government's
programs.
ANS: Permanent
Rationale: A Permanent Fund is used to account for resources
restricted so that only earnings, and not principal, may be used to
support the reporting government's programs.
True/False Questions
5. True or False: Governmental accounting uses the same
financial statements as private sector accounting.
©/2025
, ANS: False
Rationale: Governmental accounting uses different financial
statements, such as the Statement of Net Position and the
Statement of Activities, to reflect the unique aspects of
governmental operations.
6. True or False: The Modified Accrual basis of accounting is
used for governmental funds.
ANS: True
Rationale: The Modified Accrual basis of accounting is used
for governmental funds and recognizes revenues when they are
both measurable and available and expenditures when liabilities
are incurred.
Multiple Response Questions
7. Which of the following are types of fiduciary funds? (Select
all that apply)
- A. Agency Funds
- B. Pension Trust Funds
- C. Permanent Funds
©/2025
Governmental Accounting
Midterms Exam Review (Qns & Ans)
2025
1. Which of the following fund types is used to account for
government resources that are restricted, committed, or assigned
to expenditures for specific purposes other than debt service or
capital projects?
- A. General Fund
- B. Special Revenue Fund
- C. Capital Projects Fund
- D. Debt Service Fund
©/2025
, ANS: B. Special Revenue Fund
Rationale: Special Revenue Funds are used to account for
government resources that are restricted, committed, or assigned
to expenditures for specific purposes other than debt service or
capital projects.
2. What is the primary objective of the Governmental
Accounting Standards Board (GASB)?
- A. To regulate private sector accounting
- B. To establish and improve standards of accounting and
financial reporting for U.S. state and local governments
- C. To monitor corporate financial reporting
- D. To oversee tax compliance
ANS: B. To establish and improve standards of accounting
and financial reporting for U.S. state and local governments
Rationale: The primary objective of GASB is to establish and
improve standards of accounting and financial reporting for U.S.
state and local governments.
Fill-in-the-Blank Questions
©/2025
,3. The __________ basis of accounting recognizes revenues
when they are earned and expenses when they are incurred,
regardless of when cash is received or paid.
ANS: Accrual
Rationale: The accrual basis of accounting recognizes
revenues when they are earned and expenses when they are
incurred, providing a more accurate representation of financial
performance.
4. A __________ Fund is used to account for resources
restricted to the extent that only earnings, and not principal, may
be used for purposes that support the reporting government's
programs.
ANS: Permanent
Rationale: A Permanent Fund is used to account for resources
restricted so that only earnings, and not principal, may be used to
support the reporting government's programs.
True/False Questions
5. True or False: Governmental accounting uses the same
financial statements as private sector accounting.
©/2025
, ANS: False
Rationale: Governmental accounting uses different financial
statements, such as the Statement of Net Position and the
Statement of Activities, to reflect the unique aspects of
governmental operations.
6. True or False: The Modified Accrual basis of accounting is
used for governmental funds.
ANS: True
Rationale: The Modified Accrual basis of accounting is used
for governmental funds and recognizes revenues when they are
both measurable and available and expenditures when liabilities
are incurred.
Multiple Response Questions
7. Which of the following are types of fiduciary funds? (Select
all that apply)
- A. Agency Funds
- B. Pension Trust Funds
- C. Permanent Funds
©/2025
