ACCT 4421 Module 1 Quiz UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Which of the following rule-making authorities would establish accounting standards for the
University of Wisconsin (a public university)? - CORRECT ANSWER - the GASB
Who may impose constraints for the use of a committed fund balance? - CORRECT
ANSWER - the government's highest level of decision-making authority
A city issues $20 million of general obligation bonds to improve its streets and roads. In
accordance with the bond covenants, it committed $1 million to help ensure that it is able to meet
its first payment of principal and $100,000 for its first payment of interest. The amount of
liability that the city should report in its debt service fund is - CORRECT ANSWER - $0
The City of Round Lake receives a contribution of $20 million. The donor stipulates that the
money is to be invested. The principal is to remain intact, and the investment proceeds are to be
used to support a city-owned nature center. The city should report the contribution in a -
CORRECT ANSWER - permanent fund.
Rule 203 of the AICPA's Code of Professional Conduct pertains to - CORRECT
ANSWER - authorities designated to establish accounting standards.
The city of Alpine incurred the following costs during the year in its property tax collection
department:
Purchase of computer equipment $10,000
Salaries and wages $400,000
Purchase of electricity from the city-owned electric utility $40,000
Purchase of supplies, all of which were used during the year $10,000
As a consequence of these transactions, the amount that Alpine should report as expenditures in
its general fund is - CORRECT ANSWER - $460,000
, The primary objective of a not-for-profit organization or a government is to - CORRECT
ANSWER - provide services to constituents.
The FASB is to the GASB as - CORRECT ANSWER - a brother is to a sister.
Which of the following is not one of the GASB's financial reporting objectives? - CORRECT
ANSWER - ensuring that budgeted revenues are equal to or exceed budgeted expenses
Interperiod equity refers to a condition whereby - CORRECT ANSWER - current-year
revenues are sufficient to pay for current-year services.
If the GASB has not issued a pronouncement on a specific issue, which of the following is true
with respect to FASB pronouncements - CORRECT ANSWER - They could be taken into
account but would have no higher standing than other accounting literature.
If businesses are "governed by the marketplace," governments are governed by - CORRECT
ANSWER - budgets.
The organization responsible for setting accounting standards for state and local governments is
the - CORRECT ANSWER - GASB
In governments, in contrast to businesses, - CORRECT ANSWER - there may not be a
direct relationship between revenues raised and the demand for the entity's services.
The traditional business model of accounting is inadequate for governments and not-for-profit
organizations primarily because businesses differ from governments and not-for-profit
organizations in that - CORRECT ANSWER - they have different missions.
Standards promulgated by the FASB are most likely to be adhered to by which of the following
governmental units? - CORRECT ANSWER - an electric utility
ACTUAL Exam Questions and CORRECT
Answers
Which of the following rule-making authorities would establish accounting standards for the
University of Wisconsin (a public university)? - CORRECT ANSWER - the GASB
Who may impose constraints for the use of a committed fund balance? - CORRECT
ANSWER - the government's highest level of decision-making authority
A city issues $20 million of general obligation bonds to improve its streets and roads. In
accordance with the bond covenants, it committed $1 million to help ensure that it is able to meet
its first payment of principal and $100,000 for its first payment of interest. The amount of
liability that the city should report in its debt service fund is - CORRECT ANSWER - $0
The City of Round Lake receives a contribution of $20 million. The donor stipulates that the
money is to be invested. The principal is to remain intact, and the investment proceeds are to be
used to support a city-owned nature center. The city should report the contribution in a -
CORRECT ANSWER - permanent fund.
Rule 203 of the AICPA's Code of Professional Conduct pertains to - CORRECT
ANSWER - authorities designated to establish accounting standards.
The city of Alpine incurred the following costs during the year in its property tax collection
department:
Purchase of computer equipment $10,000
Salaries and wages $400,000
Purchase of electricity from the city-owned electric utility $40,000
Purchase of supplies, all of which were used during the year $10,000
As a consequence of these transactions, the amount that Alpine should report as expenditures in
its general fund is - CORRECT ANSWER - $460,000
, The primary objective of a not-for-profit organization or a government is to - CORRECT
ANSWER - provide services to constituents.
The FASB is to the GASB as - CORRECT ANSWER - a brother is to a sister.
Which of the following is not one of the GASB's financial reporting objectives? - CORRECT
ANSWER - ensuring that budgeted revenues are equal to or exceed budgeted expenses
Interperiod equity refers to a condition whereby - CORRECT ANSWER - current-year
revenues are sufficient to pay for current-year services.
If the GASB has not issued a pronouncement on a specific issue, which of the following is true
with respect to FASB pronouncements - CORRECT ANSWER - They could be taken into
account but would have no higher standing than other accounting literature.
If businesses are "governed by the marketplace," governments are governed by - CORRECT
ANSWER - budgets.
The organization responsible for setting accounting standards for state and local governments is
the - CORRECT ANSWER - GASB
In governments, in contrast to businesses, - CORRECT ANSWER - there may not be a
direct relationship between revenues raised and the demand for the entity's services.
The traditional business model of accounting is inadequate for governments and not-for-profit
organizations primarily because businesses differ from governments and not-for-profit
organizations in that - CORRECT ANSWER - they have different missions.
Standards promulgated by the FASB are most likely to be adhered to by which of the following
governmental units? - CORRECT ANSWER - an electric utility
