ACCT 4421 Exam 1: ch 4 UPDATED
ACTUAL Exam Questions and CORRECT
Answers
F - CORRECT ANSWER - if an entity elects to focus on all economic resources, then it
should adopt a modified accrual basis of accounting
T - CORRECT ANSWER - the budgetary measurement focus of governments is
determined by applicable state or local laws
F - CORRECT ANSWER - the revenue recognition issues facing governments are
generally focused on the exchange transaction earning process, similar to those of businesses
F - CORRECT ANSWER - governmental activities tend to derive the majority of their
revenues from exchange transactions
T - CORRECT ANSWER - in accounting for property taxes, under the modified accrual
basis, existing standards provide that, except in unusual circumstances, revenues should be
recognized only if cash is expected to be collected within 60 days of year-end
T - CORRECT ANSWER - ad valorem taxes are taxes that are based on value
F - CORRECT ANSWER - income taxes are classified as ad valorem taxes
T - CORRECT ANSWER - sales taxes are taxpayer assessed, that is, parties other than the
beneficiary government determine the tax base
F - CORRECT ANSWER - revenues that cannot be classified as general revenues are by
default considered program revenues
, T - CORRECT ANSWER - taxes that are imposed on the reporting government's citizens
are considered general revenues, even if they are restricted to specific programs
general revenue - CORRECT ANSWER - in the government-wide FS's, which type of
revenue is considered "default revenue" ?
measurable and available - CORRECT ANSWER - revenue recognition principles are the
same for both modified and full accrual, except Gov Fund revenues are recorded when
__________?
exchange and non-exchange - CORRECT ANSWER - 2 broad types of revenue
transactions?
exchange - CORRECT ANSWER - each party gives and receives substantially equal value
non-exchange - CORRECT ANSWER - one party gives or receives value without directly
receiving or giving equal value in exchange
1. imposed non-exchange revenues
2. derived tax revenues
3. govt. mandated non-exchange
4. Voluntary non-exhcnage - CORRECT ANSWER - 4 categories of non-exchange
transactions?
derived tax revenues - CORRECT ANSWER - taxes imposed on or derived from exchange
transactions, such as commercial sales (sales taxes), taxpayer income (income taxes), etc.
imposed non-exchange revenues - CORRECT ANSWER - taxes imposed on non-
exchange transactions (fines) or wealth (property taxes)
ACTUAL Exam Questions and CORRECT
Answers
F - CORRECT ANSWER - if an entity elects to focus on all economic resources, then it
should adopt a modified accrual basis of accounting
T - CORRECT ANSWER - the budgetary measurement focus of governments is
determined by applicable state or local laws
F - CORRECT ANSWER - the revenue recognition issues facing governments are
generally focused on the exchange transaction earning process, similar to those of businesses
F - CORRECT ANSWER - governmental activities tend to derive the majority of their
revenues from exchange transactions
T - CORRECT ANSWER - in accounting for property taxes, under the modified accrual
basis, existing standards provide that, except in unusual circumstances, revenues should be
recognized only if cash is expected to be collected within 60 days of year-end
T - CORRECT ANSWER - ad valorem taxes are taxes that are based on value
F - CORRECT ANSWER - income taxes are classified as ad valorem taxes
T - CORRECT ANSWER - sales taxes are taxpayer assessed, that is, parties other than the
beneficiary government determine the tax base
F - CORRECT ANSWER - revenues that cannot be classified as general revenues are by
default considered program revenues
, T - CORRECT ANSWER - taxes that are imposed on the reporting government's citizens
are considered general revenues, even if they are restricted to specific programs
general revenue - CORRECT ANSWER - in the government-wide FS's, which type of
revenue is considered "default revenue" ?
measurable and available - CORRECT ANSWER - revenue recognition principles are the
same for both modified and full accrual, except Gov Fund revenues are recorded when
__________?
exchange and non-exchange - CORRECT ANSWER - 2 broad types of revenue
transactions?
exchange - CORRECT ANSWER - each party gives and receives substantially equal value
non-exchange - CORRECT ANSWER - one party gives or receives value without directly
receiving or giving equal value in exchange
1. imposed non-exchange revenues
2. derived tax revenues
3. govt. mandated non-exchange
4. Voluntary non-exhcnage - CORRECT ANSWER - 4 categories of non-exchange
transactions?
derived tax revenues - CORRECT ANSWER - taxes imposed on or derived from exchange
transactions, such as commercial sales (sales taxes), taxpayer income (income taxes), etc.
imposed non-exchange revenues - CORRECT ANSWER - taxes imposed on non-
exchange transactions (fines) or wealth (property taxes)
