NFP Exam UPDATED ACTUAL Exam
Questions and CORRECT Answers
Other Financing Sources/Uses would appear on which of the following statements? - CORRECT
ANSWER - Statement of Revenues, Expenditures, and Changes in Fund Balances
A government's internal managers rely on general purpose financial statements for a considerable
amount of information about their government. - CORRECT ANSWER - True
The governmental Accounting Standards Board establishes generally accepted accounting
principles for all state and local governments and all not-for-profit entities. - CORRECT
ANSWER - False
The Financial Accounting Standards Board requires all nongovernmental not-for-profit entities to
use fund accounting. - CORRECT ANSWER - False
Fund accounting promotes control and accountability over restricted resources. - CORRECT
ANSWER - True
Encumbrances and expenditures both reduce total fund balances of state and local governments. -
CORRECT ANSWER - False
State and local governments' budget-to-actual comparisons present both original and final budget
amounts - CORRECT ANSWER - True
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 sixty days after year-end. - CORRECT ANSWER - True
Ad valorem taxes are taxes that are based on value. - CORRECT ANSWER - True
, Expenditures are generally recognized when resources are acquired; expenses when resources
consumed. - CORRECT ANSWER - True
Prepaid expenses such as for insurance are classified as deferred outflows, rather than as assets. -
CORRECT ANSWER - False
The primary objective of a not-for-profit organization or a government is to - CORRECT
ANSWER - Provide services to constituents.
Interperiod equity refers to a condition whereby - CORRECT ANSWER - Current-year
revenues are sufficient to pay for current-year services
The most significant financial document provided by a government is the - CORRECT
ANSWER - Operating Budget
The purpose of the FASAB is to establish accounting standards for - CORRECT
ANSWER - Federal government.
The City of Round Mountain receives a contribution of $10 million. The donor stipulates that the
money is to be invested. The principle is to remain intact and the investment proceeds are to be
used to support a city-owned recreation center. The city should report the contribution in a -
CORRECT ANSWER - Permanent Fund
Under GASB No. 54, what is the hierarchy classification of fund balances? - CORRECT
ANSWER - Nonspendable, restricted, committed, assigned, and unassigned
Which of the following funds is a proprietary fund? - CORRECT ANSWER - Internal
Service Fund
The state collects a gasoline tax that must be used to support highway construction and
maintenance. The gasoline tax revenue should be accounted for in which of the following funds?
- CORRECT ANSWER - Special Revenue Fund
Questions and CORRECT Answers
Other Financing Sources/Uses would appear on which of the following statements? - CORRECT
ANSWER - Statement of Revenues, Expenditures, and Changes in Fund Balances
A government's internal managers rely on general purpose financial statements for a considerable
amount of information about their government. - CORRECT ANSWER - True
The governmental Accounting Standards Board establishes generally accepted accounting
principles for all state and local governments and all not-for-profit entities. - CORRECT
ANSWER - False
The Financial Accounting Standards Board requires all nongovernmental not-for-profit entities to
use fund accounting. - CORRECT ANSWER - False
Fund accounting promotes control and accountability over restricted resources. - CORRECT
ANSWER - True
Encumbrances and expenditures both reduce total fund balances of state and local governments. -
CORRECT ANSWER - False
State and local governments' budget-to-actual comparisons present both original and final budget
amounts - CORRECT ANSWER - True
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 sixty days after year-end. - CORRECT ANSWER - True
Ad valorem taxes are taxes that are based on value. - CORRECT ANSWER - True
, Expenditures are generally recognized when resources are acquired; expenses when resources
consumed. - CORRECT ANSWER - True
Prepaid expenses such as for insurance are classified as deferred outflows, rather than as assets. -
CORRECT ANSWER - False
The primary objective of a not-for-profit organization or a government is to - CORRECT
ANSWER - Provide services to constituents.
Interperiod equity refers to a condition whereby - CORRECT ANSWER - Current-year
revenues are sufficient to pay for current-year services
The most significant financial document provided by a government is the - CORRECT
ANSWER - Operating Budget
The purpose of the FASAB is to establish accounting standards for - CORRECT
ANSWER - Federal government.
The City of Round Mountain receives a contribution of $10 million. The donor stipulates that the
money is to be invested. The principle is to remain intact and the investment proceeds are to be
used to support a city-owned recreation center. The city should report the contribution in a -
CORRECT ANSWER - Permanent Fund
Under GASB No. 54, what is the hierarchy classification of fund balances? - CORRECT
ANSWER - Nonspendable, restricted, committed, assigned, and unassigned
Which of the following funds is a proprietary fund? - CORRECT ANSWER - Internal
Service Fund
The state collects a gasoline tax that must be used to support highway construction and
maintenance. The gasoline tax revenue should be accounted for in which of the following funds?
- CORRECT ANSWER - Special Revenue Fund
