Governmental and NFP Accounting Exam 2
UPDATED ACTUAL Exam Questions and
CORRECT Answers
The Resources to service long-term debt of gov's are typically accounted for in Debt Service
Funds - CORRECT ANSWER - True
10 MM, 6% long term bond O/S. Interest due 1/1 and 7/1 each year. for a 9/30 FYE what amt of
int. payable should be in DSF. - CORRECT ANSWER - $0k
Harbor city issues 6% tax-exempt bond and acquired govt securities with 7% yield. This is an
example of - CORRECT ANSWER - arbitrage
In governmental funds, the costs of capital assets are reported as expenses and capitalized when
acquired - CORRECT ANSWER - True
For a Government that elects NOT to capitalize works of art, what are the government-wide
stmts-what is the entry at donation? - CORRECT ANSWER - Dr. Expenses Cr. Revenues
For a Government that elects to capitalize works of art, what are the government-wide stmts-
what is the entry at donation? - CORRECT ANSWER - Dr. Asset Cr. Revenues
The government-wide financial statements report capital assets? - CORRECT ANSWER -
at depreciated historical cost
Tax Anticipation Notes must be reported as current liability of the governmental fund in which
related revenues are reported - CORRECT ANSWER - True
In the govt-wide fin. stmts. the assets acquired under a capital lease would be reported at -
CORRECT ANSWER - PV of the required lease payments
, Debt issued by one entity but backed by the promise of an unrelated entity to make up any debt
service deficiency is - CORRECT ANSWER - moral obligation debt
Bond Insurance issued by credit enhancement agencies is-- - CORRECT ANSWER -
intended to assure the holder of the debt will be paid, ensures the bonds receive the high rating, is
costly to the government paying for the insurance
The Revenues of an internal service fund are the expenditures and expenses of other funds of that
government - CORRECT ANSWER - True
Gov'ts choose to account for ISF activities on an accrual basis, MAB, or cash basis - CORRECT
ANSWER - False, They are on a ________ Basis
Which of the following is NOT true about ISF as reported in the fund financial stmts? -
CORRECT ANSWER - billing rates must be set to cover the full cost of goods and
services
Which of the following IS TRUE about ISF as reported in the fund financial stmts? - CORRECT
ANSWER - -Costs in the ISF are reported twice within the same set of gov't fin.
statements
-Depreciation can be charged to gov'tal funds through billing rates
-Deficits or surpluses in the general fund can be transferred to the ISF
Asset Retirement Obligation (ARO) should be reported at - CORRECT ANSWER -
annually adjusted current value of retirement outlays
Per GASB No 34. permanent funds are classified as fiduciary funds - CORRECT
ANSWER - False
UPDATED ACTUAL Exam Questions and
CORRECT Answers
The Resources to service long-term debt of gov's are typically accounted for in Debt Service
Funds - CORRECT ANSWER - True
10 MM, 6% long term bond O/S. Interest due 1/1 and 7/1 each year. for a 9/30 FYE what amt of
int. payable should be in DSF. - CORRECT ANSWER - $0k
Harbor city issues 6% tax-exempt bond and acquired govt securities with 7% yield. This is an
example of - CORRECT ANSWER - arbitrage
In governmental funds, the costs of capital assets are reported as expenses and capitalized when
acquired - CORRECT ANSWER - True
For a Government that elects NOT to capitalize works of art, what are the government-wide
stmts-what is the entry at donation? - CORRECT ANSWER - Dr. Expenses Cr. Revenues
For a Government that elects to capitalize works of art, what are the government-wide stmts-
what is the entry at donation? - CORRECT ANSWER - Dr. Asset Cr. Revenues
The government-wide financial statements report capital assets? - CORRECT ANSWER -
at depreciated historical cost
Tax Anticipation Notes must be reported as current liability of the governmental fund in which
related revenues are reported - CORRECT ANSWER - True
In the govt-wide fin. stmts. the assets acquired under a capital lease would be reported at -
CORRECT ANSWER - PV of the required lease payments
, Debt issued by one entity but backed by the promise of an unrelated entity to make up any debt
service deficiency is - CORRECT ANSWER - moral obligation debt
Bond Insurance issued by credit enhancement agencies is-- - CORRECT ANSWER -
intended to assure the holder of the debt will be paid, ensures the bonds receive the high rating, is
costly to the government paying for the insurance
The Revenues of an internal service fund are the expenditures and expenses of other funds of that
government - CORRECT ANSWER - True
Gov'ts choose to account for ISF activities on an accrual basis, MAB, or cash basis - CORRECT
ANSWER - False, They are on a ________ Basis
Which of the following is NOT true about ISF as reported in the fund financial stmts? -
CORRECT ANSWER - billing rates must be set to cover the full cost of goods and
services
Which of the following IS TRUE about ISF as reported in the fund financial stmts? - CORRECT
ANSWER - -Costs in the ISF are reported twice within the same set of gov't fin.
statements
-Depreciation can be charged to gov'tal funds through billing rates
-Deficits or surpluses in the general fund can be transferred to the ISF
Asset Retirement Obligation (ARO) should be reported at - CORRECT ANSWER -
annually adjusted current value of retirement outlays
Per GASB No 34. permanent funds are classified as fiduciary funds - CORRECT
ANSWER - False
