Government & NFP Exam 1 - Ch1-4 MBC
Quiz UPDATED ACTUAL Exam Questions
and CORRECT Answers
Why do governments and nonprofit entities use fund accounting?
a. To help ensure restricted resources are spent for their intended purpose
b. To help limit errors when posting general journal entries to the general ledger
c. To allow managers more flexibility when budgeting
d. To better match revenues and expenses - CORRECT ANSWER - a. To help ensure
restricted resources are spent for their intended purpose
Which of the following is generally the major source of revenues for governments?
Select one:
a. Voluntary donations
b. Revenue from exchange transactions
c. Taxes
d. Revenue from investments - CORRECT ANSWER - c. Taxes
Users of governmental and nonprofit financial reports use financial statements to answer a
number of questions. Which of the following can at least partially be answered by reading a
government or nonprofit's financial statements?
Select one:
a. Does the entity have sufficient financial resources to provide a reasonable cushion against
near-term revenue shortfalls caused by economic contraction?
b. What is the likelihood of the entity's ability to pay its short-term and long-term financial
obligations?
c. What is the entity's ability to continue to provide a particular level of services?
d. Financial statements can be used to answer all of the aforementioned questions.
e. None of the above. - CORRECT ANSWER - d. Financial statements can be used to
answer all of the aforementioned questions.
,Which of the following types of entities follow FASB standards when preparing financial
statements?
Select one:
a. State and local governments and nonprofit entities
b. Business enterprises and the federal government
c. Nonprofit entities and business enterprises
d. Federal government and state and local governments - CORRECT ANSWER - c.
Nonprofit entities and business enterprises
Which of the following type of entities follows FASAB standards when preparing financial
statements?
Select one:
a. State and local governments
b. Federal government
c. Nonprofit entities
d. Business enterprises - CORRECT ANSWER - b. Federal government
State which category of funds (governmental-type, proprietary type, or fiduciary type) would be
used by a state government for each of the following purposes:
1. To construct a new office building for use by various departments
2. To pay salaries of personnel who maintain state parks
3. To accumulate resources in a trust fund to pay pension benefits for its employees
4. To collect sales taxes for local governments who "piggy-back" their sales taxes on top of the
state sales tax
5. To operate a central printing department that prints forms and reports for all state departments
AnswerFiduciary typeGovernmental-typeProprietary type - CORRECT ANSWER -
Governmental
Governmental
Fiduciary
, Fiduciary
Proprietary
For each scenario shown below, state which specific fund is used to account for the activity and
which measurement focus and basis of accounting is used within the fund.
1. To construct a new office building for use by various departments
2. To pay salaries of personnel who maintain state parks
3. To accumulate resources in a trust fund to pay pension benefits for its employees
4. To collect sales taxes for local governments who "piggy-back" their sales taxes on top of the
state sales tax
5. To operate a central printing department that prints forms and reports for all state departments
- CORRECT ANSWER - 1. Capital Project, Current Financial Resources, Mod Accrual
2. General Fund, Current Financial Resources, Mod Accrual
3. Pension Trust Fund, Economic Resources, Accrual
4. Custodial Fund, Economic Resources, Accrual
5. Internal Service Fund, Economic Resources, Accrual
1. Services are provided to the general public, and the costs of providing the services are
financed by user charges.
Quiz UPDATED ACTUAL Exam Questions
and CORRECT Answers
Why do governments and nonprofit entities use fund accounting?
a. To help ensure restricted resources are spent for their intended purpose
b. To help limit errors when posting general journal entries to the general ledger
c. To allow managers more flexibility when budgeting
d. To better match revenues and expenses - CORRECT ANSWER - a. To help ensure
restricted resources are spent for their intended purpose
Which of the following is generally the major source of revenues for governments?
Select one:
a. Voluntary donations
b. Revenue from exchange transactions
c. Taxes
d. Revenue from investments - CORRECT ANSWER - c. Taxes
Users of governmental and nonprofit financial reports use financial statements to answer a
number of questions. Which of the following can at least partially be answered by reading a
government or nonprofit's financial statements?
Select one:
a. Does the entity have sufficient financial resources to provide a reasonable cushion against
near-term revenue shortfalls caused by economic contraction?
b. What is the likelihood of the entity's ability to pay its short-term and long-term financial
obligations?
c. What is the entity's ability to continue to provide a particular level of services?
d. Financial statements can be used to answer all of the aforementioned questions.
e. None of the above. - CORRECT ANSWER - d. Financial statements can be used to
answer all of the aforementioned questions.
,Which of the following types of entities follow FASB standards when preparing financial
statements?
Select one:
a. State and local governments and nonprofit entities
b. Business enterprises and the federal government
c. Nonprofit entities and business enterprises
d. Federal government and state and local governments - CORRECT ANSWER - c.
Nonprofit entities and business enterprises
Which of the following type of entities follows FASAB standards when preparing financial
statements?
Select one:
a. State and local governments
b. Federal government
c. Nonprofit entities
d. Business enterprises - CORRECT ANSWER - b. Federal government
State which category of funds (governmental-type, proprietary type, or fiduciary type) would be
used by a state government for each of the following purposes:
1. To construct a new office building for use by various departments
2. To pay salaries of personnel who maintain state parks
3. To accumulate resources in a trust fund to pay pension benefits for its employees
4. To collect sales taxes for local governments who "piggy-back" their sales taxes on top of the
state sales tax
5. To operate a central printing department that prints forms and reports for all state departments
AnswerFiduciary typeGovernmental-typeProprietary type - CORRECT ANSWER -
Governmental
Governmental
Fiduciary
, Fiduciary
Proprietary
For each scenario shown below, state which specific fund is used to account for the activity and
which measurement focus and basis of accounting is used within the fund.
1. To construct a new office building for use by various departments
2. To pay salaries of personnel who maintain state parks
3. To accumulate resources in a trust fund to pay pension benefits for its employees
4. To collect sales taxes for local governments who "piggy-back" their sales taxes on top of the
state sales tax
5. To operate a central printing department that prints forms and reports for all state departments
- CORRECT ANSWER - 1. Capital Project, Current Financial Resources, Mod Accrual
2. General Fund, Current Financial Resources, Mod Accrual
3. Pension Trust Fund, Economic Resources, Accrual
4. Custodial Fund, Economic Resources, Accrual
5. Internal Service Fund, Economic Resources, Accrual
1. Services are provided to the general public, and the costs of providing the services are
financed by user charges.
