Chapter 3: Government and NFP Accounting
UPDATED ACTUAL Exam Questions and
CORRECT Answers
In a government-wide statement of activities, how should expenses be reported? - CORRECT
ANSWER - By function or program
What are direct expenses? - CORRECT ANSWER - Expenses that are specifically
associated with a function.
What are indirect expenses? - CORRECT ANSWER - Expenses not directly associated
with a function.
Example: Interest on long term debt.
Revenues should be distinguished between what two categories? - CORRECT ANSWER -
Program revenues and general revenues
What three categories are program revenues reported into? - CORRECT ANSWER - 1)
Charges for services
2) Operating Grants and Contributions
3) Capital Grants and Contributions
What are charges for services, within program revenues? - CORRECT ANSWER -
Charges by the government to customers.
Example: Licenses and Permits
What are operating grants and contributions, within program revenues? - CORRECT
ANSWER - When a grant is received from an external source to be used for operational
purposes.
, What are capital grants and contributions, within program revenues? - CORRECT
ANSWER - A purchase of equipment for a function.
What are some examples of general revenues? - CORRECT ANSWER - Property taxes
and sales taxes.
How do you calculate net (expense) or revenue? - CORRECT ANSWER - Expenses-
Revenues
How are extraordinary items, special items, and transfers reported? - CORRECT
ANSWER - As separate line items near the bottom of the government-wide statement of
activities.
How would you describe extraordinary items? - CORRECT ANSWER - Both "unusual
and infrequent" in occurrence.
How would you describe special items? - CORRECT ANSWER - Either "unusual or
infrequent" in occurrence.
What is the general fund equation? - CORRECT ANSWER - (Current) Assets + Deferred
Outflows (Prepaid Assets) - (Current) Liabilities - Deferred Inflows (Unearned Revenue) = Fund
Balance
What are the three balance sheet accounts? - CORRECT ANSWER - Assets, Liabilities,
and Fund Equity
What are some examples of assets in general fund balance sheet accounts? - CORRECT
ANSWER - Cash, Due from other funds, due from other governments, taxes receivable,
investments, and inventory of supplies.
UPDATED ACTUAL Exam Questions and
CORRECT Answers
In a government-wide statement of activities, how should expenses be reported? - CORRECT
ANSWER - By function or program
What are direct expenses? - CORRECT ANSWER - Expenses that are specifically
associated with a function.
What are indirect expenses? - CORRECT ANSWER - Expenses not directly associated
with a function.
Example: Interest on long term debt.
Revenues should be distinguished between what two categories? - CORRECT ANSWER -
Program revenues and general revenues
What three categories are program revenues reported into? - CORRECT ANSWER - 1)
Charges for services
2) Operating Grants and Contributions
3) Capital Grants and Contributions
What are charges for services, within program revenues? - CORRECT ANSWER -
Charges by the government to customers.
Example: Licenses and Permits
What are operating grants and contributions, within program revenues? - CORRECT
ANSWER - When a grant is received from an external source to be used for operational
purposes.
, What are capital grants and contributions, within program revenues? - CORRECT
ANSWER - A purchase of equipment for a function.
What are some examples of general revenues? - CORRECT ANSWER - Property taxes
and sales taxes.
How do you calculate net (expense) or revenue? - CORRECT ANSWER - Expenses-
Revenues
How are extraordinary items, special items, and transfers reported? - CORRECT
ANSWER - As separate line items near the bottom of the government-wide statement of
activities.
How would you describe extraordinary items? - CORRECT ANSWER - Both "unusual
and infrequent" in occurrence.
How would you describe special items? - CORRECT ANSWER - Either "unusual or
infrequent" in occurrence.
What is the general fund equation? - CORRECT ANSWER - (Current) Assets + Deferred
Outflows (Prepaid Assets) - (Current) Liabilities - Deferred Inflows (Unearned Revenue) = Fund
Balance
What are the three balance sheet accounts? - CORRECT ANSWER - Assets, Liabilities,
and Fund Equity
What are some examples of assets in general fund balance sheet accounts? - CORRECT
ANSWER - Cash, Due from other funds, due from other governments, taxes receivable,
investments, and inventory of supplies.
