©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
NFP EXAM 2 Questions And Answers
|Latest 2025 | Guaranteed Pass.
Which of the following type of entities follows FASAB standards when preparing financial
statements? - Answer✔Federal government
Why do governments use fund accounting? - Answer✔To help ensure restricted resources are
spent for their intended purposes.
Which of the following type of entities prepares financial statements using both the modified
accrual basis of accounting and the accrual basis of accounting? - Answer✔State and local
governments
How should a transfer out of the General Fund into the Debt Service Fund be reported in the
fund financial statements? - Answer✔As an Other Financing Use in the General Fund and an
Other Financing Source in the Debt Service Fund.
Which of the following type of entities prepares both entity-wide and fund financial
statements? - Answer✔State and local governments
Which of the following statements is not true? - Answer✔Both government and nonprofit
entities assess taxes
Which of the following type of entities follows GASB standards when preparing financial
statements? - Answer✔State and local governments
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, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
Which of the following is generally the major source of revenues for governments? -
Answer✔Taxes
Under the modified accrual basis of accounting for a government, property tax revenues should
be recognized in the accounting period in which they - Answer✔Are levied and become
measurable and available
Which of the following types of entities follow FASB standards when preparing financial
statements? - Answer✔Nonprofit entities and business enterprises
When preparing the General Fund budget for the next fiscal year, which of the following are
important to consider in estimating the amount of resources that will be available for spending
in the next year? - Answer✔-The probable fund balance at the end of the current year
-The projected fund expenditures for next year
At the beginning of the year, the Beatle City Council adopted a budget calling for estimated
revenues of $480,000 and appropriations of $470,000.When the City prepares its journal entry
to record the budget: - Answer✔Expenditures for the year will be less than revenues
When the chief executive of a governmental submits a "balanced budget" to the legislative
body, it usually means that: - Answer✔Proposed expenditures do not exceed estimated monies
available for the year
The City of Kent's police department needs a new police car. A police car is ordered at an
estimated cost of $34,000 and the appropriate budgetary control journal entry is made. When
the car is received, the actual cost is $35,000.Which of the following is a part of the budgetary
entry that should be made when the police car is received? - Answer✔Credit encumbrances for
$34,000
During the year, the Platte City found that, because of an economic contraction, its sales tax
revenues are likely to be $100,000 less than anticipated and that police department
2|P a g e
NFP EXAM 2 Questions And Answers
|Latest 2025 | Guaranteed Pass.
Which of the following type of entities follows FASAB standards when preparing financial
statements? - Answer✔Federal government
Why do governments use fund accounting? - Answer✔To help ensure restricted resources are
spent for their intended purposes.
Which of the following type of entities prepares financial statements using both the modified
accrual basis of accounting and the accrual basis of accounting? - Answer✔State and local
governments
How should a transfer out of the General Fund into the Debt Service Fund be reported in the
fund financial statements? - Answer✔As an Other Financing Use in the General Fund and an
Other Financing Source in the Debt Service Fund.
Which of the following type of entities prepares both entity-wide and fund financial
statements? - Answer✔State and local governments
Which of the following statements is not true? - Answer✔Both government and nonprofit
entities assess taxes
Which of the following type of entities follows GASB standards when preparing financial
statements? - Answer✔State and local governments
1|P a g e
, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
Which of the following is generally the major source of revenues for governments? -
Answer✔Taxes
Under the modified accrual basis of accounting for a government, property tax revenues should
be recognized in the accounting period in which they - Answer✔Are levied and become
measurable and available
Which of the following types of entities follow FASB standards when preparing financial
statements? - Answer✔Nonprofit entities and business enterprises
When preparing the General Fund budget for the next fiscal year, which of the following are
important to consider in estimating the amount of resources that will be available for spending
in the next year? - Answer✔-The probable fund balance at the end of the current year
-The projected fund expenditures for next year
At the beginning of the year, the Beatle City Council adopted a budget calling for estimated
revenues of $480,000 and appropriations of $470,000.When the City prepares its journal entry
to record the budget: - Answer✔Expenditures for the year will be less than revenues
When the chief executive of a governmental submits a "balanced budget" to the legislative
body, it usually means that: - Answer✔Proposed expenditures do not exceed estimated monies
available for the year
The City of Kent's police department needs a new police car. A police car is ordered at an
estimated cost of $34,000 and the appropriate budgetary control journal entry is made. When
the car is received, the actual cost is $35,000.Which of the following is a part of the budgetary
entry that should be made when the police car is received? - Answer✔Credit encumbrances for
$34,000
During the year, the Platte City found that, because of an economic contraction, its sales tax
revenues are likely to be $100,000 less than anticipated and that police department
2|P a g e
