ACCT 4421 Ch 7 & 8 Exam with Accurate
Answers
Which of the following is true of proprietary funds? - Correct Answers -They operate on
user charges.
Financial reporting requirements for proprietary funds are reported on the ______ basis
of accounting - Correct Answers -accrual
The format of the statement of net position for a proprietary fund displays which of the
following? - Correct Answers -assets, plus deferred outflows of resources, less
liabilities, less deferred inflows of resources, equals net position
Net investment in capital assets is calculated as which of the following? - Correct
Answers -gross capital assets net of accumulated depreciation, less any outstanding
debt related to the acquisition or construction of capital assets
True or false: The "dual-track" approach is used to capture the different bases of
accounting for internal service funds. - Correct Answers –False
If a single-employer defined benefit plan issues a stand-alone financial report, the
employer will ______. - Correct Answers -have to make many of the same disclosures
in the comprehensive annual financial report (CAFR) that the plan makes in its stand-
alone report
Managers of investment trust funds and defined benefit plan funds are charged with
earning the ______ on the portfolio of investments within the constraints of safety and
liquidity. - Correct Answers -maximum return possible
A governmental employer that reports pension expenditures in a governmental fund
should recognize the expenditures on the _______ basis. - Correct Answers -modified
accrual
Research has shown that other postemployment benefits cost governments on average
______ the cost of pensions. - Correct Answers -1/3 of
[Reason: The dual track approach is not used since the basis is the same at the fund
and governmental wide level.]
Proprietary funds ______. - Correct Answers -are used to improve the management of
resources
, Internal balances are reported in the government-wide statement of net position
______. - Correct Answers -for purposes of fairly representing each reporting entity
Which of the following is true of proprietary fund financial statements? - Correct
Answers -They include the balance sheet, statement of revenues, expenses, and
changes in fund net position, and a statement of cash flows.
The statement of net position for a proprietary fund shows which of the following? -
Correct Answers -current assets, capital assets, current liabilities, and net position
Net position is divided into which of the following components? - Correct Answers -net
investment in capital assets, restricted, and unrestricted
Which of the following accounts would appropriately be included on an enterprise fund
balance sheet? - Correct Answers -Fund Balance: No; Net Position—Unrestricted: Yes.
Which of the following is the appropriate basis of accounting for a custodial fund? -
Correct Answers -Accrual basis.
Under GASB standards, an internal service fund should prepare all of the following
financial statements except a:
- Statement of net position.
- Statement of cash flows.
- Statement of revenues, expenditures, and changes in fund balance.
- Statement of revenues, expenses, and changes in net position. - Correct Answers -
Statement of revenues, expenditures, and changes in fund balance.
Which of the following properly portrays the components of net position for proprietary
funds? - Correct Answers -Net investment in capital assets, Restricted, Unrestricted.
Customers' meter deposits, which cannot be spent for normal operating purposes,
would be classified as restricted cash in the balance sheet of which fund type? - Correct
Answers -Enterprise fund.
Which of the following is NOT true regarding proprietary funds?
- The difference between assets plus deferred outflows of resources and liabilities plus
deferred inflows of resources of proprietary funds is called net assets.
- Proprietary funds record long-term debt directly in the fund accounts.
- Proprietary funds present a statement of cash flows.
- Proprietary funds record capital assets directly in the fund accounts. - Correct Answers
-The difference between assets plus deferred outflows of resources and liabilities plus
deferred inflows of resources of proprietary funds is called net assets.
Which of the following organizations or units would least likely be accounted for by an
enterprise fund?
Answers
Which of the following is true of proprietary funds? - Correct Answers -They operate on
user charges.
Financial reporting requirements for proprietary funds are reported on the ______ basis
of accounting - Correct Answers -accrual
The format of the statement of net position for a proprietary fund displays which of the
following? - Correct Answers -assets, plus deferred outflows of resources, less
liabilities, less deferred inflows of resources, equals net position
Net investment in capital assets is calculated as which of the following? - Correct
Answers -gross capital assets net of accumulated depreciation, less any outstanding
debt related to the acquisition or construction of capital assets
True or false: The "dual-track" approach is used to capture the different bases of
accounting for internal service funds. - Correct Answers –False
If a single-employer defined benefit plan issues a stand-alone financial report, the
employer will ______. - Correct Answers -have to make many of the same disclosures
in the comprehensive annual financial report (CAFR) that the plan makes in its stand-
alone report
Managers of investment trust funds and defined benefit plan funds are charged with
earning the ______ on the portfolio of investments within the constraints of safety and
liquidity. - Correct Answers -maximum return possible
A governmental employer that reports pension expenditures in a governmental fund
should recognize the expenditures on the _______ basis. - Correct Answers -modified
accrual
Research has shown that other postemployment benefits cost governments on average
______ the cost of pensions. - Correct Answers -1/3 of
[Reason: The dual track approach is not used since the basis is the same at the fund
and governmental wide level.]
Proprietary funds ______. - Correct Answers -are used to improve the management of
resources
, Internal balances are reported in the government-wide statement of net position
______. - Correct Answers -for purposes of fairly representing each reporting entity
Which of the following is true of proprietary fund financial statements? - Correct
Answers -They include the balance sheet, statement of revenues, expenses, and
changes in fund net position, and a statement of cash flows.
The statement of net position for a proprietary fund shows which of the following? -
Correct Answers -current assets, capital assets, current liabilities, and net position
Net position is divided into which of the following components? - Correct Answers -net
investment in capital assets, restricted, and unrestricted
Which of the following accounts would appropriately be included on an enterprise fund
balance sheet? - Correct Answers -Fund Balance: No; Net Position—Unrestricted: Yes.
Which of the following is the appropriate basis of accounting for a custodial fund? -
Correct Answers -Accrual basis.
Under GASB standards, an internal service fund should prepare all of the following
financial statements except a:
- Statement of net position.
- Statement of cash flows.
- Statement of revenues, expenditures, and changes in fund balance.
- Statement of revenues, expenses, and changes in net position. - Correct Answers -
Statement of revenues, expenditures, and changes in fund balance.
Which of the following properly portrays the components of net position for proprietary
funds? - Correct Answers -Net investment in capital assets, Restricted, Unrestricted.
Customers' meter deposits, which cannot be spent for normal operating purposes,
would be classified as restricted cash in the balance sheet of which fund type? - Correct
Answers -Enterprise fund.
Which of the following is NOT true regarding proprietary funds?
- The difference between assets plus deferred outflows of resources and liabilities plus
deferred inflows of resources of proprietary funds is called net assets.
- Proprietary funds record long-term debt directly in the fund accounts.
- Proprietary funds present a statement of cash flows.
- Proprietary funds record capital assets directly in the fund accounts. - Correct Answers
-The difference between assets plus deferred outflows of resources and liabilities plus
deferred inflows of resources of proprietary funds is called net assets.
Which of the following organizations or units would least likely be accounted for by an
enterprise fund?
