ACT410 - Government and Non-Profit Accounting
Module 2: The Purpose of Budgeting and Control and Recognizing Revenues - Mastery Exercise I
1. Which of the following is a primary benefit of a performance budget?
a) It facilitates control by establishing rigid spending mandates.
b) It encourages accomplishment of objectives by associating expenditures with outcomes
c) It encourages planning by requiring management to anticipate every type of expenditure.
d) It provides decision-makers with detailed information.
A primary benefit of a performance budget is that it encourages accomplishment of objectives by associating
expenditures with outcomes.
2. If an entity elects to focus on all economic resources, then it should adopt a modified accrual basis
of accounting.
• True
• False
Correct. If an entity elects to focus on all economic resources, then it should NOT adopt a modified accrual basis of
accounting. Instead, the entity should adopt a full accrual basis of accounting.
3. Under the modified accrual basis of accounting, investment revenues for the current period
should include .
a) only interest and dividends received
b) all interest and dividends received during the period plus all accruals of interest and dividends earned
c) all interest and dividends received plus gains and losses on securities that were sold during the period
d) all interest and dividends received, all gains and losses on securities sold, and all changes in market values
on securities held in the portfolio at year-end
Correct. Investment revenues for the current period should include all interest and dividends received plus gains and
losses on securities that were sold during the period.
4. Which branch of local (city and county) government most commonly prepares the budget?
a) executive branch
b) legislative branch
c) judicial branch
d) none of the above
Correct. The executive branch of local government most commonly prepares the budget.
5. As used in governmental accounting, inter-period equity refers to a concept of .
a) providing the same level of services to citizens each year
b) measuring whether current year revenues are sufficient to pay for current year services.
c) levying property taxes at the same rate each year
d) requiring that general fund budgets be balanced each year
Correct. Inter-period equity refers to a concept of measuring whether current year revenues are sufficient to pay for
current year salaries.
6. Property taxes levied on the citizens of the Hill County would most appropriately be budgeted in which
of the following budgets?
a) operating budget
b) b. capital budget
c) c. flexible budget
d) d. all of the above
Correct. The operating budget is the most appropriate for property taxes levied on the citizens of Hill County.
This study source was downloaded by 100000852681095 from CourseHero.com on 11-05-2022 05:19:50 GMT -05:00
https://www.coursehero.com/file/18669234/Module-2-Mastery-Exam/
Module 2: The Purpose of Budgeting and Control and Recognizing Revenues - Mastery Exercise I
1. Which of the following is a primary benefit of a performance budget?
a) It facilitates control by establishing rigid spending mandates.
b) It encourages accomplishment of objectives by associating expenditures with outcomes
c) It encourages planning by requiring management to anticipate every type of expenditure.
d) It provides decision-makers with detailed information.
A primary benefit of a performance budget is that it encourages accomplishment of objectives by associating
expenditures with outcomes.
2. If an entity elects to focus on all economic resources, then it should adopt a modified accrual basis
of accounting.
• True
• False
Correct. If an entity elects to focus on all economic resources, then it should NOT adopt a modified accrual basis of
accounting. Instead, the entity should adopt a full accrual basis of accounting.
3. Under the modified accrual basis of accounting, investment revenues for the current period
should include .
a) only interest and dividends received
b) all interest and dividends received during the period plus all accruals of interest and dividends earned
c) all interest and dividends received plus gains and losses on securities that were sold during the period
d) all interest and dividends received, all gains and losses on securities sold, and all changes in market values
on securities held in the portfolio at year-end
Correct. Investment revenues for the current period should include all interest and dividends received plus gains and
losses on securities that were sold during the period.
4. Which branch of local (city and county) government most commonly prepares the budget?
a) executive branch
b) legislative branch
c) judicial branch
d) none of the above
Correct. The executive branch of local government most commonly prepares the budget.
5. As used in governmental accounting, inter-period equity refers to a concept of .
a) providing the same level of services to citizens each year
b) measuring whether current year revenues are sufficient to pay for current year services.
c) levying property taxes at the same rate each year
d) requiring that general fund budgets be balanced each year
Correct. Inter-period equity refers to a concept of measuring whether current year revenues are sufficient to pay for
current year salaries.
6. Property taxes levied on the citizens of the Hill County would most appropriately be budgeted in which
of the following budgets?
a) operating budget
b) b. capital budget
c) c. flexible budget
d) d. all of the above
Correct. The operating budget is the most appropriate for property taxes levied on the citizens of Hill County.
This study source was downloaded by 100000852681095 from CourseHero.com on 11-05-2022 05:19:50 GMT -05:00
https://www.coursehero.com/file/18669234/Module-2-Mastery-Exam/
