©EVERLY 2025 ALL RIGHTS RESERVED
NFP Exam #2 Chapter 7 Exam Questions
And Answers 100% Pass
Allowance for Funds Used During Construction - ANS For construction WIP, the net cost for
the period of construction of borrowed funds used for construction purposes and a reasonable
rate on other funds so used.
Cash Equivalents - ANS ST, highly liquid investments that are both readily convertible into
known amounts of cash and so near their maturity that they present insignificant risk of
changes in value due to changes in interest rates.
General Obligation (GO) Bonds - ANS Bonds for whose payment the full faith and credit of
the issuing body is pledged. More commonly, but not necessarily, general obligation bonds are
considered to be those payable from taxes and other general revenues. In some states, these
bonds are called tax-supported bonds.
Historical Cost - ANS The amount paid or liability incurred by an accounting entity to acquire
an asset and make it ready to render the services for which it was acquired.
Original Cost - ANS The total of assets given and/or liabilities assumed to acquire an asset. In
utility accounting, the original cost is the cost to the first owner who dedicated the plant to
service of the public.
Regulatory Accounting Principles (RAP) - ANS The accounting principles prescribed by federal
or state regulatory commissions for investor owned and some governmentally owned utilities.
Also called statutory accounting principles (SAP). RAP or some SAP may differ from GAAP.
, ©EVERLY 2025 ALL RIGHTS RESERVED
Revenue Bonds - ANS Bonds whose principal and interest are payable exclusively from
earnings of a public enterprise. In addition to a pledge of revenues, such bonds sometimes
contain a mortgage on the enterprise's property and are then known as mortgage revenue
bonds.
Utility Plant Acquisition Adjustment - ANS An account that captures the premium paid on a
utility plant purchased by a government. Similar to goodwill except that the premium is the
difference between the purchase price and the depreciated original cost of the utility rather
than the difference between the purchase price and fair value.
Within the government-wide financial statements, the column for Business-type Activities will
generally include:
A. All enterprise fund transactions and only the internal service fund transactions undertaken
with governmental funds on the accrual basis of accounting.
B. Enterprise funds only.
C. All internal service fund and enterprise fund transactions added together and accounted for
on the accrual basis of accounting.
D. Internal service funds only. - ANS B. Enterprise funds only.
Which of the following would most likely be accounted for in an internal service fund?
A. An asphalt plant used to supply the asphalt needed to resurface the city's streets.
B. Proceeds from an endowment that are used to maintain the city's library.
C. The city pool.
D. The city's investments, which are pooled with the county's and the school district's
investments. - ANS A. An asphalt plant used to supply the asphalt needed to resurface the
city's streets.
NFP Exam #2 Chapter 7 Exam Questions
And Answers 100% Pass
Allowance for Funds Used During Construction - ANS For construction WIP, the net cost for
the period of construction of borrowed funds used for construction purposes and a reasonable
rate on other funds so used.
Cash Equivalents - ANS ST, highly liquid investments that are both readily convertible into
known amounts of cash and so near their maturity that they present insignificant risk of
changes in value due to changes in interest rates.
General Obligation (GO) Bonds - ANS Bonds for whose payment the full faith and credit of
the issuing body is pledged. More commonly, but not necessarily, general obligation bonds are
considered to be those payable from taxes and other general revenues. In some states, these
bonds are called tax-supported bonds.
Historical Cost - ANS The amount paid or liability incurred by an accounting entity to acquire
an asset and make it ready to render the services for which it was acquired.
Original Cost - ANS The total of assets given and/or liabilities assumed to acquire an asset. In
utility accounting, the original cost is the cost to the first owner who dedicated the plant to
service of the public.
Regulatory Accounting Principles (RAP) - ANS The accounting principles prescribed by federal
or state regulatory commissions for investor owned and some governmentally owned utilities.
Also called statutory accounting principles (SAP). RAP or some SAP may differ from GAAP.
, ©EVERLY 2025 ALL RIGHTS RESERVED
Revenue Bonds - ANS Bonds whose principal and interest are payable exclusively from
earnings of a public enterprise. In addition to a pledge of revenues, such bonds sometimes
contain a mortgage on the enterprise's property and are then known as mortgage revenue
bonds.
Utility Plant Acquisition Adjustment - ANS An account that captures the premium paid on a
utility plant purchased by a government. Similar to goodwill except that the premium is the
difference between the purchase price and the depreciated original cost of the utility rather
than the difference between the purchase price and fair value.
Within the government-wide financial statements, the column for Business-type Activities will
generally include:
A. All enterprise fund transactions and only the internal service fund transactions undertaken
with governmental funds on the accrual basis of accounting.
B. Enterprise funds only.
C. All internal service fund and enterprise fund transactions added together and accounted for
on the accrual basis of accounting.
D. Internal service funds only. - ANS B. Enterprise funds only.
Which of the following would most likely be accounted for in an internal service fund?
A. An asphalt plant used to supply the asphalt needed to resurface the city's streets.
B. Proceeds from an endowment that are used to maintain the city's library.
C. The city pool.
D. The city's investments, which are pooled with the county's and the school district's
investments. - ANS A. An asphalt plant used to supply the asphalt needed to resurface the
city's streets.
