Question 1

Assume estimated revenues exceed appropriations. When the budget for the General Fund is recorded, the journal entry will include:

Accepted Answer

A)  a credit to Budgetary Fund Balance. 
B)  a credit to Estimated Revenues Control. 
C)  a debit to Appropriations Control. 
D)  a credit to Budgetary Fund Balance -- Reserve for Encumbrances.

Question 2

The modified accrual basis is a distinct system of accounting that contains financial statement elements that appear nowhere else.

Accepted Answer

A) True 
 B)False

Question 3

According to GASB, which of the following statements is not true regarding restricted fund balances?

Accepted Answer

A)  Restricted funds are those that are subject to constraints imposed by external parties or by law. 
B)  Restricted fund balance can result from legally enforceable requirements that resources be used only for specific purpose. 
C)  Restricted funds are the result of a self-imposed constraint by a government upon itself. 
D)  All of the above are correct

Question 4

The purpose of an encumbrance is to prevent governments from:

Accepted Answer

A)  Overriding Unauthorized Contracts 
B)  Spending in Excess of the Amounts Authorized 
C)  Revising the Approved Budget 
D)  Misappropriating Tax Revenues

Question 5

The general ledger journal entry in the General Fund to record actual expenditures and reversal of the associated encumbrance would include:

Accepted Answer

A)  A debit to Encumbrance Control 
B)  A credit to Encumbrance Control 
C)  A debit to Accounts payable 
D)  A credit to Budgetary Fund Balance-Reserve for Encumbrances

Question 6

Encumbrances are recorded when a purchase order is filled or a contract is executed.

Accepted Answer

A) True 
 B)False

Question 7

GASB requires a reconciliation between the amount shown as GAAP expenditures in the basic financial statements and the amount shown in the budgetary comparison schedule.

Accepted Answer

A) True 
 B)False

Question 8

Rainy day funds are classified as restricted if they are created by a resolution or ordinance that identifies the specific circumstances under which the resources may be expended.

Accepted Answer

A) True 
 B)False

Question 9

The Revenues account of a government is credited when:

Accepted Answer

A)  the budget is recorded in the accounts. 
B)  property taxes are collected. 
C)  property taxes are levied. 
D)  budgetary accounts are closed at the end of the year.

Question 10

Deferred Inflows of Resources have a credit balance and are obligations of the reporting entity

Accepted Answer

A) True 
 B)False

Question 11

What would be the total Unassigned fund balance?

Accepted Answer

A)  $190,000 
B)  $105,000 
C)  $185,000 
D)  $410,000

Question 12

What are the four classes of nonexchange revenues?

Accepted Answer

The answer of What are the four classes of nonexchange...

Question 13

The term, Fund Balance, is used to indicate the residual net position of a proprietary fund.

Accepted Answer

A) True 
 B)False

Question 14

The modified accrual basis is a distinct system of accounting that contains financial statement elements that appear nowhere else. Among these are expenditures and fund balances.

Accepted Answer

A) True 
 B)False

Question 15

Modified accrual accounting is essentially equivalent to cash basis accounting

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not one of the four classes into which nonexchange transactions apply in accordance with GASB Statement No. 33?

Accepted Answer

A)  Voluntary nonexchange transactions. 
B)  Imposed nonexchange revenues. 
C)  Derived Tax Revenues. 
D)  Mandatory exchange transactions.

Question 17

According to the GASB, which of the following statements is not true regarding assigned funds?

Accepted Answer

A)  Assigned fund balances represent governmental resources that the government intends to use for a specific purpose such as a debt service fund. 
B)  This is the only fund balance that can be negative 
C)  Constraints on assigned resources are more easily changed than committed funds. 
D)  For governmental funds other than the General Fund, this is the category for all positive residual fund balances.

Question 18

When liabilities authorized by an appropriation have been incurred, the appropriation is said to be…

Accepted Answer

A)  Encumbered 
B)  Expired 
C)  Expended 
D)  Expensed

Question 19

An appropriations budget is authorization for administrators to incur specified amounts of liabilities on behalf of the government for specified purposes.

Accepted Answer

A) True 
 B)False

Question 20

An example of expenditure classification by object would be:

Accepted Answer

A)  Current. 
B)  Public safety. 
C)  Police department. 
D)  Salaries.

Exam 3: Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority

Assume estimated revenues exceed appropriations. When the budget for the General Fund is recorded, the journal entry will include:

The modified accrual basis is a distinct system of accounting that contains financial statement elements that appear nowhere else.

According to GASB, which of the following statements is not true regarding restricted fund balances?

The purpose of an encumbrance is to prevent governments from:

The general ledger journal entry in the General Fund to record actual expenditures and reversal of the associated encumbrance would include:

Encumbrances are recorded when a purchase order is filled or a contract is executed.

GASB requires a reconciliation between the amount shown as GAAP expenditures in the basic financial statements and the amount shown in the budgetary comparison schedule.

Rainy day funds are classified as restricted if they are created by a resolution or ordinance that identifies the specific circumstances under which the resources may be expended.

The Revenues account of a government is credited when:

Deferred Inflows of Resources have a credit balance and are obligations of the reporting entity

What would be the total Unassigned fund balance?

What are the four classes of nonexchange revenues?

The term, Fund Balance, is used to indicate the residual net position of a proprietary fund.

The modified accrual basis is a distinct system of accounting that contains financial statement elements that appear nowhere else. Among these are expenditures and fund balances.

Modified accrual accounting is essentially equivalent to cash basis accounting

Which of the following is not one of the four classes into which nonexchange transactions apply in accordance with GASB Statement No. 33?

According to the GASB, which of the following statements is not true regarding assigned funds?

When liabilities authorized by an appropriation have been incurred, the appropriation is said to be…

An appropriations budget is authorization for administrators to incur specified amounts of liabilities on behalf of the government for specified purposes.

An example of expenditure classification by object would be: