University of Connecticut
Indiana University
O’Neill School of Public and Environmental Affairs
Master of Public Affairs Program
F542: GOVERNMENTAL FINANCIAL ACCOUNTING AND REPORTING
Spring 2020
Dr. Robert S. Kravchuk
2nd Midterm Examination
11:59 PM, Friday, April 3, 2020
Instructions. Place your multiple choice answers on the attached answer sheet, and turn
it in with your typed answers to your Part II computations. You may keep the exam. If
you are not sure how to proceed with a question, list your assumptions on the answer
sheet. This will enable me to interpret your response. There are 150 Points on Part I,
and 300 Total Points Available on the Entire Exam. Good luck!
PART I. Multiple Response Questions. [3 Points Each.] Select the best response.
These may require short computations. Show any such computations the margins. Be sure
to label them properly, so that I will know the question to which they pertain.
(1) The overall purpose of a governmental accounting system is to:
(a) Establish and maintain control over an entity’s cash and other cu
ent financial
esources;
(b) Keep the accounts in accordance with relevant laws;
(c) Present fairly the financial position and results of financial operations of the
entity in conformity with GAAP, and to demonstrate compliance with
finance-related legal and contractural provisions;
(d) Demonstrate service efforts and accomplishments.
(2) Sources of governmental accounting and financial reporting standards include:
(a) Pronouncements of the GASB only;
(b) Pronouncements of the GASB, and pronouncements of FASB, if applicable,
provided that they do not contradict GASB guidance;
(c) Pronouncements of the Government Accountability Office (GAO);
(d) Standards set by the Government Finance Officers Association (GFOA).
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F542: Governmental Accounting
2nd Midterm Examination
Spring 2020
page two.
(3) According to standards of the American Institute of Certified Public Accountants
(AICPA), a governmental entity is one that “possesses a governmental character,”
which is defined as an organization that has the following characteristics:
(a) There is popular election of officers, or appointment (or approval) of a
majority of the organization’s governing body by officials of one or more
state or local governments;
(b) There is potential for unilateral dissolution by a government with the net
assets reverting to a government;
(c) It has the power to enact and enforce a tax levy;
(d) One or more of the above are sufficient to classify the entity as a “govern-
mental entity.”
(4) A “fund” is a(n):
(a) Accounting but not a fiscal entity;
(b) Legal entity created only when authorized or required by law;
(c) Self-balancing set of accounts recording cash and other financial resources,
together with all related liabilities and residual equities or balances, and
changes therein;
(d) All of the above are elements in the definition of a fund.
(5) For financial reporting purposes, the governmental activities column of the
government-wide operating statement is made up of:
(a) The General Fund, special revenue funds, internal service funds, capital
projects funds, permanent funds, and debt service funds;
(b) The General Fund, special revenue funds, capital projects funds, debt service
funds, and enterprise funds;
(c) The General Fund, special revenue funds, capital projects funds, permanent
funds, and debt service funds;
(d) The General Fund, special revenue funds, enterprise funds, and private
purpose trust funds.
F542: Governmental Accounting
2nd Midterm Examination
Spring 2020
page three.
(6) Cu
ent effective GASB standards require governmental funds to recognize revenues
and expenditures on the:
(a) Modified Accrual Basis for government-wide reporting;
(b) Full Accrual Basis for government-wide reporting;
(c) Cash Basis for fund-level financial reporting;
(d) There is no requirement; each government may choose whatever basis it
wishes, as long as it uses that basis consistently.
(7) The fiduciary funds category is made up of:
(a) Agency funds, pension trust funds, and investment trust funds;
(b) Enterprise funds and internal service funds;
(c) Agency funds, pension trust funds, investment trust funds, and private-purpose
trust funds;
(d) None of the above is a complete listing.
(8) General capital assets are reported at the government-wide level for long-term fixed
assets constructed or acquired which will be used in operations accounted for by:
(a) All of the following;
(b) An internal service fund;
(c) An enterprise fund;
(d) The general fund.
(9) General capital assets are reported only at the fund level for:
(a) All governmental funds;
(b) Both governmental and proprietary funds;
(c) Proprietary funds only;
(d) Fiduciary funds only.
(10) A governmental financial reporting entity consists of:
(a) The primary government;
(b) Organizations for which the primary government is financially accountable;
(c) Other organizations for which the nature and significance of their relationship
with the primary government are such that exclusion would cause the
eporting entity’s financial statements to be misleading or incomplete;
(d) All of the above.
F542: Governmental Accounting
2nd Midterm Examination
Spring 2020
page four.
(11) The Encum
ances Outstanding account is:
(a) A liability.
(b) A contra account;
(c) A component of fund equity;
(d) Closed to fund balance at the end of the period.
(12) Which of the following is not a recommended section of the CAFR?
(a) Introductory Section;
(b) Statistical Section;
(c) Explanatory Section;
(d) Financial Section.
(13) The government-wide financial statements:
(a) Essentially account for the entire governmental entity as though it were an
Enterprise fund;
(b) Employ the full accrual basis of accounting and economic resources measure-
ment focus;
(c) Include all long-term capital assets, including infrastructure (unless the
“modified approach” is elected for qualified infrastructure), and long-term
liabilities, including capital leases;
(d) All of the above.
(14) The Basic Financial Statements (BFS) of a governmental reporting entity:
(a) Must be included in the Financial Section of the CAFR;
(b) Include the two government-wide statements;
(c) Include the seven required fund financial statements (if they apply);
(d) All of the above.
(15) The modified accrual basis of accounting requires that revenues be recognized when:
(a) Measurable and Earned;
(b) Measurable and Available;
(c) Authorized by the Budget Ordinance;
(d) Collected in Cash.
F542: Governmental Accounting
2nd Midterm Examination
Spring 2020
page five.
(16) Comparisons of budgeted versus actual revenues and expenditures are:
(a) Required by GAAP for internal management reports only, not for external
Reporting;
(b) Required by GAAP for all major fund types;
(c) Required Supplementary Information (RSI) for all governmental funds for
which an annual budget is legally adopted;
(d) Optional for all funds under GASB Statement No. 34.
(17) In accounting for state and local governmental units, the full accrual basis is
equired for:
(a) Government-wide reporting only;
(b) Government-wide statements and proprietary funds;
(c) Proprietary funds only;
(d) All funds.
(18) Which of the following are properly accounted for as General Long-Term Debt
on the government-wide Statement of Net Assets?
(a) Tax-supported general obligation bonds;
(b) Obligations under capital leases used to finance general fixed assets;
(c) The long-term portion of claims and judgments against the entity;
(d) All of the above.
(19) Fixed assets used by the Department of Parks and Recreation should be accounted
for in:
(a) The General Fund;
(b) Departmental memorandum record only;
(c) The government-wide Statement of Net Assets;
(d) All of the above.
(20) Which of the following is credited when a purchase order is issued?
(a) Encum
ances.
(b) Encum
ances Outstanding.
(c) Appropriations.
(d) Estimated Revenues.
F542: Governmental Accounting
2nd Midterm Examination
Spring 2020
page six.
(21) When the budget for a debt service fund is recorded, the required journal entry
will include:
(a) A debit to Revenues;
(b) A debit to Encum
ances;
(c) A credit to Appropriations;
(d) Both (a) and (c).
(22) Which of the following accounts is credited when an invoice for goods is received
and approved for payment?
(a) Encum
ances;
(b) Encum
ances Outstanding;
(c) Vouchers Payable;
(d) Appropriations.
(23) What would be the effect on the General Fund Fund Balance in the cu
ent fiscal
year of recording a $1,200 expenditure for a new computer, for which a $1,300
encum
ance had been recorded in the General Fund in the previous fiscal year?
(a) Reduce the General Fund’s fund balance by $1,200;
(b) Increase the General Fund’s fund balance by $100;
(c) Increase Encum
ances Outstanding by $1,200;
(d) Reduce the General Fund’s fund balance $1,300.
(24) “Proceeds of Bonds” would be classified in a General Fund Statement of Revenues,
Expenditures and Changes in Fund Balance as a(an):
(a) Revenue;
(b) Other Financing Source;
(c) Direct Adjustment to Fund Balance;
(d) Increase in Cash.
(25) When supplies ordered for use in the General Fund are received at an actual price
which is equal to or greater than the estimated price on the purchase order, the
Encum
ances Account is:
(a) Debited for the estimated price;
(b) Credited for the estimated price;
(c) Debited for the actual