Multiple Choice Questions
1. What is the purpose of a special revenue fund?
a. To account for revenues legally or externally restricted as an operating expenditure.
b. To account for ongoing activities.
c. To account for gifts when only subsequently earned income can be expended.
d. To account for the cost of long-lived assets bought with designated funds.
2. What is the purpose of enterprise funds?
a. To account for operations that provide services to other departments within a government.
b. To account for asset transfers.
c. To account for ongoing activities such as the police and fire departments.
d. To account for operations financed in whole or in part by outside user charges.
3. Which of the following statements is true?
a. There are three different types of proprietary funds.
b. There are three different types of fiduciary funds.
c. There are five different types of fiduciary funds.
d. There are five different types of governmental funds.
4. A government expects to receive revenues of $400,000 but has approved expenditures of $430,000. The anticipated shortage will have an impact on which of the following terms?
a. Interperiod equity.
b. Modified accrual accounting.
c. Consumption accounting.
d. Account groups.
5. A citizen of the City of Townsend gives it a gift of $22,000 in investments. The citizen requires that the investments be held but any resulting income must be used to help maintain the city’s cemetery. In which fund should this asset be reported?
a. Special revenue funds.
b. Capital projects funds.
c. Permanent funds.
d. General fund.
6. Which of the following statements is correct about the reporting of governmental funds?
a. Fund financial statements measure economic resources.
b. Government-wide financial statements measure only current financial resources.
c. Fund financial statements measure both economic resources and current financial resources.
d. Government-wide financial statements measure economic resources.