Question: Multiple Choice Questions Identify the best answer for each of

Multiple Choice Questions
Identify the best answer for each of the following:
1. Which of the following is characteristic of governmental fund accounting and financial reporting?
a. The inclusion of only financial assets and related liabilities.
b. The inclusion of all financial and capital assets, as well as all related debt.
c. The inclusion of all financial assets, as well as any capital assets and related debt that are related to General Fund functions.
d. Depreciation is reported in all governmental funds that use capital assets.

2. Financial assets include
a. Capital assets that can be sold.
b. Cash, investments, and receivables.
c. Only cash and other governmental fund assets that have been converted to cash during the current year or early enough in the next year to pay the current year’s liabilities.
d. Only cash and other governmental resources that have been converted to cash by the end of the current reporting period.

3. All of the following are considered governmental funds except
a. A Special Revenue Fund.
b. A Capital Projects Fund.
c. A Permanent Fund.
d. An Internal Service Fund.

4. Each of the following is a fiduciary fund except
a. A Permanent Fund.
b. An Investment Trust Fund.
c. An Agency Fund.
d. A Private-Purpose Trust Fund.

5. Which of the following definitions best describes the term related liabilities?
a. Related liabilities are any fund liabilities that are either current or long-term in nature.
b. Related liabilities refer primarily to general government liabilities that are related to the current year and are normally paid from available expendable financial assets.
c. Related liabilities refer to governmental fund short-term and long-term liabilities that are either paid from available financial resources or transfers from other funds.
d. Related liabilities are liabilities that are reported in the general long-term liabilities nonfund accounts.

6. Which of the following transactions would typically not be reported in a county’s General Fund?
a. The purchase of 10 new public safety vehicles.
b. The annual lease payment for the copiers in the county courthouse.
c. The collection of property taxes that are past due from previous years.
d. General property taxes a county collects on behalf of municipalities located within the county.

7. The transactions associated with a Community Development Block Grant that must be used to finance rehabilitation of privately owned housing in an economically depressed neighborhood of the city typically would be reported in which of the following funds and/or nonfund accounts?
a. The General Fund only.
b. The General Fund and the General Capital Assets accounts.
c. A Special Revenue Fund only.
d. A Capital Projects Fund only.

8. The city of Hannah has established a trust to provide resources to offset the costs of maintenance of the city-owned cemetery. The majority of the resources of this trust will be cemetery plot sales and donations from families of those buried in the cemetery. The trust corpus is nonexpendable in nature. Transactions associated with this trust activity would most likely be accounted for in
a. The General Fund.
b. A Special Revenue Fund.
c. A Private-Purpose Trust Fund.
d. A Permanent Fund.

9. A transaction in which a municipal electric utility paid $150,000 out of its earnings for new equipment requires accounting recognition in
a. An Enterprise Fund.
b. The General Fund.
c. The General Fund and the General Capital Assets and General Long-Term Liabilities accounts.
d. An Enterprise Fund and the General Capital Assets and General Long-Term Liabilities accounts.

10. The activities of a municipal employee retirement plan that is financed by equal employer and employee contributions should be accounted for in
a. An Agency Fund.
b. An Internal Service Fund.
c. A Special Revenue Fund.
d. A Trust Fund.

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