Question

1. Which of the following is not a purpose of external financial reporting by governments? External financial report should allow users to:

A. assess financial condition

B. compare actual results with the budget

C. assess the ability of elected officials to effectively manage people

D evaluate efficiency and effectiveness.

2. Users of government financial statements should be interested in information about compliance with laws and regulations for which of the following reasons?

A to determine if the entity has complied with bond covenants

B to determine if the entity has complied with taxing limitations

C to determine if the entity has complied with donor restrictions on the use of funds

D to determine all of the above

3. Which of the following is an objective of financial reporting by governmental entities as established by GASB?

A financial reporting should assist users in assessing the management skills of top management

B financial reporting should assist users in determining if current-period revenues were sufficient to pay for current period services

C financial reporting should assist users in evaluating the cash management operations of the governmental entity for the year

D financial reporting should assist users in assessing whether the government provided appropriate services to its constituents in the current year

4. What is the primary reason that governmental entities use fund accounting?

A fund accounting is required by law

B fund accounting is required by GAAP

C Fund accounting promotes control and accountability over restricted resources

D fund accounting promotes better control over operating activities

5. Under the accrual basis of accounting, property tax revenues are recognized?

A when they are received in cash

B in the year for which they were levied

C in the year for which they were levied and when collection in cash is reasonably assured

D they are available to finance expenditures of the fiscal period

6. Under the accrual basis of accounting used by governments, investment revenues for the current period should include?

A only interest and dividends received

B all interest and dividends received during the period plus all accruals of interest and dividends earned

C all interest and dividends received plus gains and losses on securities that were sold during the period

D all interest and dividends received all gains and losses on securities sold and all changes in the market values on securities held in the portfolio at year-end/

7. Government revenues and expenditures are controlled by/through?

A the accountant general and the auditor general

B the chief financial officer

C the budgetary process

D the revenue and expenditure central management system

8. A country’s general fund budget includes budgeted revenues of $600,000 and budgeted expenditures of $595,000. Actual revenues for the year were $610,000. To close the estimated revenues account at the end of the year?

A debit estimated revenues $10,000

B Credit Estimated revenue $10,000

C Debit estimated revenue $600,000

D Credit estimated revenues $600,000

9. Which of the following items is not an example of an item that would be reported as other financing sources uses in the general consolidated fund?

A $10 million received from the issuance of bonds

B $7,000 received from the sale of a used bulldozer

C $200,000 capital lease obligation for a new bulldozer

D $100,000 paid to a motor pool internal service fund for automobile usage during the period

Answer 1

1) C

Assess the ability of elected official to effectively manage people

Purpose of external financial reporting is to assess financial condition,assess the efficiency & effectiveness ,compare actual with budget, compliance with laws rules & regulation.

2)D

All of the above

Users of financial statements are interested to know whether there is proper compliance with laws & regulation.

To determine whether issuer of bond has meet positive or negative covenants in bond agreement.

To determine compliance with taxing limitation & donor restrictions on the basis of which donation has been made

3)B

Financial reporting assist users to determine current period revenues were sufficient to pay for current period services.

(To assess whether organisation is capable to make payment for the services ,assess the operating profitability)

4) C

Fund accounting is used by governmental entities to remain accountable for spending resources .Fund accounting focus on accountability rather than profitability.