Governmental & Not-for-Profit Accounting Flashcards
7 cards from real Certified Public Accountant practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Governmental & Not-for-Profit Accounting flashcards as text
Under GASB standards, which basis of accounting do proprietary funds (enterprise and internal service funds) use?
Answer: Full accrual basis
Proprietary funds use full accrual accounting because they are business-like activities that follow a capital maintenance (economic resources) measurement focus.
A county receives bond proceeds to construct a new courthouse. These resources should be accounted for in which fund?
Answer: Capital Projects Fund
Capital Projects Funds account for financial resources restricted to the acquisition or construction of major capital facilities, such as a courthouse.
Which of the following government activities would be classified as a business-type activity in government-wide statements?
Answer: Municipal water utility
Business-type activities are government services financed primarily through user charges, such as a water utility, and are reported separately in government-wide statements.
What is the term for the residual interest in a government's assets after deducting liabilities and adjusting for deferred items, used in government-wide statements?
Answer: Net position
Net position is the GASB equivalent of equity for governmental entities, representing the residual interest after deducting liabilities and adding deferred outflows of resources.
Under FASB ASC 958, a donation requiring the principal to be maintained in perpetuity with only investment income available for spending creates:
Answer: Net assets with donor restrictions
An endowment gift requiring principal preservation in perpetuity creates net assets with donor restrictions, as the donor has placed permanent restrictions on the use of the funds.
Which characteristic most clearly distinguishes a contribution from an exchange transaction in not-for-profit accounting?
Answer: The resource provider receives no direct commensurate value in return
A contribution is defined as an unconditional transfer where the provider receives no commensurate value in return; exchange transactions involve reciprocal transfers of equivalent value.
Under GASB Statement No. 34, the Management's Discussion and Analysis (MD&A) section of a government's financial report is classified as:
Answer: Required supplementary information (RSI)
Under GASB 34, the MD&A is required supplementary information (RSI) that precedes the basic financial statements and provides an analytical overview of financial activities.