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Governmental & Not-for-Profit Accounting Flashcards

7 cards from real CPA 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

  1. Which governmental fund is used to account for the accumulation of resources for and the payment of general long-term debt principal and interest?

    Answer: Debt Service Fund

    The Debt Service Fund accounts for financial resources set aside for repayment of general long-term debt obligations including principal and interest.

  2. Under the modified accrual basis, property tax revenues are recognized when they are:

    Answer: Measurable and available within 60 days after year-end

    Under modified accrual, property taxes are recognized as revenue when measurable and available, with GASB generally defining available as collectible within 60 days of year-end.

  3. A not-for-profit hospital receives a $500,000 donation restricted by the donor for equipment purchases. Before the equipment is purchased, this amount should be classified as:

    Answer: Net assets with donor restrictions

    Donor-restricted contributions are recorded as net assets with donor restrictions until the restriction is satisfied through expenditure for the specified purpose.

  4. Which GASB concept requires governments to report on their fiscal accountability by using the modified accrual basis in fund statements?

    Answer: Fiscal accountability

    Fiscal accountability focuses on whether the government raised and spent resources in accordance with the budget and legal requirements, which is served by fund-level modified accrual reporting.

  5. In governmental accounting, which of the following would be recorded as an expenditure rather than an expense?

    Answer: Depreciation of general capital assets

    Governmental funds do not record depreciation because they use current financial resources focus; capital asset costs are recorded as expenditures when purchased, not depreciated over time.

  6. The Comprehensive Annual Financial Report (CAFR) required of governments includes which three sections?

    Answer: Introductory, Financial, and Statistical

    A CAFR (now often called the Annual Comprehensive Financial Report) contains an Introductory section, a Financial section (with audited statements), and a Statistical section with trend data.

  7. Under FASB ASC 958 for not-for-profits, which of the following is required to be presented in the statement of cash flows?

    Answer: Operating, Investing, and Financing activities

    Not-for-profit organizations follow FASB standards requiring a statement of cash flows with operating, investing, and financing activity classifications, similar to for-profit entities.