Section A: (5 x 1 = 5 Marks)

Q1. Which of the following is not an objective of financial reporting by state and local governments?
A. To assist users in assessing the adequacy of systems and controls.
B. To assist users in assessing financial condition and results of operations.
C. To assist financial report users in comparing actual financial results with the legally adopted
budget.
D. To assist in determining compliance with finance-related laws, rules, and regulations.
Q2. Recognizing revenues when measurable and available for paying current obligations and
expenditures when incurred describes which basis of accounting?
A. Accrual.
B. Modified accrual.
C. Modified cash.
D. Budgetary.
Q3. One characteristic that distinguishes other financing sources from revenues is that other financing
sources:
A. Arise from debt issuances or interfund transfers in.
B. Increase fund balances when they are closed at year-end.
C. Provide financial resources for the recipient fund.
D. Have a normal credit balance.
Q4. A government enters a capital lease for the purchase of a new snow plow. The present value of the
future lease payments is $845,500 and there is a down payment at the inception of the lease of
$25,000. The snow plow should be recorded in the General Fund at:
A. $25,000.
B. $870,500.
C. $845,500.
D. None.
Q5. The City of Oak Park constructed a new storage facility using the city's own public works
employees. Construction costs were incurred in the amount of $900,000, plus $25,000 in interest
on short-term notes used to finance construction. What amount should be capitalized in the
government-wide statements?
A. $900,000.
B. $925,000.
C. $875,000.
D. $0.

End of Paper