Faculty of Commerce-Eng Sec 6th week GOV-ACC 3rd Year-2022/2023

By Dr. Sabah Soliman page 1

Faculty of Commerce-Eng Sec 6th week GOV-ACC 3rd Year-2022/2023

By Dr. Sabah Soliman page 2

Faculty of Commerce-Eng Sec 6th week GOV-ACC 3rd Year-2022/2023

By Dr. Sabah Soliman page 3

 Faculty of Commerce-Eng Sec 6th week GOV-ACC 3rd Year-2022/2023

Answer: 1. d 2. a 3. d 4. b 5. d 6. c 7. c
For each of the following statements, choose the best answer:
1. Proceeds from sale of capital assets (e.g. buildings ….etc) are recorded as……………
A) Revenues B) Fund balance C) Transfers from other funds D) Expenditures

2. ……… are objectively measurable and available when levied.

A) Sales taxes B) Income taxes C) Property taxes D) Value added taxes

3. As commitments are made against appropriations, ……. are recorded for expendable fund entities.
A) Estimated expenditures B) Encumbrances C) Expenditures D) Disbursements

4. The difference between financial resources inflows and financial resources outflows equals…….
A) Net income B) Change in Fund balance
C) Decrease in financial resources. D) Increase in financial resources.

5. In accounting for expendable fund entities, criteria for recognition of revenue are to be …. and …….
A. Measurable, uncollectible. B. Measurable, available.
C. Measurable, earnings process is complete. D. None of these.

6. Classification of expenditures by …… refers to the broad purposes for which expenditures are made.
A. Activity. B. Function. C. Organizational unit. D. Fund.

7. If a city owns a municipal electricity company, it would account for that electricity company as a ………
fund.
A. Expendable. B. Proprietary. C. Fiduciary. D. Budgetary.

8. Fund accounting is an important means of meeting several of the accounting, control and……. objectives of
most non-business organizations.

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 Faculty of Commerce-Eng Sec 6th week GOV-ACC 3rd Year-2022/2023

A) Reporting B) Classifying C) Summarizing D) None

9. In the traditional…………….. of reporting on the operations of governmental units, actual and approved (or
stipulated) inflows and outflows of resources are compared.
A) Compliance model B) Income determination C) Balance sheet model D) None

10. Governmental units apply the accounting standards established by …………

A) FASB B ) GASB C) FASB & GASB D) None of the previous

11. ………..entities are most closely associated with basic fund accounting concepts.
A) Proprietary B) Fiduciary C) Expendable D) None of the previous

12. Expendable fund entities consist of net ……………that are dedicated to a specific use.
A) Assets B) Financial resources C) Liabilities D) None of the previous

13. Financial resources of the fund (assets) less claims against those financial resources (liabilities) equals
A) Net assets B) Fund balance C) Owners’ equity D) None of the previous

14. The proprietary fund entity’s measurement focus is on the flow of ……… whereas the measurement focus
of expendable fund entities is the flow of ………
A. Cash resources, Economic resources. B. Cash resources, Current financial resources.
C. Economic resources, Current financial resources. D. None of the above.

15. Increase in financial resources (inflows) include:

A) Revenue
B) Revenue and proceeds from debt issuance
C) Revenue, proceeds from debt issuance, and transfer from other funds
D) None of the previous

16. Decrease in financial resources (outflows) include:

A) Expenses and transfer to other funds B) Expenditures and transfer to other funds
C) Expenditures only D) None of the previous

17. Public water utility is an example of …………funds.

A) Expendable B) Proprietary C) Fiduciary D) None of the previous

18. When the budgeted expenditures are enacted into law, they are referred to as ………
A) Estimated expenditures B) Actual Expenditures
C) Appropriations D) None of the previous

19. Governmental funds (expendable funds) use the…………..basis of accounting.

A) Cash B) Accrual C) Modified Accrual D) None of the previous

20. Under the modified accrual basis of accounting, revenues are recognized when they are……………
A) Measurable B) Available
C) Measurable and available D) None of the previous

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 Faculty of Commerce-Eng Sec 6th week GOV-ACC 3rd Year-2022/2023

21. The relevant measures of the operations of expendable fund entities are…………..
A) Revenues, expenses, and net income
B) Revenues, expenditures, and change in fund balance
C) Revenues, expenses, and net financial resources
D) None of the previous

22. The accounting basis used in expendable fund entities is………………basis of accounting.
A. Accrual. B. Cash. C. Modified cash. D. Modified accrual.

23. The tax agency is an example of……………………… fund entities.

A. Expendable. B. Proprietary. C. Budgetary. D. Fiduciary.

24. Debt service fund created to account for interest and principal payments on long-term debt is an example
of…………….. fund entities.
A. Proprietary. B. Expendable. C. Budgetary. D. Fiduciary.

25. The statement of financial position for an expendable fund entity does not include:
A. Current assets B. Current liabilities C. Fund balance D. Fixed assets

26. In accounting for expendable funds, the emphasis is changed from matching revenues and expenses to a
comparison of the actual inflows and outflows of financial resources with………………inflows and outflows
of financial resources.
A. Estimated. B. Approved. C. Predicted. D. Previous.

27. ................... should be classified separately from revenues for purposes of financial reporting.
A. Charges for services. B. Fines and penalties. C. Debt issue proceeds. D. Grants. E. Property Tax

28. The classifications of expenditures by ……………are particularly important and are the classifications
ordinarily recommended for published financial reports.
A. Function and Fund. B. Function and activity. C. Fund and activity. D. Fund and object class.

29. In accounting for profit oriented organizations, capital expenditures are treated as an:
A. Asset. B. Expense. C. Outflow of financial resources. D. None of the above.

30. ......................... is neither a source nor a use of the financial resources of an expendable fund entity.
A. Capital expenditure. B. Depreciation expense. C. Encumbrance. D. Revenue.

31. The expenditures account of a governmental unit is debited when:

A. The budget is recorded. C. Supplies are ordered.
B. Supplies encumbered are received. D. The supplies invoice is paid.

32. When total amount of encumbrances for the financial year (for two purchase orders) is$675,000, expenditures
is $380,000 (related to $305,000 purchase order), and appropriations is $990,000, the amount of the
unencumbered balance is:
A. $370,000 B. $10,000 C. $145,000 D. $240,000

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 Faculty of Commerce-Eng Sec 6th week GOV-ACC 3rd Year-2022/2023

33. If the total beginning fund balance is $1000,000, total actual revenues is $700,000, total actual expenditures
is $500,000, and the reserve for encumbrances at year end is $200,000. What is the amount of the ending
balance of unreserved fund balance?
A. $1,400,000. B. $1,000,000. C.$1,200,000. D.$2,000,000.

34. The excess of appropriations over expenditures plus encumbrances is recorded as an increase in the….:
A. Reserve for encumbrance. B. Unreserved fund balance. C. Fund. D. None of the above.

35. When the goods ordered are received, two entries are prepared. These entries include:
A. Debit Encumbrance. C. Credit Expenditures.
B. Debit reserve for encumbrance. D. Debit Cash.

36. .....................represent commitments made against the current year’s appropriations and therefore represent the
use of the appropriation authority of the current year.
A. Expenditures. C. Encumbrances.
B. Reserve for encumbrances. D. Financial resources outflows.

37. When budgeted financial resources inflows are enacted into law, they are referred to as:
A. Revenues B. Estimated Revenues C. Encumbrances. B. Budget.
38. The governmental fund financial statements are prepared using the………. management concept.
A. Economic resources. C. Current financial resources.
B. Cash resources. D. None of the above.

39. The difference between inflows and outflows of financial resources of an expendable fund entity is..
A. Fund. B. Change in fund balance. C. Fund balance. D. Appropriation.

40. In expendable fund entities, financial resources inflows include all the following except:
A. Proceeds from debt issuance. C. Transfer of resources from other fund.
B. Revenues. D. Transfer of resources to other fund.

41. Under the cash basis of accounting revenues are recorded when ……
A. Earned B. Measurable C. Available D. Cash is received
42. The financial statement that includes the financial resources of an expendable fund entity and claims against
those resources is……………….:
A. Cash flows statement. B. Operating statement. C. Income statement. D. Financial position statement.

43. One of the relevant measures of the operations of expendable fund entities is:
A. Unreserved fund balance. B. Increases in fund resources
C. Net income. D. Financial resources.

44. Most non-business entities finance their operations through …………………..

A. Charges. B. Tax levy. C. Borrowing. D. Selling price.

45. …………… represent(s) the maximum amount of expenditures that are authorized to spend.
A. Encumbrances. B. Expenses. C. Fund balance. D. None.

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 Faculty of Commerce-Eng Sec 6th week GOV-ACC 3rd Year-2022/2023

46. Financial resources inflows include all of the following except:

A. Taxes. B. Grants C. Due from other funds D. Debt issue proceeds.

47. ………… is responsible for establishing accounting standards for nongovernmental entities.
A. FASB. B. GAAP. C. GASB. D. PCAOB.

48. A city’s General Fund budget for the forthcoming fiscal year shows estimated revenues in excess of
appropriations. The initial effect of recording this will result in an increase in ….…..
A. Reserve for encumbrances. B. Taxes receivable. C. Actual revenues. D. None.

49. Assets of an expendable fund include all of the following except: ……………….
A. Machines. B. Marketable Securities. C. Property tax receivable. D. Certificate of deposits. E. Cash

50. If the total amount of commitments for expenditures was initially recorded for $600,000 and actual
expenditures had incurred for $500,000 (these expenditures were related to $510,000 worth of commitments
for expenditures). How much is the outstanding commitments?
A. $90,000 B. $100,000 C. $10,000 D. $110,000

51. Fund entities in which the budget is formally incorporated into the accounting records are sometimes referred
to as ………. funds.
A. Proprietary. B. Nongovernmental. C. Fiduciary. D. None.

52. In accounting for expendable funds, the emphasis is changed from matching revenues and expenses to a
comparison of the actual inflows and outflows of financial resources with………………inflows and outflows
of financial resources.
A. Estimated. B. stipulated. C. Predicted. D. Previous.

53. At the end of the fiscal year, appropriations are closed against expenditures and ……………
A. Estimated revenues. B. Revenues. C. Encumbrances. D. Reserve for encumbrances.

54. Expenditures made for prior year’s encumbrances are closed against the ……… for that prior year.
A. Appropriations. B. Reserve for encumbrances. C. Encumbrances. D. Revenues.

55. In preparing the General Fund budget of Dover City for the forthcoming fiscal year, the City Council
appropriated a sum greater than expected revenues. This action will result in a decrease in …..
A. Cash. B. Fund balance. C. Encumbrances. D. Estimated revenues.

56. ………. is the amount of resources that can still be obligated or expended without exceeding the legal or
authorized limit.
A. Revenue. B. Fund balance. C. Appropriations. D. Unencumbered balance.

57. ……. is not accounted for in the records of an expendable fund entity.
A. Capital expenditure. B. Depreciation expense. C. Encumbrance. D. Revenue.

58. Purchase of capital assets is recorded in the same manner as any …. in the records of the General Fund.

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 Faculty of Commerce-Eng Sec 6th week GOV-ACC 3rd Year-2022/2023

a) expenditure b) purchase order c) asset d) fixed asset

59. ..….. fund Entities are funds where the government acts as an agent or acts as a trustee for an individual or
organization.
a) Governmental b) Fiduciary c) Expendable d) Agency

60. When budgeted expenditures are enacted into law, they are referred to as …………..............
a) encumbrances b) funds c) estimated expenditures d) appropriations

61. …. balance represents the net financial resources that are available for expenditure for the specific purposes
or objectives for which the fund was created.
a) Unencumbered b) Encumbrances c) Change in fund d) Fund

62. ………: The difference between the financial resources of an expendable fund entity and claims against those
resources.
a) Fund balance b) Change in fund balance c) Unencumbered balance d) Fund

63. ………… Fund Entities are used to account for the activities of nonbusiness organizations that are similar to
those of business enterprises.
a) Proprietary b) Budgetary c) Fiduciary d) Expendable

64. An …………. is a decrease in fund resources (or an increase in fund liabilities) that occurs when the vendor
or supplier performs on a contract or purchase order and goods or services are received.
a) appropriation b) encumbrance c) expenditure d) order

65. In preparing the General Fund budget of Dover City for the forthcoming fiscal year, the City Council
appropriated a sum greater than expected revenues. This action will result in a decrease in
a) Cash b) fund balance c) encumbrances d) estimated revenues

By Dr. Sabah Soliman page 9