Financial Information Questions! Trivia Quiz
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Financial information questions trivia quiz. Different transactions calls for different ways of reporting and this quiz is designed to not only test your vocabulary knowledge when it comes to financial information but to also how to treat some transactions when recording them in financial statements. Do give it a try and get to polish up on your skills and add on to them as well. All the best and keep practicing!
- 1.
Which of the following is a correct statement about how financial information for the activities of governments should be reported?
- A.
Information about business-type activities should be reported in both the government-wide and proprietary fund financial statements using the same basis of accounting for both
- B.
Information about governmental activities should be reported in both the government-wide and governmental fund financial statements using the same basis of cost accounting for both
- C.
Information about fiduciary activities should be reported in both the government-wide and fiduciary fund financial statements, using the same basis of accounting for both.
- D.
All of the above
Correct Answer
A. Information about business-type activities should be reported in both the government-wide and proprietary fund financial statements using the same basis of accounting for bothExplanation
The correct answer states that information about business-type activities should be reported in both the government-wide and proprietary fund financial statements using the same basis of accounting for both. This means that financial information for business-type activities should be presented consistently in both the overall financial statements of the government and the specific financial statements for proprietary funds. This ensures that there is uniformity and comparability in reporting financial information for these activities.Rate this question:
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- 2.
Which of the following statements is true regarding the basic financial statements of a state or local government?
- A.
Separate columns should be provided in the government-wide financial statements for governmental activities and business-type activities
- B.
Governmental fund and proprietary fund financial statements should provide a separate column for each major fund
- C.
Aggregate information about all non-major governmental funds or non-major enterprise funds should be reported in a single column of the governmental fund or proprietary fund financial statements
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
The correct answer is "All of the above". This means that all three statements provided are true regarding the basic financial statements of a state or local government. The first statement states that separate columns should be provided in the government-wide financial statements for governmental activities and business-type activities. The second statement states that governmental fund and proprietary fund financial statements should provide a separate column for each major fund. The third statement states that aggregate information about all non-major governmental funds or non-major enterprise funds should be reported in a single column of the governmental fund or proprietary fund financial statements. Therefore, all three statements are true.Rate this question:
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- 3.
In the reporting of governmental activities, fiscal accountability is demonstrated by:
- A.
Government-wide financial statements
- B.
Governmental fund financial statements
- C.
Both fund and government-wide financial statements
- D.
Neither fund nor government-wide financial statements
Correct Answer
B. Governmental fund financial statementsExplanation
Fiscal accountability in the reporting of governmental activities is demonstrated through governmental fund financial statements. These statements provide detailed information about the financial transactions and balances of specific funds, such as the general fund, special revenue funds, and debt service funds. They focus on the inflows and outflows of financial resources and help assess the financial position and performance of the government's various funds. Government-wide financial statements, on the other hand, provide a broader overview of the government's financial activities, including both governmental and business-type activities. However, fiscal accountability is primarily demonstrated through the specific fund financial statements.Rate this question:
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- 4.
The measurement focus and basis of accounting that should be used for the governmental fund financial statements are:
- A.
MEASUREMENT FOCUS: Current financial resources BASIS OF ACCOUNTING: Modified accrual
- B.
MEASUREMENT FOCUS: Current financial resources BASIS OF ACCOUNTING: Accrual
- C.
MEASUREMENT FOCUS: Economic resources BASIS OF ACCOUNTING: Modified accrual
- D.
MEASUREMENT FOCUS: Economic resources BASIS OF ACCOUNTING: Accrual
Correct Answer
A. MEASUREMENT FOCUS: Current financial resources BASIS OF ACCOUNTING: Modified accrualExplanation
The correct answer is "MEASUREMENT FOCUS: Current financial resources BASIS OF ACCOUNTING: Modified accrual". This means that the governmental fund financial statements should focus on the current financial resources and use the modified accrual basis of accounting. The modified accrual basis recognizes revenues when they become available and measurable and recognizes expenditures when they are incurred. This approach is used because it provides a more conservative and reliable representation of the financial position and results of operations of the governmental fund.Rate this question:
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- 5.
Which of the following statements is true regarding the definition of a fund?
- A.
A fund is a fiscal and accounting entitiy
- B.
A fund has a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances and changes therein
- C.
Resources, related liabilities, and residual equities or balances and changes therein are segregated for the purpose of carrying out specific activities or attaining certain objectives.
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
A fund is a fiscal and accounting entity that has a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances and changes therein. These resources, related liabilities, and residual equities or balances and changes therein are segregated for the purpose of carrying out specific activities or attaining certain objectives. Therefore, all of the statements regarding the definition of a fund are true.Rate this question:
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- 6.
Capital assets used for governmental activities, such as those of the police department, should be reported in:
- A.
Governmental fund financial statements only
- B.
Government-wide financial statements only
- C.
Neither governmental fund nor government-wide financial statements
- D.
Both governmental fund and government-wide financial statements
Correct Answer
B. Government-wide financial statements onlyExplanation
Capital assets used for governmental activities, such as those of the police department, should be reported in government-wide financial statements only. This is because government-wide financial statements provide a comprehensive view of the government's financial position, activities, and results, including all assets, liabilities, revenues, and expenses. Governmental fund financial statements, on the other hand, focus on short-term financial resources and do not include capital assets. Therefore, capital assets used for governmental activities are not reported in governmental fund financial statements.Rate this question:
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- 7.
Assets and liabilities of activities for which the government is acting in either an agency or trustee capacity for individuals, organizations, or other governments should be reported in:
- A.
The fiduciary column of the government-wide financial statements
- B.
The fiduciary fund financial statements
- C.
Both government-wide and fiduciary fund statements
- D.
Neither government-wide nor fiduciary fund statements
Correct Answer
B. The fiduciary fund financial statementsExplanation
The fiduciary fund financial statements are used to report the assets and liabilities of activities where the government is acting in either an agency or trustee capacity for individuals, organizations, or other governments. These statements provide information about the resources that the government holds and manages on behalf of others. The government-wide financial statements, on the other hand, report the financial activities of the government as a whole and do not include fiduciary activities. Therefore, the correct answer is the fiduciary fund financial statements.Rate this question:
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- 8.
Under the modified accrual basis of accounting:
- A.
Revenues are recognized at the time an exchange transaction occurs
- B.
Expenditures are recognized as the cost of an asset expires or is used up in providing governmental services
- C.
Revenues are recognized when current financial resources become measurable and available to pay current-period obligations
- D.
Expenses are recognized when an obligation occurs for costs incurred in providing services
Correct Answer
C. Revenues are recognized when current financial resources become measurable and available to pay current-period obligationsExplanation
Under the modified accrual basis of accounting, revenues are recognized when current financial resources become measurable and available to pay current-period obligations. This means that revenues are recognized when the government has the ability to collect and use the funds to meet its current obligations. This differs from the accrual basis of accounting, where revenues are recognized when they are earned, regardless of when the cash is received. The modified accrual basis is commonly used in governmental accounting to ensure that revenues are recognized when they can be used to meet current obligations.Rate this question:
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- 9.
Financial information about an internal service fund should be reported in the proprietary fund financial statements and the:
- A.
Governmental Activities column of the government-wide financial statements
- B.
Business-type Activities column of the government-wide financial statements
- C.
Either A or B, depending on whether the internal service fund predominantly serves governmental activities or business-type activites
- D.
None of the above
Correct Answer
C. Either A or B, depending on whether the internal service fund predominantly serves governmental activities or business-type activitesExplanation
Financial information about an internal service fund should be reported in the proprietary fund financial statements and either the Governmental Activities column or the Business-type Activities column of the government-wide financial statements, depending on whether the internal service fund predominantly serves governmental activities or business-type activities. This means that the financial information of the internal service fund will be included in the appropriate column based on its primary function.Rate this question:
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- 10.
A certain city reports the following year-end total assets: General Fund $18,400,000 Library Fund (a special revenue fund) 2,900,000 Debt Service Fund 2,600,000 Total governmental funds 26,300,000 Total governmental and enterprise funds combined 51,250,000 Based on this information, which funds should be reported as major funds?
- A.
General Fund only
- B.
General Fund and Library Fund
- C.
General Fund and Debt Service Fund
- D.
All three funds should be reported as major funds
Correct Answer
B. General Fund and Library FundExplanation
The General Fund and Library Fund should be reported as major funds because they have significant total assets compared to the other funds. The General Fund has a total asset of $18,400,000 and the Library Fund has a total asset of $2,900,000, which makes them the two largest funds among the given options. The Debt Service Fund, on the other hand, has a lower total asset of $2,600,000. Therefore, only the General Fund and Library Fund meet the criteria to be reported as major funds.Rate this question:
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- 11.
In which of the following funds would it not be appropriate to record depreciation expense?
- A.
Special revenue fund
- B.
Enterprise fund.
- C.
Internal service fund.
- D.
Pension trust fund.
Correct Answer
A. Special revenue fundExplanation
Depreciation expense is not appropriate to record in a Special Revenue Fund because Special Revenue Funds are used to account for specific revenue sources that are legally restricted for specific purposes, such as grants or donations. These funds are typically not used for acquiring long-term assets, such as buildings or equipment, which are subject to depreciation. Therefore, there would be no need to record depreciation expense in a Special Revenue Fund.Rate this question:
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- 12.
Which of the following is not a characteristic of a fund as described by GASB standards?
- A.
An accounting entity.
- B.
A fiscal entity.
- C.
A segregated quantity of cash and other financial resources on deposit with a designated trustee.
- D.
A self-balancing set of accounts.
Correct Answer
C. A segregated quantity of cash and other financial resources on deposit with a designated trustee.Explanation
A fund, as described by GASB standards, is not a segregated quantity of cash and other financial resources on deposit with a designated trustee. Instead, a fund is an accounting entity that represents a fiscal entity and is a self-balancing set of accounts.Rate this question:
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- 13.
Under the modified accrual basis of accounting, revenues should be recognized when:
- A.
Earned.
- B.
Collected in cash.
- C.
Authorized by the budget ordinance.
- D.
Measurable and available.
Correct Answer
D. Measurable and available.Explanation
Under the modified accrual basis of accounting, revenues should be recognized when they are measurable and available. This means that the amount of revenue can be reasonably estimated and the funds are likely to be collected in the near future. The recognition of revenue is not dependent on whether it has been earned or collected in cash, but rather on its measurability and availability. The budget ordinance is not a determining factor for revenue recognition under the modified accrual basis.Rate this question:
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- 14.
Which of the following funds are governmental funds?
- A.
General fund, special revenue funds, capital projects funds, debt service funds, and private-purpose trust funds.
- B.
General fund, special revenue funds, and private-purpose trust funds.
- C.
General fund, special revenue funds, capital projects funds, debt service funds, and permanent funds.
- D.
General fund, special revenue funds, capital projects funds, debt service funds, and internal service funds.
Correct Answer
C. General fund, special revenue funds, capital projects funds, debt service funds, and permanent funds. -
- 15.
Which of the following funds would be most appropriate for accounting for an activity that provides goods or services to the public for a fee that is intended to make the activity self-supporting?
- A.
Investment trust fund.
- B.
Enterprise fund.
- C.
Internal service fund.
- D.
Special revenue fund.
Correct Answer
B. Enterprise fund.Explanation
An enterprise fund is the most appropriate choice for accounting for an activity that provides goods or services to the public for a fee that is intended to make the activity self-supporting. This is because an enterprise fund is specifically designed to account for activities that operate in a manner similar to a business, generating revenue through the sale of goods or services. The funds collected from the fees charged to the public can be used to cover the costs of the activity and any excess revenue can be reinvested back into the activity.Rate this question:
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- 16.
In accounting for state and local governments, the modified accrual basis is required for:
- A.
Proprietary and fiduciary funds.
- B.
Governmental funds only.
- C.
Proprietary funds only.
- D.
All funds.
Correct Answer
B. Governmental funds only.Explanation
The modified accrual basis is required for governmental funds only in accounting for state and local governments. This basis of accounting recognizes revenues when they become both measurable and available to finance current expenditures. It also recognizes expenditures when the related liability is incurred. Governmental funds include general funds, special revenue funds, capital projects funds, and debt service funds. Proprietary funds, on the other hand, use the accrual basis of accounting, while fiduciary funds use the full accrual basis. Therefore, the correct answer is governmental funds only.Rate this question:
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- 17.
Reporting fund financial information in separate columns for each major fund and aggregate information for non-major funds:
- A.
Means that only those funds that meet the GASB's 10% and 5% rules are reported in separate columns.
- B.
Is optional under GAAP, but is generally required by state laws for governments.
- C.
Is the same manner of reporting used by business organizations.
- D.
Is required by GAAP for state and local governments.
Correct Answer
D. Is required by GAAP for state and local governments.Explanation
The correct answer is that reporting fund financial information in separate columns for each major fund and aggregate information for non-major funds is required by GAAP for state and local governments. This means that government entities are obligated to follow this reporting method in order to comply with accounting standards set by the Governmental Accounting Standards Board (GASB). This requirement ensures transparency and consistency in financial reporting for these entities.Rate this question:
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- 18.
Which of the following must be reported as a major fund?
- A.
The General Fund.
- B.
A fund having total assets, liabilities, revenues, or expenditures/expenses equaling at least 10% of the total governmental or enterprise fund amount for the same element (assets, liabilities, and so forth), as applicable, and at least 5% of the combined governmental and enterprise fund total amount for the same element.
- C.
Both A and B above.
- D.
Neither A nor B above.
Correct Answer
C. Both A and B above.Explanation
A major fund must have total assets, liabilities, revenues, or expenditures/expenses equaling at least 10% of the total governmental or enterprise fund amount for the same element, and at least 5% of the combined governmental and enterprise fund total amount for the same element. The General Fund meets these criteria and therefore must be reported as a major fund.Rate this question:
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