CPU BUSINESS AND INFORMTION TECHNOLOGY COLLEGE

DEPARTMENT OF ACCOUNTING AND FINANCE

WORKSHEET TO THE COURSE ACCOUNTING FOR PUBLIC SECTOR AND CIVIC SOCIETY
PART I MULTIPLE CHOICE QUESTIONS
Write the correct choice of each of the following multiple-choice questions in the space provided beside
each question.
______1. The accounting system designed for Gonder Council must make it possible:
a. To Prepare consolidated statements for the reporting entity in conformity with FASB Standards
b. To prepare financial statements as required by relevant laws only.
c. To present fairly the financial position and results of financial operations of the government in conformity
with GASB and to demonstrate compliance with finance-related legal and contractual provisions
d. To demonstrate service efforts and accomplishments
______2. Which of the following reports is not a component of the financial statements according to
IPSAS 1?
a. Statement of Financial position.
b. Statement of changes in equity.
c. The Director’ s report.
d. Notes to the financial statements.
______3. Governmental units that engage in self-supporting activities by providing goods and services
to the public on a user charge basis should be accounted for in what fund category?
a. Governmental Fund
b. Any Non-expendable fund
c. Proprietary Fund
d. Fiduciary Fund
______4. As per IPSAS 2 Inventory should be stated at
a. Lower of cost and fair value.
b. Lower of cost and net realizable value.
c. Lower of cost and nominal value.
d. Lower of cost and net selling price.
_____5. Which of the following is not a budgetary account?
a. Encumbrance
b. Appropriation
c. Expenditure
d. Disbursement
______6. As per IPSAS 2 Inventories are assets which are not
a. Used in the production or supply of goods and services for administrative purposes.
b. Held for sale in the ordinary course of business.
c. In the process of production for such sale.
d. In the form of materials or supplies to be consumed in the production process or the rendering of services.
______7. An expense account appears in:
a. A pension trust fund
b. An Enterprise Fund
c. Special Revenue Fund
d. Debt Service Fund
______9. The Town of Shire General Fund’s Estimated Expenditures account had a balance of Br.
807,000. When the town’s General Fund closes its books, this Br. 807,000 Estimated Expenditure
account should have:
a. Been Debited
b. Been Credited
c. Remained Open
d. Appeared as Contra account

Worksheet Accounting for Public Sector and Civil Society Compiled by Sintayehu Y.
10. _______. Which of the following governmental unit uses modified accrual basis of
accounting?
A. Debt service funds
B. Pension trust funds
C. Enterprise funds
D. Internal service funds
E. All of the above
11. _____ delivering centralized service to the public entity is concerned with ________.
A. Investment trust fund
B. Internal service funds
C. Enterprise fund
D. Special revenue funds
12. _____ Which of the following is not correct statement?
A. Modified Accrual Basis is used for non-exchange transaction
B. Permanent funds are legally restricted in principal but earnings
C. Taxation most of the time is characterized for Governmental units.
D. The exact number of funds depends on legal compliance & Judgment.
E. Accrual basis applied for heavily financed by tax
F. All of the above
G. None of the above
13. _______. Which of the following is/are the current parameter of Ethiopian Regional
subsidy?
A. Population Growth
B. Development level
C. Budget utilization
D. Revenue generating Capacity
E. All but C
F. All of the above
14. ____. Which of the following is not the common identification for both recurrent & capital budget?
A. Expenditure budget
B. Covered by domestic revenue
C. Prepared by line-item budget
D. Prepared for forecasted fiscal year
E. All but C
F. All
15. __________. Which of the following is/ are correct about Budget Deficit?
A. Financed from external & internal source
B. Determined by Total revenue minus Total expenditure
C. It is the excess of expenditure over revenue
D. It is the excess of revenue over expenditure
E. All but D
16. _______. Which of the following funds would be used to account for an activity that provides
centralized purchasing and sales of goods or services to other departments or agencies of the
government on a cost-reimbursement basis?
A. Permanent fund.
B. Internal service fund.
C. Fiduciary fund.
D. Enterprise fund.

Worksheet Accounting for Public Sector and Civil Society Compiled by Sintayehu Y.
17. _____. Which of the following objective of financial reporting for Gov.t & NFP organizations?
A. Accountability
B. Legal Obligation.
C. Safety & Stability
D. Service efforts and accomplishments.
E. A&B
18. _______ Which of the following accounting basis are correctly Matched for preparing fund

19. _______. Capital assets used by a proprietary fund should be accounted for in the
A. Proprietary fund and depreciation on the capital assets should be recorded.
B. Business-type activities journal but no depreciation on the capital assets should be recorded.
C. Governmental activities journal and depreciation on the capital assets should be recorded.
D. proprietary fund but no depreciation on the capital assets should be recorded
20. _____. Which of the following is not true about Fund Acct?
A. Moves from generation to generation without bankruptcy
A. receive contributions of significant amounts of resources from resource providers who do not
expect equivalent value in return
B. operate for purposes other than to provide goods and services at a profit
C. Lack ownership interests like those of a business enterprise
D. All
E. None of the above
21. Federal Government Financial Reporting
A. Evaluating the entity’s service efforts, costs, and accomplishments and its management of assets
and liabilities
B. Assessing the impact on the nation of the government’s operations and investments and how, as a
result, the nation’s financial condition has changed and may change in the future; and
C. Understanding whether financial management systems and internal accounting and
administrative controls are adequate.
D. All
22. Not-for-Profit Organization Financial Reporting
A. the services provided by the entity and its ability to continue to provide them
B. how the entity’s managers discharged their stewardship responsibilities
C. the entity’s performance, Environment and Characteristics including its service efforts and
accomplishments
D. All of the above
C. incorporates budgetary accounts into the financial accounting system for some funds
D. All
E. None of the above

Worksheet Accounting for Public Sector and Civil Society Compiled by Sintayehu Y.
23. One of the characteristics of governmental-type funds
A. Their expenditures are likely to be controlled by budgets proposed by the executive branch of
government and legally adopted by the legislative branch in the form of appropriations
authorizations to spend.
B. funds are used to account for governmental activities that operate in a manner similar to that of
private-sector businesses in the sense that they charge fees for services and measure whether their
revenues will cover their expenses
C. Used to account for resources that governments hold in a trust or agency capacity for others.
“Others” might be individuals, other governments, or private organizations
D. All of the above
E. None of the above
24. Which of the following is general fund
A. All financial resources not accounted for in some other fund; includes most day-to-day activities
of government
B. items restricted or otherwise limited to spending for specific purposes other than debt service or
capital projects
C. Financial resources restricted or otherwise limited to spending for capital outlays, including
facilities and other capital assets
D. Financial resources restricted or otherwise limited to spending for principal and interest on
general long-term debt
E. Resources restricted to the extent that only earnings (not principal) may be used to support the
government’s programs
25. Which of the following is true enterprise fund
A. Enterprise Resources used to supply goods and services, for a fee, to users who are entirely or
primarily external to the governmental unit
B. Resources used to supply goods or services, based on cost reimbursement, within the
governmental unit and to other governments
C. Financial resources restricted or otherwise limited to spending for principal and interest on
general long-term debt
D. Resources restricted to the extent that only earnings (not principal) may be used to support the
government’s programs
E. Financial resources restricted or otherwise limited to spending for capital outlays, including
facilities and other capital
26. Enterprise Funds must be used if any one of the following criteria is met:
A. The activity is financed with debt that is secured solely by a pledge of the net revenues from the
activity’s fees and charges.
B. Laws or regulations require that the costs of providing services, including capital costs
C. Such as depreciation or debt service, be recovered through fees and charges, rather than with taxes.
D. The activity’s pricing policies set fees and charges that are designed to recover its costs,
including capital costs (such as depreciation or debt service).
E. All of the above
27. Which of the following is true Pension Trust fund
A. Resources held in trust for employee retirement plans and other employee benefit plans
B. Resources of an external investment pool managed by a sponsoring government
C. Resources of all other trust arrangements maintained for benefit of individuals, other
governments, and private organizations
D. Resources held in a custodial capacity that must be disbursed according to law or contractual
agreement
E. Sales or property taxes collected by a government on behalf of another government, Social Security taxes
withheld from employees and kept separately pending distribution to the federal government
28. Which of the following is true investment Trust fund

Worksheet Accounting for Public Sector and Civil Society Compiled by Sintayehu Y.
A. Resources held in trust for employee retirement plans and other employee benefit plans
B. Resources of an external investment pool managed by a sponsoring government
C. Resources of all other trust arrangements maintained for benefit of individuals, other governments, and
private organizations
D. Resources held in a custodial capacity that must be disbursed according to law or contractual agreement
E. Sales or property taxes collected by a government on behalf of another government, Social
Security taxes withheld from employees and kept separately pending distribution to the federal government
D. Unclaimed (escheat) property, such as bank accounts, investment accounts, and other property held
pending claim by rightful owners
E. Resources held in a custodial capacity that must be disbursed according to law or contractual agreement
29. Which of the following is true Private-Purpose Trust fund
A. Resources held in trust for employee retirement plans and other employee benefit plans
B. Resources of an external investment pool managed by a sponsoring government
C. The portion of an external investment pool that belongs to other governments
D. Resources of all other trust arrangements maintained for benefit of individuals, other governments, and
private organizations
E. Resources held in a custodial capacity that must be disbursed according to law or contractual agreement
30. Which fund would recognize a transaction in which a municipal electric utility paid $150,000 for
new equipment out of its earnings?
A. Enterprise Fund
B. General Fund
C. Capital Projects Fund
D. Special Revenue Fund
E. All
31. Which of the following statements is true regarding the accounting measurement implications of the current
financial resource’s measurement focus and modified accrual basis of accounting?
A. Capital assets are recorded as assets when they are acquired.
B. Revenues are recognized when they are earned.
C. Expenditures and liabilities for compensated absences are recognized when the liabilities
come due for payment as employees resign or retire.
D. A fund liability is recorded upon the receipt of proceeds from the sale of bonds.
E. All
32. Under the modified accrual basis of accounting, GASB standards specifically require accrual of
salaries due but unpaid at year-end because
A. The amount is measurable, and resources to pay the salaries are available.
B. Salaries must be paid to maintain the entity’s credit rating.
C. Salaries are liabilities that, having been incurred, are normally paid in a timely manner and
in full from current financial resources.
D. accruing salaries is an exception to the modified accrual basis of accounting.
33. In approving the budget, the city council appropriated an amount greater than expected revenues.
What will be the result of this action?
A. A cash overdraft will definitely occur during the fiscal year.
B. Current-year expenditures will be greater than previous-year expenditures.
C. A debit will be made to Budgetary fund balance.
D. The debits and the credits will not be equal.
34. Which of the following is a budgetary account?
A. Expenditures—supplies
B. Appropriations
C. Revenues—property taxes
D. Vouchers payable

Worksheet Accounting for Public Sector and Civil Society Compiled by Sintayehu Y.
35. If estimated revenues exceed appropriations, closing the budgetary accounts must include which of
the following entries?
A. A debit to Estimated revenues
B. A debit to Revenues—control
C. A credit to Budgetary fund balance
D. A debit to Budgetary fund balance
36. Entries similar to those for the General Fund may also appear on the books of a municipality’s
A. Enterprise Fund
B. Pension Trust Fund
C. Agency Fund
D. Special Revenue Fund
37. When a budgetary comparison schedule is prepared, columns are needed for
A. Last year’s budget, current year’s budget, and current year’s actual results on the budgetary basis of
accounting
A. A debit to unassigned fund balance
B. A debit to Encumbrances—capital equipment
C. A credit to other financing sources—proceeds from sale of general fixed assets
D. A credit to a Vehicles fixed asset account
38. Which of the following best expresses the accounting standard regarding accounting for purchases
and inventories in the General Fund?
A. They must be accounted for in a manner similar to that of commercial enterprises.
B. All purchases must be accounted for as expenditures upon acquisition.
C. Purchases may be recorded as expenditures either when acquired or consumed; if accounted
for as expenditures when acquired, year-end inventories are ignored.
D. Purchases may be recorded as expenditures either when acquired or consumed; if accounted
for as expenditures when acquired, year-end inventories must be reported if the amount is
significant.

PART II- TRUE OR FALSE QUESTIONS

Write TRUE if the statement is correct. Write FALSE if the statement is incorrect
in the space provided beside each question.
______1. Entries similar to those of the city’s Pension Trust Fund may appear to that of Special Revenue
Fund.
______2. IPSAS 39 deals with the classification, recognition, measurement, presentation and disclosure of
financial instruments.
______3. A special revenues fund and debt service fund are always considered Major Funds.
______4. As per IPSAS 23 revenue stipulations that provide to use the fund for specific purpose or to return
are conditions
______5. Depreciation should be recorded for fixed assets accounted for in the Capital Projects Funds
______6. IPSAS 42 deals with social costs
______7. The appropriation Control account of is Debited when the budgetary accounts are closed.
______8. Machines held for rental purposes are accounted for though IPSAS 17
______9. The operating statement of a General Fund is a Statement of Revenues, Expenses and Change in
Fund Balance
______10. IPSAS 21 differs from IPSAS 26 in that the later defines value in use as the present value of
remaining
service potential

Worksheet Accounting for Public Sector and Civil Society Compiled by Sintayehu Y.
PART III-WORK OUT QUESTIONS
Work out the following exercises in a neat and readable manner. Neatness has a credit.
The Common Council of the City of Dire Dawa is the administrative unit of the Dire Dawa City. In its
2012/13 budget year the city accomplished the following activities through its special revenue fund.
1. The common Council adopted the revenues budget for the general operations as:
VAT 1,500,000
Fines and Forfeits 500,000
License and Permits 437,500
Intergovernmental Revenues 87,500
2. Expenditures for the following functions were legally budgeted for the year:
General Administration 525,000
Education 972,500
Public Safety 175,000
Health and Welfare 750,000
3. During the year, revenues were received in cash from the following sources:
VAT 1,482,500
Fines and Forfeits 497,500
License and Permits 435,000
intergovernmental Revenues 96,250
4. During the year, contracts and purchase orders were issued as follows:
General Administration 112,500
Education 200,000
Public Safety 70,000
Health and Welfare 125,000
6. A budget revision was approved by the Commission. Estimated revenues for intergovernmental revenues
were decreased by Br. 8,750. Appropriations for General Administration were increased to Br. 550,000.
7. Vouchers were issued for items not previously encumbered, primarily personal services, in the following
amounts:
General Administration 436,750
Education 770,000
Public Safety 104,500
Health and Welfare 625,000

Required:
Show all the necessary General Ledger entries

Worksheet Accounting for Public Sector and Civil Society Compiled by Sintayehu Y.