Public sector work sheet

1. What is the primary purpose of governmental accounting?

A) To generate profit

B) To provide information for decision-making

C) To track private sector transactions

D) To manage tax collections

2. Which of the following organizations is primarily responsible for establishing accounting

standards for state and local governments?

A) FASB

B) IPSAS

C) AICPA

D) SEC

3. What is the primary focus of not-for-profit financial reporting?

A) Profit maximization

B) Fund accountability

C) Shareholder value

D) Tax evasion

4. Which financial statement is typically not required for not-for-profit organizations?

A) Statement of Financial Position

B) Statement of Activities

C) Statement of Cash Flows

D) Income Statement

5. In governmental accounting, what is the term for funds that are restricted for a specific
purpose?

A) Unrestricted funds

B) Designated funds
 C) Restricted funds

D) Endowment funds

6. What basis of accounting do most governmental entities use?

A) Accrual basis

B) Cash basis

C) Modified accrual basis

D) Hybrid basis

7. Which of the following is an example of a proprietary fund?

A) General Fund

B) Special Revenue Fund

C) Enterprise Fund

D) Capital Projects Fund

8. What is the primary source of revenue for most governmental entities?

A) Donations

B) Grants

C) Taxes

D) Investments

9. Which financial statement provides information about a not-for-profit organization's revenues,

expenses, and changes in net assets?

A) Balance Sheet

B) Income Statement

C) Statement of Activities

D) Cash Flow Statement

10. In governmental accounting, what does the term "fund balance" refer to?

A) Total assets minus total liabilities

 B) The cash available at year-end

C) The net position of a fund at a specific point in time

D) The total revenues collected

11. What is the purpose of the budget in governmental accounting?

A) To forecast profits

B) To allocate resources and plan expenditures

C) To minimize taxes

D) To track employee performance

12. Which of the following is NOT a characteristic of not-for-profit organizations?

A) No ownership interests

B) Focus on social objectives

C) Distribution of profits to shareholders

D) Reliance on donations and grants

14. Which of the following is a distinguishing feature of governmental funds?

A) They report on a cash basis only.

B) They focus on current financial resources.

C) They are used to account for profit-generating activities.

D) They do not require a budget.

15. What does the term "net assets" refer to in a not-for-profit organization?

A) Total revenues minus total expenses

B) Total assets minus total liabilities

C) Total cash available at year-end

D) Total donations received

16. Which type of fund is used to account for resources that are legally restricted for specific
purposes?
 A) General Fund

B) Special Revenue Fund

C) Debt Service Fund

D) Permanent Fund

17. In governmental accounting, what does "inter-fund transfers" refer to?

A) Transfers between private and public entities

B) Transfers between different funds within the same government entity

C) Transfers between federal and state governments

D) Transfers from government to non-profit organizations

18. What is the main objective of financial reporting for not-for-profit organizations?

A) To provide information to investors

B) To enhance transparency and accountability to donors and stakeholders

C) To minimize tax liabilities

D) To maximize revenue generation

19. Which of the following would be considered an operating expense for a not-for-profit
organization?

A) Purchase of land

B) Salaries and wages of staff

C) Endowment contributions

D) Capital improvements

20. What is the role of the Financial Accounting Standards Board (FASB)?

A) To set standards for governmental accounting only

B) To establish accounting standards for private-sector entities and some not-for-profits

C) To oversee all financial reporting in the United States

D) To regulate tax compliance

21. What is the primary purpose of governmental accounting?

A) To provide information for decision-making

B) To maximize profit

C) To track private sector transactions

D) To minimize tax liabilities

22. Which organization establishes accounting standards for state and local governments?

A) FASB

B) GASB

C) AICPA

D) SEC

23. What is the basis of accounting primarily used by governmental entities?

A) Accrual basis

B) Cash basis

C) Modified accrual basis

D) Hybrid basis

24. Which type of fund is used to account for resources that are legally restricted for specific
purposes?

A) General Fund

B) Special Revenue Fund

C) Debt Service Fund

D) Capital Projects Fund

25. What is the primary focus of governmental financial reporting?

A) Profit maximization

B) Accountability and stewardship

C) Shareholder value
 D) Tax evasion

26. Which financial statement provides a snapshot of a governmental entity's financial position at
a specific point in time?

A) Statement of Activities

B) Balance Sheet

C) Statement of Revenues, Expenditures, and Changes in Fund Balance

D) Cash Flow Statement

27. What does the term "fund balance" refer to in governmental accounting?

A) Total assets minus total liabilities

B) The cash available at year-end

C) The net position of a fund at a specific point in time

D) Total revenues collected

28. Which of the following funds is used to account for the acquisition and construction of major
capital facilities?

A) General Fund

B) Capital Projects Fund

C) Special Revenue Fund

D) Enterprise Fund

29. What is the purpose of the budget in governmental accounting?

A) To forecast profits

B) To allocate resources and plan expenditures

C) To minimize taxes

D) To track employee performance

32. Which financial statement shows the inflows and outflows of cash during a specific period?

A) Statement of Activities

B) Balance Sheet
 C) Statement of Cash Flows

D) Statement of Revenues, Expenditures, and Changes in Fund Balance

33. Which type of fund accounts for activities similar to those of a private business?

A) Governmental Fund

B) Fiduciary Fund

C) Proprietary Fund

D) Permanent Fund

35. What is the term for resources that are set aside for a specific purpose by legislation or grant
agreements?

A) Unrestricted funds

B) Designated funds

C) Restricted funds

D) Endowment funds

36. In governmental accounting, which type of fund is used to account for resources that are held
in trust for others?

A) General Fund

B) Special Revenue Fund

C) Fiduciary Fund

D) Enterprise Fund

37. Which of the following is an example of a special revenue fund?

A) General Fund

B) Debt Service Fund

C) Capital Projects Fund

D) Gas Tax Fund

38. What does the term "net position" refer to in proprietary funds?

A) Total assets minus total liabilities

 B) Total revenues minus total expenses

C) Total cash available at year-end

D) Total donations received

39. Which type of fund is used to account for the payment of principal and interest on long-term
debt?

A) General Fund

B) Special Revenue Fund

C) Debt Service Fund

D) Capital Projects Fund

40. What is the primary source of revenue for most governmental entities?

A) Donations

B) Grants

C) Taxes

D) Investments

41. Which financial statement provides information about a governmental entity's revenues,
expenditures, and changes in fund balance?

A) Balance Sheet

B) Income Statement

C) Statement of Revenues, Expenditures, and Changes in Fund Balance

D) Cash Flow Statement

42. In governmental accounting, what does "encumbrance" mean?

A) An obligation for future payments not yet incurred

B) A reduction in fund balance due to expenditures

C) The amount of cash available at year-end

D) The total revenue collected

43. Which type of fund would be used to account for a public utility's operations?
 A) General Fund

B) Special Revenue Fund

C) Enterprise Fund

D) Capital Projects Fund

44. What is an example of a fiduciary fund?

A) General Fund

B) Pension Trust Fund

C) Capital Projects Fund

D) Debt Service Fund

45. Which accounting principle requires that financial statements be presented fairly and in
accordance with generally accepted accounting principles (GAAP)?

A) Consistency Principle

B) Full Disclosure Principle

C) Materiality Principle

D) Economic Entity Assumption

46. What is the primary objective of financial reporting for governmental entities?

A) To provide useful information for economic decision-making by users outside the

government entity

B) To maximize tax revenue collection

C) To ensure compliance with legal requirements

D) To enhance profitability

47. Which type of financial report provides an overview of all funds and activities within a
governmental entity?

A) Comprehensive Annual Financial Report (CAFR)

B) Single Audit Report

C) Management Discussion and Analysis (MDA)

 D) Budget Report

48. What does the term “capital assets” refer to in governmental accounting?

A) Short-term investments

B) Assets that are expected to provide economic benefits over multiple periods

C) Cash reserves

D) Inventory held for sale

49. In governmental accounting, what does “deferred inflow of resources” signify?

A) Future economic benefits expected to flow into the entity

B) Resources that have been earned but not yet received

C) Resources that have been received but not yet earned

D) An increase in fund balance

50. Which statement best describes the modified accrual basis of accounting used by
governmental funds?

A) Revenues are recognized when cash is received, and expenses are recognized when cash
is paid.
B) Revenues are recognized when measurable and available, and expenditures are
recognized when incurred.
C) Revenues are recognized when earned, and expenses are recognized when incurred.
D) Revenues are recognized when billed, and expenses are recognized when paid.

51. What is the primary purpose of governmental accounting?

A. To generate profit
B. To provide information for decision-making
C. To track private sector transactions
D. To manage tax collections

52. Which of the following organizations is primarily responsible for establishing accounting
standards for state and local governments nowadays?

A) FASB

B) IPSAS

C) AICPA
 D) SEC

53. What is the primary focus of not-for-profit financial reporting?

A. Profit maximization
B. Fund accountability
C. Shareholder value
D. Tax evasion

54. Which financial statement is typically not required for not-for-profit organizations?

A. Statement of Financial Position

B. Statement of Activities
C. Statement of Cash Flows
D. Income Statement

In governmental accounting, what is the term for funds that are restricted for a specific purpose?

A. Unrestricted funds
B. Designated funds
C. special revenue funds
D. Endowment funds

Which of the following is an example of a proprietary fund?

A. General Fund
B. Special Revenue Fund
C. Enterprise Fund
D. Capital Projects Fund

What is the primary source of revenue for most governmental entities?

A. Donations
B. Grants
C. Taxes
D. Investments

Which financial statement provides information about a not-for-profit organization's revenues,

expenses, and changes in net assets?

A. Balance Sheet
B. Income Statement
C. Statement of Activities
D. Cash Flow Statement
In governmental accounting, what does the term "fund balance" refer to?

A. Total assets minus total liabilities

B. The cash available at year-end
C. The net position of a fund at a specific point in time
D. The total revenues collected