Government and Non-Profit Accounting MCQs

1. Which basis of accounting is primarily used by government funds?
(A) Cash basis
(B) Accrual basis
(C) Modified accrual basis
(D) Hybrid basis

2. The main objective of financial reporting in government accounting is to:
(A) Report profit
(B) Assist investors
(C) Demonstrate accountability
(D) Calculate income tax

3. Which of the following funds is a governmental fund?
(A) Internal Service Fund
(B) Special Revenue Fund
(C) Pension Trust Fund
(D) Enterprise Fund

4. The financial statements for a non-profit organization typically include all EXCEPT:
(A) Statement of Financial Position
(B) Statement of Activities
(C) Statement of Revenues and Expenses
(D) Statement of Functional Expenses

5. GASB stands for:
(A) Government Accounting Standards Board
(B) General Accounting Standards Bureau
(C) Government Assurance Standards Body
(D) Global Accounting Standards Board

6. Which of the following is not a characteristic of governmental entities?
(A) Power to tax
(B) Profit motive
(C) Budget authorization by legislature
(D) Accountability to public

7. Which of the following funds would account for a city’s public water utility?
(A) Special Revenue Fund
(B) Enterprise Fund
(C) Capital Projects Fund
(D) Debt Service Fund

8. Revenues in governmental funds are recognized when they are:
(A) Earned and measurable
(B) Available and measurable
(C) Collected
(D) Accrued

9. Non-profit organizations classify net assets into which categories?
(A) Restricted, Unrestricted, and Temporarily Restricted
(B) Net assets with donor restrictions and without donor restrictions
(C) Endowment, General, and Restricted
(D) Capital, Revenue, and Surplus

10. What is the accounting method used by proprietary funds?
(A) Modified accrual
(B) Full accrual
(C) Cash basis
(D) Modified cash

11. Which fund would be used to account for resources legally restricted to expenditure for specific purposes?
(A) General Fund
(B) Debt Service Fund
(C) Special Revenue Fund
(D) Internal Service Fund

12. Fiduciary funds are used to account for resources:
(A) For general government operations
(B) Held for the benefit of parties outside the government
(C) Used for proprietary purposes
(D) For capital projects

13. The fund balance classification ‘Restricted’ means:
(A) Funds are available for any purpose
(B) External parties have imposed restrictions on use
(C) Internal decisions restrict usage
(D) The fund must be spent within the fiscal year

14. Which statement is specific to non-profit organizations?
(A) Statement of Activities
(B) Balance Sheet
(C) Statement of Cash Flows
(D) Statement of Revenues, Expenses, and Changes in Fund Net Position

15. Internal Service Funds are classified as:
(A) Governmental funds
(B) Proprietary funds
(C) Fiduciary funds
(D) Capital projects funds

16. A permanent fund is used to:
(A) Pay general operating expenses
(B) Account for endowments where only earnings can be spent
(C) Manage enterprise operations
(D) Hold pension plan assets

17. The General Fund accounts for:
(A) Fiduciary resources
(B) Proprietary activities
(C) All financial resources not accounted for in other funds
(D) Restricted gifts and donations

18. Which organization sets accounting standards for non-profit organizations in the U.S.?
(A) GASB
(B) FASB
(C) SEC
(D) PCAOB

19. Contributions received by a non-profit with donor restrictions should be recorded as:
(A) Unrestricted revenue
(B) Revenue with donor restrictions
(C) Deferred revenue
(D) Conditional revenue

20. The Debt Service Fund is used to:
(A) Finance and construct capital assets
(B) Accumulate resources to pay general long-term debt
(C) Operate utilities
(D) Fund pension benefits