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Home / CPAUS-FAR · FAR: Financial Accounting and Reporting / Unit 4: State and Local Governments and Not-for-Profit Entities

CPAUS-FAR · FAR: Financial Accounting and Reporting·UnitCPAUS-FAR · Unit 04Access: Free tier

Unit 4: State and Local Governments and Not-for-Profit Entities

Prepare for Unit 4: State and Local Governments and Not-for-Profit Entities with practice questions covering 8 topics. Part of FAR: Financial Accounting and Reporting — build your knowledge and track your progress with GoCPAus.

Questions
240
Topics
8
Access
Free

What’s in it.

8 topics
  • Topic 01

    Governmental Accounting Concepts

    36 questions
  • Topic 02

    Governmental Fund Types

    33 questions
  • Topic 03

    Proprietary and Fiduciary Funds

    15 questions
  • Topic 04

    Government-Wide Financial Statements

    39 questions
  • Topic 05

    Governmental Revenue and Expenditure Recognition

    48 questions
  • Topic 06

    Governmental Budgetary Accounting

    39 questions
  • Topic 07

    Not-for-Profit Financial Reporting

    15 questions
  • Topic 08

    Not-for-Profit Revenue, Contributions, and Expenses

    15 questions

Sample questions

3 of many

A few questions from this unit, with the answer and a full explanation. The complete bank is available when you start practising.

  1. A government levies $12 million in property taxes on July 1 for the fiscal year ending June 30. By June 30, $9 million is collected and $1.8 million is expected to be collected by August 29 (within 60 days of year-end). What amount is recognised as property tax revenue for the fiscal year?

    • $1.8 million
    • $10.8 million
      Correct answer
    • $12 million
    • $9 million
    Explanation

    Under modified accrual, property tax revenue is recognised when measurable and available. 'Available' for property taxes means collected within the current period or within 60 days after year-end. $9M collected by June 30 + $1.8M collectible within 60 days = $10.8M recognised. The remaining $200,000 is deferred.

  2. A hospital NFP receives $800,000 in restricted grants for cardiac research, purchases $600,000 in qualifying equipment during the year, and earns $30,000 in unrestricted investment income. What is the net change in net assets with donor restrictions?

    • $230,000 increase ($800,000 − $600,000 + $30,000)
    • $170,000 increase ($800,000 − $600,000 − $30,000)
    • $800,000 increase
    • $200,000 increase ($800,000 received − $600,000 released)
      Correct answer
    Explanation

    Net assets with donor restrictions change due to: (1) restricted contributions received +$800,000; (2) amounts released from restriction when restriction satisfied −$600,000. The $30,000 investment income is unrestricted (no donor restriction on income), so it affects net assets without donor restrictions. Net change in with-donor-restrictions = $800,000 − $600,000 = $200,000 increase.

  3. A city receives two federal grants: $1M to operate a job training program and $500K to construct a new job training facility. How should each grant be classified on the statement of activities?

    • Both as charges for services because they relate to a specific program
    • Both as capital grants and contributions, because the program involves construction
    • $1M as general revenue; $500K as capital grants and contributions
    • $1M as operating grants and contributions; $500K as capital grants and contributions
      Correct answer
    Explanation

    Under GASB Statement No. 34, the subcategory depends on the restriction's nature: grants restricted for operational program expenditures are operating grants and contributions; grants restricted to acquiring or constructing capital assets are capital grants and contributions. The $1M for program operations is an operating grant; the $500K for facility construction is a capital grant. Both are program revenues — they are simply in different subcategories based on their intended use.