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College of Business and Economics
Department of Accounting and Finance
Model Exit Exam For Accounting and Finance students
1. Which of the following is not the unique characteristic of governmental and not for
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f organizations?
A. The profit motive is inherent in their operation or inception.
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B. They are usually owned collectively by their constituents.
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C. Their scope of operation includes governmental, proprietary and fiduciary.
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D. They have generally adopted the concept and systems of fund accounting
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Answer A f
2. The operations of a public library receiving the majority of its support from consumption
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f taxes for that purpose should be accounted for in:
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A. The General Fund f f C. An Enterprise Fund f f
B. A Special Revenue Fund f f f D. An Internal Service Fund f f f
Answer B fff
3. Which of the following is not the appropriate basis of accounting for a governmental fund?
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A. Accrual C. Modified accrual basis f f
B. Cash basisf f D. All of the above f f f
Answer B fff
4. The monthly remittance to an insurance company of the lump sum of hospital surgical
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f insurance premiums collected as a payroll deduction from employees should be recorded
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f in:
A. The Agency Fund f f
B. Special Revenue Fund
f f f
C. An Enterprise Fund f f
D. An Internal Service Fund f f f
Answer A f
5. If budgetary fund balance is debited in the process of recording a budget in the General
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f Fund, it can be assumed that:
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A. Est. revenues and Est. other financing sources exceeded appropriations and Est.
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f other Financing Uses. f f
B. Est. revenues and other financing sources exceeded actual revenues and other
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f financing sources. f
C. Appropriations and Est. other financing uses exceeded Est. revenues and other f f f f f f f f f f
f financing sources. f
D. Revenues and other financing sources exceeded Est. revenues and Est. other
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f financing sources f
Answer C f
6. A non-cash-generating asset is impaired when :
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A. Recoverable service amount of the asset exceeds the carrying amount of the asset.
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B. Carrying amount of the asset exceeds recoverable service amount of the asset.
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C. Value in use of the asset exceeds fair value less cost to sell.
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D. Fair value less cost to sell exceeds Value in use of the asset.
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Answer B fff
7. YZ Government unit purchased equipment using funds from General Fund, which of the
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f following account increased by entry to record in General Fund?
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A. Expenditures
B. Cash
C. Equipment f
D. All of the above f f f
ffff Answer A fff
8. Which of the following are not the objectives of international public sector accounting
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f standard board (IPSASB)?
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A. Serving the public interest by setting high-quality public sector accounting
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f standards.
B. Facilitating the adoption and implementation public sector accounting standards.
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C. Ugly the quality and consistency of practice throughout the world.
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D. Strengthening the transparency and accountability of public sector financial f f f f f f f f
f reporting and financial management. f f f
E. All of the above. f f f
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Answer C f
9. A not-for-profit organization performs all of the following activities except
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A. Charging a fee for services provided f f f f f
B. Paying dividends to shareholders f f f
C. Purchasing long-lived (capital) assets f f f
D. Paying overtime to employees f f f
ff Answer B f
10. Which of the following is not a reason that governmental accounting is different from
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f business accounting? f
A. Different users of financial reports f f f f
B. Expected long-life of governments f f f
C. Capital assets are used by governments f f f f f
D. Revenues that are unique to governments f f f f f
f Answer C f
11. The operation of a municipal swimming pool receiving the majority of its support from
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f charges to users should be accounted for in:
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A. The General Fund f f C. An Internal Service Fund f f f f
B. Special Revenue Fund
f f f D. An Enterprise Fund f f
ff Answer D f
12. In 1984, the City of Moorland built an office building at a cost of $50million. The building
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f was expected to provide service for 40 years. In 2003,after 19 years of use, fire caused
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f severe structural problems. Due to safety reasons, the office building is closed, and
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f structural repairs costing $35.5million are to be made to restore the office building to an
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f occupiable condition. The replacement cost of a new office building is $100 million. The
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f asset is depreciated based on straight-line method. What will be the recoverable service
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f amount of the office building (non-cash generating asset)?
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A. $17,000,000 C. $25,000,000
B. $16,000,000 D. $18,000,000
Answer A f
13. Based on question no.12 how much the impairment loss of the office building (non-cash
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f generating asset)? f ff
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A. 10,250,000 C. 17,000,000
B. 9,250,000 D. 12,500,00
Answer B f
14. The selection of a measurement basis for assets and liabilities contributes to meeting the
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f objectives of financial reporting in the public sector by providing information that enables
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f users to assess :f f f
A. The cost of services provided in the period in historical or current terms
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B. Operational capacity
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C. Financial capacity
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D. All of the above f f f
E. None of the above f f f
Answer D f
15. Which one of the following are sources of finances for a debt service fund?
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A. Special Taxes f D. Bond Premium f
B. Investments E. All of the above f f f
C. Refinancing
Answer E f
16. The board of Commissioners of the City of Addis Ababa adopted budget for the current year
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f ending Jan 31, 2021, indicated estimated revenue of Br.5 million and appropriation of
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f Br.4.7 million. When the budget is formally integrated into the accounting records, what is
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f the required journal entry?
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A. Estimated revenues......................5,000,000 f
ff Appropriations..................................4, 7 00,000 f f
ffffffffffffffffffffffffff Budgetary Fund Balance.......................300,000 f f
B. Appropriations.................................5,000,000
f Estimated revenues............................4, 700,000
f f
f Budgetary Fund Balance.......................300,000
f f
C. Revenues Receivable...............5 ,000,000 f f
f Estimated Expenditures.........................4, 700,000
f f
General Fund Balance...............................3,000,000
f f
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