Posted on February 22, 2024March 30, 2024Accounting and Finance Model Exam of 2024 /100 315 123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960616263646566676869707172737475767778798081828384858687888990919293949596979899100 Uncategorized Accounting and Finance Model Exam of 2024 Choose the Best Alternative Fill in your Full Name and ID Number (Only the Number) and Write your Modality (Regular, Extention or Weekend) Name of StudentID NumberModality (egular, Extention or Weekend)Phone Number 1 / 100 1. Which one of the following is the primary importance of accounting information system? A) Financial planning B) Policy approval C) Tax and licensing D) Decision-making 2 / 100 2. Which of the following financial statement reports the resources that a business owns and controlled by an entity at a particular point in time: A) Statement of financial position B) Statement of profit and loss C) (A) Statement of Retained Earnings D) Statement of cash flow 3 / 100 3. Adjusting entries affect A) Balance sheet accounts only B) Income statement accounts only C) Both Balance sheet and income statement accounts D) Either Balance sheet or income statement accounts 4 / 100 4. On January 1, 2020, Lexy Company paid rent of $60,000 for the month January, February, March and April. The $60,000 was initially recorded as prepaid rent. The rent expense for the month of January should be: A) $60,000 B) $10,000 C) $20,000 D) $15,000 5 / 100 5. If we failed to record adjustments for prepaid expense recorded as an asset initially except A) Net income will be over stated B) Expense account will be understated C) Asset account will be over stated D) Asset account will be under stated 6 / 100 6. Mr. Tomas deliver home rent service on monthly receipt basis and he has a plan to receive advance payment from its customers. One of the following is true on the accounts of Mr. Tomas A) Receipt of advance payment recorded as debit to prepaid rent and credit to cash B) Receipt of advance payment recorded as debit to cash and credit to earned revenue C) Receipt of advance payment recorded as debit to unearned revenue and credit to cash D) Receipt of advance payment recorded as debit to cash and credit to unearned revenue 7 / 100 7. The form listing the titles and balances of the accounts in the ledger on a given date is; A) Income Statement B) Balance Sheet C) Statement of Owner’s Equity D) Trial Balance 8 / 100 8. The receipt of cash from customers in payment of their accounts would be recorded by: A) A debit to Accounts Receivable and a credit to Cash. B) A debit to Cash and a credit to Accounts Payable. C) A debit to Cash and a credit to Accounts Receivable D) A debit to Accounts Payable and a credit to Cash. 9 / 100 9. An accounting assumption that states an entity will continue in operation long enough to carry out its existing objectives and commitments? A) Monetary unit assumption B) Economic entity assumption C) Going concern assumption D) Time period assumption 10 / 100 10. An accumulated amount that has been earned but not distributed to shareholders is known as: A) Contributed amounts B) Dividend pay-out C) Retained Earnings D) Withdrawal amount 11 / 100 11. Assume Company P began the accounting period with 100,000 in owner’s capital, ended with Br.700,000 in owner’s capital, and the owner withdrew 300,000 ETB during the period for personal use. What was the company’s net income or loss for the period? A) 550,000 net income B) 550,000 net loss C) 900,000 net income D) 500,000 net income 12 / 100 12. Lucy Car Repair Shop started the year with total assets of 600,000 and total liabilities of 400,000. During the year the business recorded 1,000,000 in car repair revenues, 550,000 in expenses, and dividends of 100,000. The net income reported by Lucy’s Car Repair Shop for the year was A) 100,000 B) 250,000 C) 300,000 D) 450,000 13 / 100 13. All of the following are true about internal control over cash except: A) The individuals who receive cash should not also disburse cash B) The individuals who handle cash can maintain accounting records C) Cash receipts are immediately recorded and deposited and are not used directly to make payments. D) Bank accounts are reconciled monthly. 14 / 100 14. Which of the following type of assets are usually the management could reasonably be expected to convert into cash within one year? A) Current Asset B) Current Liability C) Non-current Asset D) Non-Current Liability 15 / 100 15. Which of the following is not an activity listed in the statement of cash flows? A) Investing Activities B) Funding Activities C) Operating Activities D) Financing Activities 16 / 100 16. If a merchandise sold on account is returned because of defects, the seller may issue ____ to signify acceptance of merchandise returned from buyer. A) Debit Memorandum B) Sales invoice C) Sales return and allowance D) Credit Memorandum 17 / 100 17. Suppose Nile Company made credit sales of Br. 500,000 during 2022. Based on past experience Nile Company estimated that 10% of credit sales are uncollectible each year, the entry to record uncollectible accounts expense under direct write -off method A) Debit account receivable and credit uncollectible expense accounts by Br. 50,000 B) Debit uncollectible expense accounts and credit AFDA by Br. 50,000 C) Debit uncollectible expense accounts and credit account receivable by Br. 50,000 D) Debit account receivable and credit AFDA by Br. 50,000 18 / 100 18. ____________are cash receipts recorded by the depositor, but not reached the bank to be included in the bank statement for the current month. A) Outstanding Checks B) Charges for depositing NSF- checks C) Deposits in transit D) Notes collected by bank 19 / 100 19. Suppose on January 1, 2021 Sally Company sold merchandise which worth Birr 150,000 on account terms 2/10, n/30, and FOB destination to Sony Company. On January 8, the buyer returned a portion of the goods worth Birr 5000 as they were found to be the wrong model. What will be the entry to record return of merchandise under perpetual inventory system? A) Debit Sale and credit account receivable by 5,000 B) Debit account receivable and credit sales by 5,000 C) Debit merchandise inventory and credit account receivable by 5,000 D) Debit sales return and allowance and credit account receivable by 5,000 20 / 100 20. Assume on December 1, 2022 Zemen Company purchase merchandise which worth Birr 500,000 on account terms 3/15, n/45, and FOB shipping point from Lulit Trading. On December 12, the company made full payment for Lulit Trading. What will be the entry to record settlement of liability under periodic system? A) Debit account payable and credit cash by 500,000 B) Debit account payable by 500,000 and credit cash by 485, 000 and purchase discount by 15,000 C) Debited account payable by 500,000 and credit cash by 485, 000 and purchase return and allowance by 15,000 D) Debit account payable by 485,000 and credit cash by 485, 000 21 / 100 21. The cash in bank account for Tana Company at January 31, 2022 showed that balance of Br. 26, 431.60 after both cash receipt journal and check register for January had been posted. The bank statement indicated that a balance of Br. 39,027.8 on January 31. The bank had collected Br. 10,500 on an interest-bearing note left for collection, the face value of the note was Br.10, 000. In preparing bank reconciliation, the amount of notes collected would be: A) Added to the cash balance according to the bank statement B) Added to the cash balance according to the company’s records. C) Deducted from the cash balance according to the company’s records D) Deducted from the cash balance according to the bank statement 22 / 100 22. Which one of the following is not element of a single set of high-quality international accounting standards? A) Consistency in application and interpretation B) Common disclosures C) Common high-quality auditing standards and practices D) Multiple set of high-quality international accounting standards 23 / 100 23. One of the following is true about fair value measurement if there is a quoted price in an active market for an identical asset or liability A) Use significant unobservable input (Level 3) B) Use with adjustment C) Use that quoted price to measure fair value (Level 1) D) Replicate a market price through a valuation technique 24 / 100 24. Under IFRS: A) The entry to record estimated uncollected accounts is the same as GAAP. B) Loans and receivables should only be tested for impairment as a group. C) It is always acceptable to use the direct write-off method. D) All financial instruments are recorded at fair value. 25 / 100 25. All of the following are major part of IASB pronouncement except: A) International Financial Reporting Standards B) Organizations of International Securities Commission C) International Financial Reporting Interpretations 26 / 100 26. General-purpose financial statements are prepared primarily for: A) Internal users B) External users C) Auditors D) Government regulators 27 / 100 27. Which of the following statements is false? A) The monetary unit assumption is used under IFRS. B) Under IFRS, companies may use fair value for property, plant, and equipment. C) The FASB and IASB are working on a joint conceptual framework project. D) Under IFRS, there are the same numbers of financial statement elements as in GAAP. 28 / 100 28. Which of the following statements is correct? A) Both IFRS and GAAP permit revaluation of property, plant, and equipment. B) IFRS permits revaluation of property, plant, and equipment but not GAAP. C) Both IFRS and GAAP do not permit revaluation of property, plant, and equipment. D) GAAP permits revaluation of property, plant, and equipment but not IFRS. 29 / 100 29. When is revenue generally recognized? A) When cash is received. B) When the warranty expires. C) When production is completed. D) When the company satisfies the performance obligation. 30 / 100 30. On January 1, 2019 Saba Company purchased copy machine with a cost of Br. 155, 000 and a salvage value of Br. 5, 000 with economic life of five years or 100,000 operating hours. Assuming fiscal period of Saba Company ends on December 31. The machine will be depreciated over useful life of 5 years using the sum-of-the-year’-digits method. If the asset placed in to service on January 1, 2019, the amount of depreciation Saba Company would record for the year ended 2019 would be: A) Br. 51, 666 B) Br. 40,000 C) Br. 44,500 D) Br. 50,000 31 / 100 31. Debt investments not held for collection are reported at A) amortized cost B) fair value C) the lower of amortized cost or fair value D) net realizable value 32 / 100 32. Held-for-collection investments are reported at A) acquisition cost. B) amortized cost. C) maturity value. D) fair value. 33 / 100 33. An unrealized holding gains or losses on a trading debt investment is the difference between the investment’s A) fair value and original cost. B) face value and amortized cost. C) fair value and amortized cost. D) fair value and amortized cost. 34 / 100 34. If the investor owns 60% of the investee’s outstanding ordinary shares, the investor should generally account for this investment under the A) cost method. B) fair value method. C) consolidation equity method. D) consolidation equity method. 35 / 100 35. A Company purchased bonds with a face amount of $400,000. It purchased the bonds at 102 and paid brokerage costs of $6,000. The amount to record as the cost of this investment is A) $406,000.00 B) $414,000.00 C) $408,000.00 D) $400,000.00 36 / 100 36. Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the A) investor sells the investment. B) investee declares a dividend. C) investee pays a dividend. D) earnings are reported by the investee in its financial statements. 37 / 100 37. Debt investments that are accounted for and reported at amortized cost, are A) debt investments which are managed and evaluated based on a documented risk-management strategy. B) trading debt investments. C) held-for-collection debt investments D) All of these answer choices are correct. 38 / 100 38. ZB Corp. had finished goods inventory of $50,000 and $60,000 at April 1 and April 30, respectively, and cost of goods manufactured of $175,000 in April. Cost of goods sold in April was A) $165,000 B) $185,000 C) $175,000 D) $225,000 39 / 100 39. Materiality is used in all of the following situations of providing financial information, except: A) where an amount is of relatively large size and importance. B) where it would impact the judgment of a reasonable person. C) where it would not make a difference in the actions of decision maker. D) where omission of the information would result in bias. 40 / 100 40. For the current period, Mesfin started 5,000 units and completed 3,000 units, leaving 2,000 units in process 70 percent complete. How many equivalent units of production did Mesfin have for the period? A) 1400 B) 3000 C) 4400 D) 5000 41 / 100 41. Which one of the following is not considered for preparation of Job cost sheet? A) Factory cost. B) Direct Material cost C) Selling cost D) Labor cost. 42 / 100 42. When should process costing techniques be used in assigning costs to products? A) In situations where standard costing techniques should not be used B) If the product is composed of mass-produced homogeneous units C) When production is only partially completed during the accounting period D) If the product is manufactured on the basis of each order received 43 / 100 43. The predetermined overhead rate is $50 per machine hour, under applied overhead is $5,000. And the actual amount of machine hours is 2,000. What is the actual amount of total manufacturing overhead incurred during the period? A) $105,000 B) $50,000 C) $10,000 D) $95,000 44 / 100 44. In job order costing, the basic document for accumulating the cost of each order is the: A) Job cost sheet. B) Requisition sheet. C) Purchase order. D) Invoice. 45 / 100 45. Under a job order system of accounting, Cost of Goods Sold is debited and Finished Goods is credited for a: A) Transfer of materials to the factory. B) Shipment of completed goods to the customer. C) Transfer of completed production to the finished goods storeroom. D) Purchase of goods on account. 46 / 100 46. When should process costing techniques be used in assigning costs to products? A) In situations where standard costing techniques should not be used B) If the product is composed of mass-produced homogeneous units C) When production is only partially completed during the accounting period D) If the product is manufactured on the basis of each order received 47 / 100 47. If the level of activity increases, A) Variable cost per unit and total fixed costs increase. B) Fixed cost per unit and total variable cost increase. C) Total cost will increase and fixed cost per unit will decrease. D) variable cost per unit and total cost increase. 48 / 100 48. An industry that would most likely use process costing procedures is: A) Beverage. B) Home Construction. C) Printing. D) Shipbuilding. 49 / 100 49. Which of the following is a constraint in presenting financial information? A) Cost. B) Full Disclosure C) Relevance D) Consistency 50 / 100 50. During a period 17, 500 labor hours were worked at a standard cost of Rs 6.50 per hour. The labor efficiency variance was Rs 7,800 favorable. How many standard hours were produced? A) $2.40. B) $2.57. C) $2.80. D) $2.85. 51 / 100 51. During September, 300 labor hours were worked for a total cost of $4800. The variable overhead expenditure variance was $600 (A). Overheads are assumed to be related to direct labor hours of active working. What was the standard cost per labor hour? A) $14 B) $16.50 C) $17.50 D) $18 52 / 100 52. A company calculates the prices of jobs by adding overheads to the prime cost and adding 30% to total costs as a profit margin. Job number Y256 was sold for $1690 and incurred overheads of $ 694. What was the prime cost of the job? A) $489 B) $606 C) $996 D) $1,300 53 / 100 53. Unit cost information is important for making all of the following marketing decisions except: A) Determining the selling price of a product. B) Bidding on contracts. C) Determining the amount of advertising needed to promote the product. D) Determining the amount of profit that each product earns. 54 / 100 54. Which of the following is a non-discounting technique for appraising a project? A) Net present value B) Payback period C) Internal rate of return D) Discounted payback 55 / 100 55. Davis Company manufacturer’s desks. The beginning balance of Raw Material Inventory was $4,500; raw material purchases of $29,600 were made during the month. At month end, $7,700 of raw material was on hand. Raw material used during the month was A) $26,400.00 B) $34,100.00 C) $37,300.00 D) $29,600 56 / 100 56. The objective of financial management is to A) Maximize the revenue B) Minimize the expenses C) Maximize the return on investment D) Maximize the wealth of the owners by increasing the value of the firm 57 / 100 57. Which one of the following statements is correct concerning the weighted average cost of capital (WACC)? A) The WACC may decrease as a firm’s debt-equity ratio increases B) In the computation of WACC, weight assigned to the preferred stock is based on the coupon rate multiplied by the par value of the stock. C) A firm’s WACC will decrease as the corporate tax rate decreases. D) The weight of the common stock used in the computation of the WACC is based on the number of shares outstanding multiplied by the book value per share. 58 / 100 58. If risk free rate of return is 8%, Return on market portfolio is 12%, beta = 1.5, then the expected rate of return according to CAPM is equal to A) 10% B) 14% C) 18% D) 24% 59 / 100 59. If payable, receivables and inventories on average are $3,000,000, 3,500,000m and 4,000,000 respectively and sales are $15,000,000, Cash conversion cycle will be? A) 72 Days B) 96 Days C) 180 Days D) 108 Days 60 / 100 60. Which of the followings are factors favoring a low dividend policy A) tax- exempt investors B) corporate investors C) Tax and legal benefits from high dividends D) Flotation costs 61 / 100 61. The major benefit of diversification is to____________. A) Increase the expected return. B) Increase the size of the investment portfolio. C) Reduce brokerage commissions. D) Reduce the expected risk. 62 / 100 62. Which of the following statements is correct regarding profit maximization as the primary goal of the firm? A) Profit maximization does consider the impact on individual shareholder’s EPS. B) Profit maximization considers the firm’s risk level. C) Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits. D) Profit maximization is concerned more with maximizing net income than the stock price 63 / 100 63. Increasing the credit period from 30 to 60 days, in response to similar action taken by all of our competitors, would likely result in: A) An increase in the average collection period B) A decrease in bad debt losses C) An increase in sale D) Higher profit 64 / 100 64. Permanent working capital ___________. A) Varies with seasonal needs. B) Includes fixed assets. C) Is the amount of current assets required to meet a firm’s long-term minimum needs. D) Includes accounts payable 65 / 100 65. Auditor in general is: A) Employee of the company B) Agent of the company C) Agent of the shareholders D) None of the above 66 / 100 66. In “auditing” financial accounting data, the primary concern is with: A) Determining if fraud has occurred. B) Determining whether recorded information properly reflects the economic events that occurred during the accounting period. C) Analyzing the financial information to be sure that it complies with government requirements. D) Determining if taxable income has been calculated correctly. 67 / 100 67. Which of the following best describes the reason why independent auditors report on financial statements? A) A misstatement of account balances may exist and is generally corrected as the result of the independent auditors’ work. B) A management fraud may exist and it is more likely to be detected by independent auditors. C) Poorly designed internal control may be in existence. D) Different interests may exist between the company preparing the statements and the persons using the statements. 68 / 100 68. An audit conducted to determine whether an entity is following specific procedures or rules set down by some higher authority. A) Detailed audit B) Compliance audit C) Financial audit D) Operational audit 69 / 100 69. A review of any part of an organizations and methods for the purpose of evaluating efficiency and effectiveness is classified as a(n): A) Production audit B) Audit of financial statements C) Compliance audit D) Operational audit 70 / 100 70. ________ refers to the application of relevant, training, knowledge and experience, within the context provided by auditing, accounting and ethical standards in making informed decisions about the course of action that are appropriate in the circumstances of the audit engagement. A) Professional competence B) Compliance C) Professional judgment D) Reasonable assurance 71 / 100 71. Which of the following is a duty of the Auditor? A) Give an opinion on the financial statements. B) Prepare a set of accounts that is ‘true and fair’. C) Help management to form better relations with shareholders. D) Give an opinion on the integrity of management. 72 / 100 72. An auditor can be removed from their position as Auditor by: A) The International Federation of Accountants only. B) A vote by the majority of the board of directors. C) A decision made by the CEO and Chairman of the company. D) A vote by a majority of the shareholders. 73 / 100 73. Which of the following is considered lowballing? A) Offering the audit an artificially low fee in order to get the work before increasing fees later or offering other services to the client. B) Offering the audit at an artificially high fee to ensure that a good margin is made on the fee. C) Offering the client tax services only. D) Offering the client a low fee in the hope that they will tell others and increase the auditor’s client base. 74 / 100 74. An auditor who accepts an audit engagement and does not possess the industry expertise of the business entity, should: A) Obtain knowledge of matters that relate to the nature of the entity’s business. B) Engage financial experts familiar with the nature of the business entity. C) First inform management that an unqualified (clean) opinion cannot be issued. D) Refer a substantial portion of the audit to another auditor who will act as the principal auditor. 75 / 100 75. Which of the following is not a function of working papers? A) Document staff compliance with international auditing standards. B) Provide support for the auditors’ report. C) Aid partners in planning and conducting future audits. D) Provide support for the accounting records. 76 / 100 76. The permanent audit file would usually include the following: A) client’s working trial balance B) summary of the risk assessment procedures performed C) organizational chart of the company’s employees D) summary of the auditors test of controls for the current years audit 77 / 100 77. Before the work of audit is commenced, the auditor plans out the whole of audit work is known as: A) Audit risk B) Audit plan C) Audit note D) Audit program 78 / 100 78. Which of the following procedures is not performed as a part of planning an audit engagement? A) Performing analytical procedures. B) Reviewing the working papers of the prior year. C) Designing an audit program. D) Confirmation of all major accounts. 79 / 100 79. During an audit engagement pertinent data are prepared and included in the audit working papers. The working papers primarily are considered to be: A) Support for the auditors’ representations as to compliance with international auditing standards. B) A client-owned record of conclusions reached by the auditors who performed the engagement. C) A record to be used as a basis for the following year’s engagement. D) Evidence supporting financial statements. 80 / 100 80. Evidence obtained directly by the auditor is more competent than information obtained indirectly. Which of the following is not an example of the auditor’s direct knowledge? A) Computation. B) Physical examination. C) Observation. D) Inquiry. 81 / 100 81. Which of the following statements is correct with respect to ownership, possession, or access to working papers prepared by an audit firm in connection with an audit? A) The working papers may be obtained by third parties where they appear to be relevant to issues raised in litigation. B) The working papers are subject to the privileged communication rule which, in a majority of jurisdictions, prevents third-party access to the working papers. C) The working papers are the property of the client after the client pays the fee. D) The working papers must be retained by the audit firm for a period of ten years. 82 / 100 82. The current file of an auditor’s working papers most likely would include a copy of the A) Pension plan contract B) Bank reconciliation C) Flowchart of the internal control procedures D) Articles of incorporation 83 / 100 83. When the auditor attempts to understand the operation of the accounting system by tracing a few transactions through the accounting system, the auditor is said to be: A) Testing controls B) Tracing. C) Vouching. D) Performing a walk-through. 84 / 100 84. Which of the following is not one of the three primary objectives of effective internal control? A) Compliance with laws and regulations B) Reliability of financial reporting C) Efficiency and effectiveness of operations D) Assurance of elimination of business risk 85 / 100 85. Which of the following is not an underlying principle related to risk assessment? A) The organization should have clear objectives in order to be able to identify and assess the risks relating to the objectives. B) The organization should consider the potential for fraudulent behavior. C) The auditors should determine how the company’s risks should be managed. D) The organization should monitor changes that could impact internal controls. 86 / 100 86. Inherent risk and control risk differ from detection risk in that inherent risk and control risk are: A) Changed at the auditor’s discretion while detection risk is not B) Elements of audit risk while detection risk is not. C) Functions of the client and its environment while detection risk is not. D) Considered at the individual account-balance level while detection risk is not. 87 / 100 87. The opinion paragraph of a CPA’s report states: “In our opinion, except for the effects of not capitalizing certain lease obligations, as discussed in the preceding paragraph, the financial statements present fairly,” in all material respects, . . . This paragraph expresses a(an): A) Unqualified opinion. B) Unqualified opinion with explanatory paragraph. C) Qualified opinion. D) Adverse opinion 88 / 100 88. The date of the CPA’s opinion on the financial statements of the client should be the date of the A) Completion of all important audit procedures. B) Closing of the client’s books. C) Finalization of the terms of the audit engagement. D) Submission of the report to the client. 89 / 100 89. The introductory paragraph of the standard audit report states that the auditor is: A) Responsible for the opinion on the financial statements. B) Responsible for the financial statements and the opinion on them C) Responsible for the financial statements. D) Jointly responsible for the financial statements with management. 90 / 100 90. Among the classification of public revenue, which one is characterized by their voluntary nature and by the absence of any expectation of direct benefit for the donor? A) Grants in aid revenue B) Commercial revenue C) Contractual revenue D) Administrative revenue 91 / 100 91. he necessities of raising the public revenue follows from the: A) The necessities of incurring public expenditure B) The function the government performs and the welfare scheme is not free cost C) In the wider sense, we can include taxes and borrowing under public revenue D) (A) Public revenue implies raising income by the way of taxation E) All of the Above 92 / 100 92. If the tax liability as a proportion of income falls with the increase in taxpayer’s income, it is termed as ______________. A) Digressive taxation B) Regressive taxation C) Progressive taxation D) None of the above 93 / 100 93. Which one of the following is correct statement about Ethiopian taxation? A) Income from dividends is taxed at a flat tax rate of 15%. B) In the Ethiopian business income tax system, the tax rate for bodies ranges from 10%-35%. C) Rental income tax and royalty tax are among the direct taxes in Ethiopia. D) An output VAT is payable by a taxable person on purchase of goods and services 94 / 100 94. Which of the following is a tax to be shifted from one person to another person? A) Employment income tax B) Value Added Tax C) Business Income Tax D) Rental Income Tax 95 / 100 95. Mr. Denbel has bought ten shares of ABZ Share Company for Birr 200,000 each and sold them at Birr 300,000 each. How much does he pay as capital gains tax? A) Birr 30,000 B) Birr 20,000 C) Birr 40,000 D) Birr 25,000 96 / 100 96. Given that the following were extracted from the books of a public sector entity for the year ended December 31, 2022: Capital grants $50,000,000; Revaluation reserve $600,000; Translation reserve $900,000; Accumulated Surplus $400,000 and public debt charges $1,000,000. What is the value of its Net asset? A) $52,900,000 B) $51,900,000 C) $50,900,000 D) $50,000,000 97 / 100 97. Which of the following is a distinguishing characteristic of a nonbusiness organization? A) It does not depreciate its capital assets B) Its revenues do not exceed its expenses C) There is an absence of ownership interests that can be sold, transferred, or redeemed D) It does not charge fees for any of its services. 98 / 100 98. Governmental funds use the: A) Economic resources measurement focus and modified accrual basis of accounting. B) Current financial resources measurement focus and modified accrual basis of accounting C) Current financial resources measurement focus and accrual basis of accounting. D) Economic resources measurement focus and accrual basis of accounting. 99 / 100 99. In comparing internal service funds to enterprise funds, which of the following is (are) true? A) Internal service funds use the current financial resources measurement focus, while enterprise funds use the economic resources measurement focus. B) Internal service funds account for the sale of services and enterprise funds account for the sale of goods. C) Internal service funds use modified accrual and enterprise funds use accrual accounting. D) Internal service funds sell predominantly to other government departments and enterprise funds sell predominantly to external parties. 100 / 100 100. Which of the following is true regarding accounting for fixed assets of state and local governmental units? A) Fixed assets are to be recorded at historical cost B) Fixed assets are to be reported and depreciated in the proprietary fund financial statements but not in the governmental fund financial statements. C) Fixed assets are to be reported and depreciated in the government-wide financial statements. D) All of the above are true Your score is
