Deck 11: Issues of Reporting, Disclosure, and Financial Analysis

Question 1

Required notes are an essential element of the basic financial statements.

Answer 1

True

Question 2

A related organization must be incorporated into the primary government's financial statements.

Answer 2

False

Question 3

Which of the following is NOT a necessary characteristic of a component unit?

A)It is legally separate from the other government.
B)The other government appoints a voting majority of the component unit's governing body or a voting majority of the unit's governing body is composed of officials of the other government.
C)The other government can impose its will on the unit or the unit has the potential to provide a financial benefit to or impose a financial burden on the other government.
D)The other government provides services that are used by both governments.

Answer 3

D

Question 4

The State has a legally separate State Building Authority which has a board appointed by the Governor.The Authority issues debt in its own name, holds title to buildings in its own name, and leases its building exclusively to the State.In what manner would the Authority be included in the State's Basic Financial Statements?

A)Blended.
B)Discretely presented.
C)Note disclosure only.
D)Not included in any manner.

Question 5

The State has a legally separate State Building Authority which has a board appointed by the Governor.The Authority issues debt in its own name, holds title to buildings in its own name, and leases its building exclusively to the State.The authority would be considered a

A)Primary government.
B)Component unit.
C)Related organization.
D)Affiliated organization.

Question 6

Governments must incorporate their discretely presented component units into both the fund and the government-wide statements.

Question 7

Which of the following is NOT a necessary condition for a governmental entity to be considered fiscally independent?

A)It must be able to determine its own budget.
B)It must be able to levy taxes and/or set rates for its services.
C)It must be able to issue bonds.
D)It must be able to issue bonds that are tax-exempt.

Question 8

The comprehensive annual financial report (CAFR)is divided into three main sections: the table of contents section, the auditors' report section, and the financial section.

Question 9

Governments must incorporate their blended component units into both the fund and government-wide statements.

Question 10

The City created a legally separate Housing Authority to provide low-income housing to residents of the City.The City issues debt for the Housing Authority in the name of the City, but the Housing Authority is responsible for repayment of the debt.The Housing Authority is governed by a board composed of all 5 members of the City Council.Actions can be taken by the Authority upon receiving an affirmative vote by a simple majority of the board.The Housing Authority would be considered a:

A)Primary government.
B)Component unit.
C)Related organization.
D)Affiliated organization.

Question 11

Which of the following is NOT a primary government?

A)A state government.
B)A general purpose local government with the ability to determine its own budget.
C)A general purpose local government whose tax levies must be approved by the state.
D)A special purpose local government whose tax levies must be approved by the state.

Question 12

The City created a legally separate Housing Authority to provide low-income housing to residents of the City.The City issues debt for the Housing Authority in the name of the City, but the Housing Authority is responsible for repayment of the debt.The Housing Authority is governed by a board composed of all 5 members of the City Council.Actions can be taken by Authority upon receiving an affirmative vote by a simple majority of the board.In what manner would the Authority be included in the City's Basic Financial Statements?

A)Blended.
B)Discretely presented.
C)Note disclosure only.
D)Not included in any manner.

Question 13

A related organization is a contractual arrangement, whereby two or more participants agree to carry out a common activity and share its risks and rewards.

Question 14

The Marsh River School District, a legally separate school district that has a separately elected governing body, cannot enter into any debt agreements without the approval of the County Commission.Marsh River School District would be considered a:

A)Primary government.
B)Component unit.
C)Related organization.
D)Affiliated organization.

Question 15

Public colleges and universities must adhere to the same GASB pronouncements as other types of governments.

Question 16

Which of the following is NOT required for a special purpose local government to be considered a primary government?

A)It must have a separately elected governing body.
B)It must have the power to issue tax exempt debt.
C)It must be legally separate from other primary governments.
D)It must be fiscally independent of other governments.

Question 17

The typical audit is designed to cover all information included in the CAFR.

Question 18

There are only two government-wide statements: the statement of net assets and the statement of activities.

Question 19

Required supplementary information (RSI)is considered part of the basic financial statements.

Question 20

The County Commission appoints a voting majority of the members of the Board of a particular organization.The County Commission cannot impose its will upon the organization.There is no potential for the organization to provide any financial benefit to the County nor is there is any potential for the organization to impose any financial burden on the county.The organization is an example of a:

A)Primary government.
B)Component unit.
C)Related organization.
D)Affiliated organization.

Question 21

The City created a legally separate entity to operate a County Hospital.The City Council appoints a voting majority of the board of the Hospital.The City cannot impose its will on the Hospital and there is no potential for a financial benefit or financial burden to the City.In what manner would the Hospital be included in the City's Basic Financial Statements?

A)Blended.
B)Discretely presented.
C)Only by note disclosure of the relationship.
D)Not included in any manner.

Question 22

The City created a legally separate entity to operate a County Hospital.The City Council appoints a voting majority of the board of the Hospital.The City cannot impose its will on the Hospital and there is no potential for a financial benefit or financial burden to the City.The County Hospital would be a

A)Primary government.
B)Component unit.
C)Related organization.
D)Affiliated organization.

Question 23

The auditor's report generally includes an opinion on which of the following sections of the CAFR?

A)The introductory section, the financial section, and the statistical section.
B)The introductory and the financial sections only.
C)The statistical and the financial sections only.
D)The financial section only.

Question 24

The City created a legally separate Port Authority.Members of the board of the Port Authority are elected in general city elections.The Port Authority receives no tax dollars; it is supported entirely by user fees.The Port Authority determines its budget, sets user fees, and has the power to issue bonded debt.In what manner would the Port Authority be included in the City's Basic Financial Statements?

A)Blended.
B)Discretely presented.
C)Note disclosure only.
D)Not included in any manner.

Question 25

The County created a legally separate County Hospital authority.Members of the board of the County Hospital are elected in county-wide elections.The hospital receives no financial support from the County, except that the County pays the hospital bills for county indigents.All revenues of the Hospital are user fees.The County Hospital would be considered a

A)Primary government.
B)Component unit.
C)Related organization.
D)Affiliated organization.

Question 26

A Comprehensive Annual Financial Report for the City of Highland Hills need not include which of the following sections?

A)Condensed summary data.
B)Introductory section.
C)Financial section.
D)Statistical section.

Question 27

The financial section of a CAFR does not include:

A)Letter of Transmittal.
B)MD&A and Other RSI.
C)Basic Financial Statements.
D)Notes to the financial statements.

Question 28

With regard to combining statements, which of the following statements is true?

A)Combining statements for nonmajor governmental funds are optional.
B)Combining statements for nonmajor governmental funds are required.
C)Combining statements for nonmajor internal service funds are optional.
D)Combining statements for all internal service funds is optional.

Question 29

The County created a legally separate County Hospital authority.Members of the board of the County Hospital are elected in county-wide elections.The hospital receives no financial support from the County, except that the County pays the hospital bills for county indigents.All revenues of the Hospital are user fees.In what manner would the Hospital be included in the County's Basic Financial Statements?

A)Blended.
B)Discretely presented.
C)Note disclosure only.
D)Not included in any manner.

Question 30

Fund Financial Statements include which of the following for a governmental fund?

A)Statement of Net Assets; Statement of Changes in Net Assets.
B)Statement of Net Assets; Statement of Changes in Net Assets; Statement of Cash Flows.
C)Balance Sheet; Statement of Revenue, Expenditures, and Changes in Fund Balance; Statement of Cash Flows.
D)Balance Sheet; Statement of Revenue, Expenditures, and Changes in Fund Balance.

Question 31

Fund Financial Statements include which of the following for a proprietary fund?

A)Balance Sheet; Statement of Revenues, Expenses, and Changes in Net Assets.
B)Statement of Net Assets; Statement of Revenues, Expenses, and Changes in Net Assets; Statement of Cash Flows.
C)Statement of Net Assets; Statement of Changes in Net Assets.
D)Statement of Net Assets; Statement of Changes in Net Assets; Statement of Cash Flows.

Question 32

Which of the following statements is not a required part of the General Basic Financial Statements of the City of Highland Hills?

A)Government-wide Statement of Net Assets.
B)Statement of Revenues, Expenditures, and Changes in Fund Balances for all Governmental Funds.
C)Statement of Revenues, Expenses, and Changes in Net Assets for all Proprietary and Fiduciary Funds.
D)Statement of Cash Flows for all Proprietary Funds.

Question 33

Fund financial statements for Fiduciary Funds include which of the following?

A)Balance Sheet; Income Statement.
B)Balance Sheet; Income Statement; Statement of Cash Flows.
C)Statement of Fiduciary Net Assets; Statement of Changes in Fiduciary Net Assets.
D)Statement of Fiduciary Net Assets; Statement of Changes in Fiduciary Net Assets; Statement of Cash Flows.

Question 34

The introductory section of a CAFR does NOT include which of the following?

A)Table of Contents.
B)Letter of Transmittal.
C)Auditor's Opinion on the Basic Financial Statements.
D)GFOA Certificate of Achievement.

Question 35

Government-wide financial statements include which of the following?

A)Balance Sheet; Income Statement.
B)Balance Sheet; Income Statement; Statement of Cash Flows.
C)Statement of Net Assets; Statement of Activities.
D)Statement of Net Assets; Statement of Activities; Statement of Cash Flows; Statement of Changes in Long-Term Obligations.

Question 36

The City created a legally separate Port Authority.Members of the board of the Port Authority are elected in general city elections.The Port Authority receives no tax dollars; it is supported entirely by user fees.The Port Authority determines its budget, sets user fees, and has the power to issue bonded debt.The Authority would be considered a

A)Primary government.
B)Component unit.
C)Related organization
D)Affiliated organization.