Deck 1: Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations

Question 1

The statistical section of the CAFR contains the combining schedules of nonmajor funds.

Answer 1

False

Question 2

The government-wide financial statements present the government as a whole, excluding component units and including fiduciary activities.

Answer 2

False

Question 3

According to GASB, a primary government can only be a state or a general-purpose local government, such as a city or county.

Answer 3

False

Question 4

Separate financial information is required to be presented for all funds.

Question 5

The Government-wide financial statements include separate columns for discretely presented component units.

Question 6

The Government-wide financial statements include a separate column for fiduciary fund information.

Question 7

A Comprehensive Annual Financial Report (CAFR) would include an introductory section, management's discussion and analysis, basic financial statements, required supplementary information other than MD&A, combining and individual fund statements, narrative explanations and statistical section.

Question 8

Special-purpose governments engaged in business type activities only are required to prepare both proprietary fund and government-wide financial statements.

Question 9

The governmental fund statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.

Question 10

The fiduciary fund financial statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.

Question 11

Blending of financial information is done only when component units and the primary government are so intertwined that they are essentially the same.

Question 12

The basic financial statements of a state or local governmental unit include the MD&A, government-wide statements, fund statements and the notes.

Question 13

Prior-year data is required for government-wide financial statements.

Question 14

Governmental accounting standards do not require the statistical section.

Question 15

The government-wide financial statements are prepared using the economic resources measurement focus and accrual basis of accounting.

Question 16

The General Fund is always a major fund for purposes of financial reporting.

Question 17

Governmental fund financial statements include columns for the General Fund and all other "major" governmental funds.

Question 18

Governmental fund financial statements include the Balance Sheet and the Statement of Revenues, Expenditures and Changes in Fund Balances.

Question 19

Government activities which meet the tests and are determined to be component units of state and local governmental units must be discretely presented in the financial statements.

Question 20

Notes to the financial statements must distinguish between the primary government and discretely presented component units.

Question 21

Government-wide statements are to be prepared using the current financial resources measurement focus and modified accrual basis of accounting.

Question 22

Combining statements are required whenever a nonmajor column is used in
one of the fund financial statements.

Question 23

State and local governments are required to prepare a CAFR.

Question 24

Fiduciary funds are required to prepare a Statement of Cash Flows using the direct method.

Question 25

Management's Discussion and Analysis (MD&A) in The Comprehensive Annual Financial Report (CAFR) is part of the Introductory Section

Question 26

According to GASB Statement No. 44, which of the following is not a recommended category for the CAFR's statistical section?

A) Financial trends information
B) Debt capacity information
C) Comparative information
D) Operating information

Question 27

A Comprehensive Annual Financial Report for a state or local governmental unit should contain an introductory section, a financial section and a statistical section

Question 28

Governmental-Wide financial statements use the economic resources measurement focus and the accrual basis of accounting.

Question 29

Prior-year data may be presented but are not required on government-wide statements

Question 30

Prior-year data are required to be presented on government-wide statements

Question 31

Which of the following is true regarding the financial reporting entity of a state or local government?

A) Many component units are discretely presented, rather than blended
B) A school district could never be a primary government
C) Only a primary government may be the nucleus of a financial reporting entity
D) All of the above are true

Question 32

The introductory and statistical sections of a CAFR are not audited.

Question 33

Under GASB rules for the financial reporting entity:

A) Component units are included if the primary government is financially accountable for their operations
B) Counties are component units of the State Government
C) Blended and discretely presented component units are to be reported in government-wide financial statements but not in fund financial statements
D) Component units must be reported in columns (discrete presentation) separate from the funds of a primary government

Question 34

The three major sections of a CAFR are the Introductory, Financial and Statistical sections.

Question 35

Government-wide statements are to be prepared using the economic resources measurement focus and accrual basis of accounting.

Question 36

A complete CAFR includes combining financial statements to reflect major funds.

Question 37

Which of the following is true regarding the composition of the Comprehensive Annual Financial Report (CAFR)?

A) The CAFR is required in order to be in conformity with Generally Accepted Accounting Principles (GAAP)
B) The CAFR is to include both blended and discretely presented component units
C) The CAFR contains four major sections: introductory, financial, supplementary and statistical
D) All of the above are true

Question 38

With respect to MD & A, a government may discuss any issues it deems important to the completeness of the annual report

Question 39

Which of the following is true regarding GASB's definition of the financial reporting entity?

A) The financial reporting entity might include a primary government, component units, joint ventures or a jointly governed organization
B) Primary governments may be general-purpose governments (such as states, cities and counties) or special-purpose governments that have separately elected governing bodies, are legally separate and are fiscally independent of other state or local governments
C) Blending is used to incorporate component units only when those component units are, in substance, part of the primary government
D) All of the above are true

Question 40

Which of the following is true regarding Management's Discussion and Analysis (MD&A)?

A) MD&A is not considered part of Required Supplementary Information (RSI)
B) MD&A takes the place of footnotes
C) MD&A should present an analysis of significant variations between the original and final budget
D) All of the above are true

Question 41

Which of the following is true regarding the government-wide Statement of Activities?

A) The Statement of Activities includes depreciation expense
B) Transfers between governmental and business type activities are eliminated and do not appear on the government-wide Statement of Activities
C) In the government-wide Statement of Activities, "special items" are those items that are both unusual and infrequent and are not under the control of management
D) Taxes levied for specific functions may be reported as program revenue

Question 42

Which of the following is not considered Required Supplementary Information (RSI)?

A) Management's Discussion and Analysis
B) Budgetary Comparison Statement
C) Notes to the financial statements
D) None of the above; all are considered RSI

Question 43

Which of the following is true regarding the government-wide Statement of Net Assets?

A) The government-wide Statement of Net Assets reflects capital assets, net of accumulated depreciation, for both governmental and business-type activities
B) The government-wide Statement of Net Assets must be prepared in a classified format; that is, both assets and liabilities must be separated between current and long-term categories
C) The government-wide Statement of Net Assets includes all resources entrusted to the government; including governmental, proprietary and fiduciary
D) A reporting entity (primary governmentplus component units) total column is required

Question 44

Which of the following is not true regarding the government-wide financial statements?

A) The government-wide financial statements are not required to present prior-year data
B) The government-wide financial statements include a Statement of Net Assets, Statement of Activities and Statement of Cash Flows
C) The government-wide financial statements include capital assets, including infrastructure and reflect depreciation, except for infrastructure using the modified approach
D) All of the above are true

Question 45

Which of the following is true regarding fiduciary fund financial statements?

A) Fiduciary fund financial statements include the Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets
B) Fiduciary fund financial statements are prepared on the current financial resources measurement focus and modified accrual accounting
C) Both of the above
D) Neither of the above

Question 46

Which of the following is true regarding the reporting of special purpose governments?

A) Special purpose governments are to prepare the same financial statements as general-purpose governments, in all cases
B) Special purpose governments that are governmental in nature and have more than one governmental program are allowed to prepare the governmental fund financial statements only
C) Special purpose governments that are governmental in nature and have only one governmental program are permitted to combine the government-wide statements and the governmental fund statements
D) All of the above are true

Question 47

Which of the following is true regarding the government-wide Statement of Activities?

A) The government-wide Statement of Activities may reflect expenses either by function (general government, public safety, etc.) or by object or natural classification (salaries, supplies, etc.)
B) The government-wide Statement of Activities is prepared using the modified accrual basis of accounting for governmental activities and using the accrual basis of accounting for business-type activities
C) The government-wide Statement of Activities reflects all taxes as general revenues
D) Indirect program expenses may not be allocated to the other functional areas

Question 48

Which of the following is true regarding the proprietary fund financial statements?

A) The proprietary fund financial statements include the Statement of Net Assets, the Statement of Revenues, Expenses and Changes in Fund Net Assets and the Statement of Cash Flows
B) The proprietary funds include enterprise, internal service and permanent funds
C) Both of the above
D) Neither of the above

Question 49

Which of the following is true regarding the Budgetary Comparison Schedule?

A) The Budgetary Comparison Schedule compares the actual results to the original budget, but display of variances is optional
B) The Budgetary Comparison Schedule must be prepared for the General Fund and each major special revenue fund that has a legally adopted budget
C) The Budgetary Comparison Schedule is considered part of the basic financial statements
D) All of the above are true

Question 50

Which of the following is true regarding the proprietary fund financial statements?

A) The Statement of Net Assets (or Balance Sheet) reflects equity as contributed equity and retained earnings
B) Normally, a reconciliation is required between the proprietary fund financial statements and the business-type activities column in the government-wide financial statements
C) Statements include the Statement of Net Assets (or Balance Sheet), Statement of Revenues, Expenses and Changes in Fund Net Assets and Statement of Cash Flows
D) The Statement of Cash Flows may be prepared using either the direct or indirect methods

Question 51

Which of the following is included in Required Supplementary Information (RSI)?

A) Management's Discussion and Analysis (MD&A)
B) Budgetary Comparison Schedule
C) The Schedule of Funding Progress and Schedule of Employer Contributions when the government reports a pension trust fund
D) All of the above

Question 52

Which of the following is true regarding the fiduciary fund financial statements?

A) Fiduciary fund financial statements include the Statement of Fiduciary Net Assets and Statement of Changes in Fiduciary Net Assets
B) Fiduciary fund financial statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting
C) Fiduciary fund financial statements reflect equity as reserved and unreserved
D) Agency funds are reported only on the Statement of Changes in Fiduciary Net Assets

Question 53

Under GASB Statement 35, public colleges and universities are permitted to report as special purpose governments engaged in:

A) Business-type activities only
B) Both governmental and business-type activities
C) Governmental activities only
D) Any one of the above

Question 54

Which of the following is true regarding the Comprehensive Annual Financial Report?

A) The basic financial statements consist of the government-wide, the governmental fund, the proprietary fund and the fiduciary fund financial statements (and the notes to the financial statements)
B) The government-wide financial statements include the Statement of Net Assets, the Statement of Activities and the Statement of Cash Flows
C) Both of the above
D) Neither of the above

Question 55

Which of the following items would likely be in a reconciliation between the governmental fund financial statements and the governmental activities column in the government-wide financial statements?

A) The inclusion of long-term liabilities in the government-wide financial statements and not in the governmental fund financial statements
B) The inclusion of depreciation of capital assets in the governmental activities column of the government-wide financial statements and not in the governmental fund statements
C) The additional accrual of some revenues and expenses in the government-wide financial statements that were not made in the governmental fund financial statements
D) All of the above

Question 56

Which of the following is not true regarding major fund reporting for governmental funds?

A) The General Fund is always a major fund
B) Each fund that is considered major must be reported in a separate column in the governmental funds financial statements
C) A government may designate any fund as major if it feels that reporting that fund in the basic financial statements would be useful
D) None of the above, all are true

Question 57

Funds other than the General Fund must be considered major when

A) Total assets, liabilities, revenues or expenditures/expenses of that fund constitute 10 percent of either the governmental or enterprise category
B) Total assets, liabilities, revenues or expenditures/expenses of that fund are 5 percent of the total of the governmental and enterprise category
C) Conditions of either A or B exist
D) Conditions of both A and B exist

Question 58

Which of the following is true regarding the governmental fund financial statements?

A) The governmental fund financial statements include the Balance Sheet and the Statement of Revenues, Expenditures and Changes in Fund Balances
B) The governmental fund financial statements are prepared on the current financial resources measurement focus and modified accrual basis of accounting
C) The governmental fund Balance Sheet reflects Fund Balances as reserved and unreserved
D) All of the above are true

Question 59

Which of the following is true regarding the governmental fund statements?

A) The governmental fund statements include discretely presented component units that are governmental in nature
B) The governmental fund statements are prepared using the current financial resources measurement focus and modified accrual accounting
C) Both of the above
D) Neither of the above

Question 60

Which of the following is true regarding the Budget-Actual Comparison Schedule?

A) A Budget-Actual Comparison Schedule is required for the General Fund and all major special revenue funds that have a legally adopted annual budget
B) A Budget-Actual Comparison Statement may be prepared in lieu of the Schedule
C) Both of the above
D) Neither of the above

Question 61

Which of the following is true regarding financial reporting of governmental funds?

A) Governmental funds include the General Fund, special revenue funds, capital projects funds, debt service funds and permanent funds
B) The Fund Balance of governmental funds reports reserved and unreserved amounts
C) Both of the above
D) Neither of the above

Question 62

An example of an expenditure classification by function would be:

A) Current
B) Public safety
C) Police Department
D) Salaries

Question 63

Which of the following funds requires a Budgetary Comparison Schedule?

A) Enterprise Funds
B) Internal Service Funds
C) Investment Trust Funds
D) General Fund

Question 64

Special-purpose governments that have only business-type activities should report which of the following?

A) Statement of Net Assets, Statement of Revenues, Expenses and Changes in Fund Net Assets and Statement of Cash Flows
B) Statement of Net Assets, Statement of Revenues, Expenses and Changes in Fund Net Assets
C) MD&A, Statement of Net Assets, Statement of Revenues, Expenses and Changes in Fund Net Assets, Notes to the Financial Statements and RSI, other than MD&A as appropriate
D) Statement of Net Assets, Statement of Revenues, Expenses and Changes in Fund Net Assets and RSI

Question 65

Where in the CAFR would one find the long-term liability for revenue bonds (paid from the revenues of an enterprise fund)?

A) The proprietary funds Statement of Net Assets only
B) The government-wide Statement of Net Assets only
C) The government-wide Statement of Net Assets and the proprietary funds Statement of Net Assets
D) The government-wide Statement of Net Assets and the RSI Schedule of Bonds Payable

Question 66

Which part of the financial section of the CAFR is considered "Required Supplementary Information?"

A) Auditor's Report
B) Management's Discussion and Analysis
C) Government-Wide Financial Statements
D) Fund Financial Statements

Question 67

Which of the following is true regarding the governmental fund statements?

A) The Governmental Funds Balance Sheet does not reflect capital assets or long-term debt
B) The Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances reports columns for major funds, nonmajor funds (in total) and total
C) Both of the above
D) Neither of the above

Question 68

Which of the following is true regarding the proprietary funds statements?

A) Major enterprise and internal service funds are reported in separate columns; a column is presented for all nonmajor enterprise and internal service funds (combined) and a total column is presented
B) Financial statements include a Statement of Net Assets (or balance sheet), Statement of Revenues, Expenses and Changes in Fund Net Assets and Statement of Cash Flows
C) Both of the above
D) Neither of the above

Question 69

Which of the following is true regarding the proprietary fund financial statements?

A) The proprietary fund financial statements include the Statement of Net Assets, the Statement of Revenues, Expenses and Changes in Fund Net Assets and the Statement of Cash Flows
B) The proprietary fund financial statements are prepared using the economic resources measurement focus and the accrual basis of accounting
C) Both of the above
D) Neither of the above

Question 70

Which of the following is true regarding the reporting of major funds in the governmental funds financial statements?

A) The General Fund is always considered a major fund
B) A fund is considered major if its revenues, expenditures, assets or liabilities exceed 10% of the total governmental fund categories and if the same element (revenues, expenditures, assets or liabilities) exceeds 5% of the governmental and enterprise funds combined
C) Both of the above
D) Neither of the above

Question 71

Which of the following is true regarding fiduciary funds?

A) Fiduciary funds are reported in the fiduciary fund financial statements but not in the government-wide financial statements
B) Agency funds would be reported in both the Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets
C) Both of the above
D) Neither of the above

Question 72

Which of the following is true regarding the government-wide Statement of Net Assets?

A) Discretely presented component units are included in a separate column (or columns)
B) Net assets are broken down into three categories: invested in capital assets, reserved and unreserved
C) Both of the above
D) Neither of the above

Question 73

Which of the following is true regarding the government-wide financial statements?

A) The government-wide financial statements include the Statement of Net Assets and the Statement of Activities
B) The government-wide financial statements are prepared using the current financial resources measurement focus and the modified accrual basis of accounting
C) Both of the above
D) Neither of the above

Question 74

Which of the following is true regarding component units?

A) Component units could include park districts, school districts, counties and mosquito abatement districts
B) Component units may be reported discretely in the government-wide statements or may be blended as a fund in the fund financial statements (and thus also included in the government-wide financial statements)
C) Both of the above
D) Neither of the above

Question 75

Which of the following is true regarding fiduciary fund statements?

A) Fiduciary fund statements include the Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets
B) Fiduciary fund statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting
C) Both of the above
D) Neither of the above

Question 76

Which of the following is true regarding the government-wide Statement of Activities?

A) General revenues include items such as charges for services and program fees
B) Fiduciary activities are included
C) Both of the above
D) Neither of the above

Question 77

Which of the following is true regarding the Comprehensive Annual Financial Report (CAFR)?

A) The CAFR has three main sections: introductory, financial and statistical
B) Required Supplementary Information includes a Budgetary Comparison Schedule for the General Fund and all major special revenue funds that have a legally adopted annual budget (unless a statement is prepared)
C) Both of the above
D) Neither of the above

Question 78

Which of the following is true regarding the government-wide statements?

A) The government-wide statements include a Statement of Net Assets and a Statement of Activities
B) The governmental activities portion of the government-wide statements is prepared using the current financial resources measurement focus and modified accrual basis of accounting
C) Both of the above
D) Neither of the above

Question 79

Which of the following is true regarding Government-wide financial statements?

A) Statement of Cash Flows is not required for Government-wide statements
B) Prior year data must be presented
C) Depreciation can be reported in the statements or disclosed in footnotes
D) Fiduciary activities are only reported if they qualify as a major fund

Question 80

Which of the following is true regarding the governmental fund financial statements?

A) The governmental fund financial statements include the Balance Sheet and the Statement of Revenues, Expenditures and Changes in Fund Balances
B) The governmental fund financial statements are prepared using the current financial resources measurement focus and the modified accrual basis of accounting
C) Both of the above
D) Neither of the above