Deck 11: Public Sector Financial Reporting

Question 1

Who is the largest issuer of debt?

A)Banks
B)Government
C)Publicly-accountable enterprises
D)Private enterprises

Answer 1

B

Question 2

Which of the following is a non-financial asset?

A)Available-for-sale investment
B)Investment in a government enterprise
C)Crown land
D)Tangible capital asset

Answer 2

D

Question 3

Based on the organizations' objectives,which of the following government organizations can choose to report under the CICA PSA Handbook or IFRS?

A)Local governments
B)Government business enterprises
C)Government not-for-profit organizations
D)Other government organizations

Answer 3

D

Question 4

On what statement does the amortization of tangible capital assets appear as a reconciling item?

A)Statement of financial position
B)Statement of operations
C)Statement of changes in net debt
D)Statement of cash flows

Question 5

What do the total tangible capital assets indicate on a government's statement of financial position?

A)How much revenue the government must raise to cover its past spending
B)The government's ability to provide future services and programs
C)The government's financial position
D)The government's ability to raise revenues to meet its current year expenditures

Question 6

How does a government statement of cash flows (SCF)differ from one prepared by a business enterprise?

A)A government SCF must be prepared using the direct method.
B)A government SCF must be prepared using the indirect method.
C)A government SCF reconciles cash and cash equivalents not just cash.
D)A government SCF has a section for capital assets.

Question 7

Which financial statements are recommended by the PSAB for presentation by governments?

A)Statement of financial position,statement of operations,statement of changes in net debt,and statement of cash flows
B)Statement of financial position,statement of operations,and statement of net debt
C)Statement of financial position and statement of operations only
D)Statement of financial position and statement of net debt only

Question 8

Which of the following statements about the valuation of Crown property on the statement of financial position is true?

A)Crown property is valued at acquisition cost.
B)Crown property is valued at fair market value.
C)Crown property is valued at its depreciated value.
D)Crown property is not recognized on the financial statements.

Question 9

Which of the following is not a typical characteristic of a non-business organization?

A)No equity investors
B)May have restrictive funds
C)Rely on the sale of goods and services
D)Provision of collective goods and services

Question 10

One of the objectives of government is to provide services to the public.In order to meet legislated social goals,another major goal of government is to ________.

A)create a surplus
B)reduce taxation
C)redistribute wealth
D)increase Crown assets

Question 11

What does the carrying value of tangible capital assets represent to government?

A)Source of future cash flows from the capital assets
B)Tax value of the capital assets
C)Acquisition cost of Crown assets
D)Unexpired service potential of the capital assets

Question 12

The Public Sector Accounting Board (PSAB)has identified a number of characteristics that differentiates governmental reporting from private sector reporting.Which of the following is one of those characteristics?

A)The government's goal is to make a surplus.
B)The focus of governmental capital spending is to maximize returns.
C)Tangible capital assets are different in nature for governments.
D)Governments have limited debt capacity.

Question 13

Which of the following accounting methods would discourage government managers to manipulate cash payments to suppliers in order to "manage" the reported surplus or deficit?

A)Disbursement basis
B)Expenditure basis
C)Accrual basis
D)Cash basis

Question 14

Which of the following is not a suggested objective for financial statements for public sector entities?

A)To provide an accounting of financial affairs and resources
B)To enable evaluation of compliance with legislation
C)To provide information on financing and investing activities
D)To determine if programs are economical,efficient,and effective

Question 15

Which of the following accounting methods is most consistent with the budgetary spending limits that governmental managers must manage?

A)Disbursement basis
B)Expenditure basis
C)Accrual basis
D)Cash basis

Question 16

Which of the following is a financial asset?

A)Tangible capital asset
B)Prepaid expense
C)Supplies inventory
D)Loan to another government

Question 17

Which of the following would be a reconciling item on the statement of change in net debt?

A)Adding back the cost of tangible capital assets
B)Adding back the cost of debt servicing
C)Adding back amortization expense
D)Adding back transfer payments to other governments

Question 18

What does the net debt indicate on a government's statement of financial position?

A)How much revenue the government must raise to cover its past spending
B)The government's ability to provide future services and programs
C)The government's financial position
D)The government's ability to raise revenues to meet its current year expenditures

Question 19

Which of the following are combined to produce the accumulated deficit or surplus on a government's statement of financial position?

A)Net assets and net debt
B)Financial assets and net debt
C)Financial assets and liabilities
D)Non-financial assets and net debt

Question 20

What can the non-financial assets of a government be used for?

A)Providing services only
B)Debt payment only
C)Providing services and debt payment
D)Neither service provision nor debt payment

Question 21

The federal government provided $500,000 to a university to develop and operate a bridging program for foreign-trained accountants.Which of the following statements about the above government transfer is correct?

A)This is a non-exchange transaction with an eligibility criteria.
B)This is a non-exchange transaction with a stipulation criteria.
C)This is an exchange transaction with an eligibility criteria.
D)This is an exchange transaction with a stipulation criteria.

Question 22

One of the largest sources of revenue for governments is government transfers.Government transfers represent non-exchange revenue.Explain what "government transfer" is and why it is a non-exchange transaction.How are government transfers reported? Be sure to address reporting from the transferor and the recipient perspectives,separately.

Question 23

What does the Public Sector Accounting Board (PSAB)recommend with respect to tax revenue?

A)Tax revenue should be reported at gross.
B)Tax revenue should be reported net of tax concessions and collection costs.
C)Tax revenue should be reported net of tax concessions and collection costs should be expensed.
D)Tax revenue should be reported net of tax collection costs and tax concessions should be expensed.

Question 24

To enhance users' abilities to evaluate a government's financial results,budget numbers are included on some of the financial statements.Which statements would include the budget numbers?

A)Statement of operations and statement of changes in net debt
B)Statement of operations and statement of cash flows
C)Statement of financial position and statement of operations
D)Statement of financial position and statement of changes in net debt

Question 25

According to the recommendations of the Public Sector Accounting Board,when should revenue be recognized related to funds received from external parties who have imposed restrictions that limit the use of the funds?

A)When the funds are pledged
B)When the funds are received
C)When the funds are disbursed
D)When the resources which were purchased with the funds are used

Question 26

What is the only item that will appear under the investing section of a government statement of cash flow?

A)Sale and purchase of financial assets
B)Sale and purchase of nonfinancial assets
C)Sale and purchase of tangible capital assets
D)Amortization of tangible capital assets

Question 27

The CICA's Public Sector Accounting Board (PSAB)identified nine unique characteristics of governments that differentiate them from private sector reporting.List these nine characteristics.

Question 28

A government business enterprise's net income or loss is reported on the government's statement of operations.In addition,________.

A)its assets and liabilities are added to the government's statement of financial position
B)the accounting principles are not adjusted to government accounting principles
C)the investment should be reported using the cost method
D)the investment account should not be adjusted for the net income or loss

Question 29

Which of the following are qualitative characteristics of good financial reports for governments?

A)Comparability among years,consistency among governments,completeness,and timeliness.
B)Comparability among governments,consistency between years,completeness,and timeliness.
C)Comparability with business,consistency between years,completeness,and timeliness.
D)Full disclosure,transparency,accuracy,and audit.

Question 30

The Public Sector Accounting Board suggested several objectives for the financial statements of federal,provincial and territorial governments.List and briefly explain each of the four objectives.

Question 31

A provincial government provides a grant to one of its cities to support a winter festival.The provincial government can recognize this transfer when it has been fully authorized.When is the transfer considered fully authorized?

A)When the appropriate government minister has provided written approval for the transfer
B)When the grant has been received by the city
C)When the grant has been used by the city for the required purpose
D)When the transfer has been approved by the legislature

Question 32

What basis does the present government reporting method use?

A)Cash
B)Modified cash
C)Modified accrual
D)Full accrual

Question 33

In general,there are three types of government organizations.Identify and describe these three types and the accounting standards that are followed by each type of entity.

Question 34

Clearly distinguish between a government business organization and a non-business government organization.

Question 35

PSAB defines a government organization as one that is "controlled by the government".Explain what is meant by "control" and how this is assessed for governments.Explain how controlled entities are reported.

Question 36

According to the recommendations of the Public Sector Accounting Board,which of the following organizations should be consolidated with a provincial government's financial statements?

A)Hospitals and universities
B)School boards
C)Art galleries
D)None of the above

Question 37

Describe the major differences that exist in the purpose of accounting and reporting and in the types of reports of a large city when compared to a large public company.

Question 38

What reporting basis should Wind Power Plus,a government business enterprise,use?

A)Cost method
B)Equity method
C)Modified equity method
D)Consolidation

Question 39

One of the objectives of government reporting is to allow users the ability to assess the government's finances.A statement of financial position is prepared and the government's "net debt" is presented on this statement.Describe what is meant by "net debt" and why this is an important indicator of the government's financial position.How does net debt impact the government's accumulated deficit or surplus.

Question 40

Recent surveys have suggested that there are several qualitative characteristics that are desirable in published financial reports of governmental units.List and briefly discuss each of the four major qualitative characteristic desired.

Question 41

Tangible capital assets owned by governments are viewed differently than tangible capital assets owned by business enterprises.Explain this difference and describe how tangible capital assets are reported for governments.