Question 1

Regarding external financial reporting for governmental units, depreciation expense is reported in the government-wide Statement of Activities.

Accepted Answer

In governmental accounting, depreciation expense is reported in the government-wide Statement of Activities because this statement presents the full accrual basis of accounting, which includes recognizing depreciation of capital assets.

Question 2

Regarding external financial reporting for governmental units, depreciation is reported in the government-wide statements and the fund-based statements for governmental activities.

Accepted Answer

Depreciation is reported in the government-wide financial statements, which include the Statement of Net Position and the Statement of Activities, to show the full economic resources and changes in them. However, it is not reported in the fund-based financial statements for governmental activities, as these statements operate on a modified accrual basis focusing on current financial resources and expenditures, not on the consumption of capital assets reflected by depreciation.

Question 3

Regarding external financial reporting for governmental units, depreciation is reported in the government-wide statements and the fund-based statements for business-type activities.

Accepted Answer

Depreciation is reported in government-wide statements for all activities and in fund-based statements for business-type activities, which use accrual accounting.

Question 4

Regarding external financial reporting for governmental units, the total column for the primary government in the government-wide Statement of Activities cannot be labeled "memorandum only."

Accepted Answer

The government-wide Statement of Activities must present financial information in a manner that is not labeled as "memorandum only," as it is intended to provide a comprehensive overview of the government's financial activities.

Question 5

Regarding external financial reporting for governmental units, whether a fund is a major fund is a judgmental determination-not a quantitiative-based determination.

Accepted Answer

Determining whether a fund is a major fund in governmental accounting involves specific quantitative criteria based on its assets, liabilities, revenues, or expenditures/expenses relative to the total for all funds, making it a quantitative-based determination rather than solely judgmental.

Question 6

Regarding external financial reporting for governmental units, Internal Service Funds are reported in total in a separate column in the fund-based balance sheet for Proprietary Funds.

Accepted Answer

Internal Service Funds, which are a type of Proprietary Fund, are indeed reported in total in a separate column in the fund-based balance sheet for Proprietary Funds in external financial reporting for governmental units. This is because Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost-reimbursement basis, and their financial information is essential for comprehensive reporting.

Question 7

Regarding external financial reporting for governmental units, the accounts Contributed Capital and Retained Earnings cannot be used in the fund-based balance sheet for Proprietary Funds.

Accepted Answer

Governmental units use Net Position instead of Contributed Capital and Retained Earnings in the fund-based balance sheet for Proprietary Funds.

Question 8

Regarding external financial reporting for governmental units, a Statement of Cash Flows is required at the government-wide reporting level.

Accepted Answer

A Statement of Cash Flows is required at the government-wide reporting level because it provides information about the sources and uses of cash and cash equivalents, which is useful for assessing the financial health of a governmental unit.

Question 9

Regarding external financial reporting for governmental units, a Statement of Cash Flows is required only at the fund-based reporting level for Proprietary Funds.

Accepted Answer

Proprietary funds, which include enterprise and internal service funds, are the only types of funds in governmental accounting that require a Statement of Cash Flows. This requirement is because proprietary funds operate in a manner similar to private sector businesses, and the Statement of Cash Flows provides important information about the liquidity and financial flexibility of these funds.

Question 10

Regarding external financial reporting for governmental units, the Satement of Cash Flows for Proprietary Funds must be presented using the indirect method.

Accepted Answer

The Statement of Cash Flows for Proprietary Funds in governmental units can be presented using either the direct or indirect method, although the direct method is encouraged.

Question 11

Regarding external financial reporting for governmental units, a financial statement pertaining to fiduciary activities need not be presented at the fund-based reporting level.

Accepted Answer

Fiduciary activities must be reported at the fund-based level in governmental financial statements to provide detailed information about resources held in trust for others.

Question 12

Regarding external financial reporting for governmental units, Required Supplementary Information is information that accompanys audited GAAP financial statements but has not been subject to audit.

Accepted Answer

Required Supplementary Information (RSI) accompanies audited GAAP financial statements in governmental reporting but is not itself audited, although auditors may apply certain limited procedures to it.

Question 13

Regarding external financial reporting for governmental units, the Management Discussion and Analysis will normally be located in the notes to the financial statements.

Accepted Answer

The Management Discussion and Analysis (MD&A) is a required section of a governmental unit's annual financial report that precedes the financial statements, not in the notes to the financial statements. It provides an overview and analysis of the financial activities of the entity and is intended to give readers a narrative introduction to the financial statements.

Question 14

_____	The operation of a civic auditorium that finances 75% of its operating costs from a subsidy from the General Fund and 25% from direct charges to users would most likely be accounted for in a(n)

Accepted Answer

The operation of a civic auditorium that is primarily financed through a subsidy from the General Fund, with a portion of its costs covered by direct charges to users, fits the description of a Special Revenue Fund. This type of fund is used to account for proceeds of specific revenue sources that are legally restricted to expenditure for specified purposes, in this case, the operation of the auditorium.

Question 15

_____	Which of the following would not occur for a Special Revenue Fund?

Accepted Answer

Special Revenue Funds typically do not depreciate capital assets because such funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Depreciation of capital assets is usually recorded in proprietary funds or governmental activities in the government-wide financial statements, not in Special Revenue Funds.

Question 16

_____ A Special Revenue Fund would:
 $\begin{array}{lll}&\text { Report Fixed Assets }&\text { Depreciate Fixed Assets }\
\text { a. } & \text { Yes } & \text { Yes } \
\text { b. } & \text { Yes } & \text { No } \
\text { c. } & \text { No } & \text { Yes } \
\text { d. } & \text { No } & \text { No }
\end{array}$

Accepted Answer

The answer of _____ A Special Revenue Fund would:
 \(\begin{array}{lll}&\text...

Question 17

_____	The proceeds from general obligation bonds to be used for the construction of a new fire station would initially be recorded in the

Accepted Answer

The proceeds from general obligation bonds for the construction of a new fire station would initially be recorded in the Capital Projects Fund, as this fund is used for the acquisition or construction of major capital facilities.

Question 18

_____	Depreciation cannot be recorded in the

Accepted Answer

Depreciation is not recorded in the Capital Projects Fund because it is used for financial resources used for the acquisition or construction of major capital facilities, not for tracking depreciation.

Question 19

_____	The receipt of money by a Capital Projects Fund from the General Fund to pay for a designated percentage of a project's cost is reported as a(n)

Accepted Answer

Interfund transfers are amounts transferred from one fund to another within the same governmental entity. When a Capital Projects Fund receives money from the General Fund to cover a portion of a project's cost, it is considered an interfund transfer because it involves the movement of resources between funds without expectation of repayment.

Question 20

_____	The disbursement of some remaining cash in a Capital Projects Fund to another fund after the completion of a project is reported as a(n)

Accepted Answer

Interfund transfers are used to move resources between funds within a governmental entity. When a Capital Projects Fund has completed its project and has remaining cash, transferring those funds to another fund within the same government is considered an interfund transfer. This is done to reallocate resources where they are needed.

Quiz 25: Governmental Accounting: The Special-Purpose Funds and Special General Ledger

Regarding external financial reporting for governmental units, depreciation expense is reported in the government-wide Statement of Activities.

Regarding external financial reporting for governmental units, depreciation is reported in the government-wide statements and the fund-based statements for governmental activities.

Regarding external financial reporting for governmental units, depreciation is reported in the government-wide statements and the fund-based statements for business-type activities.

Regarding external financial reporting for governmental units, the total column for the primary government in the government-wide Statement of Activities cannot be labeled "memorandum only."

Regarding external financial reporting for governmental units, whether a fund is a major fund is a judgmental determination-not a quantitiative-based determination.

Regarding external financial reporting for governmental units, Internal Service Funds are reported in total in a separate column in the fund-based balance sheet for Proprietary Funds.

Regarding external financial reporting for governmental units, the accounts Contributed Capital and Retained Earnings cannot be used in the fund-based balance sheet for Proprietary Funds.

Regarding external financial reporting for governmental units, a Statement of Cash Flows is required at the government-wide reporting level.

Regarding external financial reporting for governmental units, a Statement of Cash Flows is required only at the fund-based reporting level for Proprietary Funds.

Regarding external financial reporting for governmental units, the Satement of Cash Flows for Proprietary Funds must be presented using the indirect method.

Regarding external financial reporting for governmental units, a financial statement pertaining to fiduciary activities need not be presented at the fund-based reporting level.

Regarding external financial reporting for governmental units, Required Supplementary Information is information that accompanys audited GAAP financial statements but has not been subject to audit.

Regarding external financial reporting for governmental units, the Management Discussion and Analysis will normally be located in the notes to the financial statements.

_____ The operation of a civic auditorium that finances 75% of its operating costs from a subsidy from the General Fund and 25% from direct charges to users would most likely be accounted for in a(n)

_____ Which of the following would not occur for a Special Revenue Fund?

_____ The proceeds from general obligation bonds to be used for the construction of a new fire station would initially be recorded in the

_____ Depreciation cannot be recorded in the

_____ The receipt of money by a Capital Projects Fund from the General Fund to pay for a designated percentage of a project's cost is reported as a(n)

_____ The disbursement of some remaining cash in a Capital Projects Fund to another fund after the completion of a project is reported as a(n)