Question 1

In the government-wide financial statements, governmental activities are reported using the current financial resources measurement focus and the accrual basis of accounting.

Accepted Answer

In the government-wide financial statements, the measurements for the activities reported in governmental-type funds are converted to the economic resources measurement focus and accrual basis of accounting.

Question 2

The government-wide financial statements report on governmental, business-type, and fiduciary-type activities.

Accepted Answer

The fund statements include the fiduciary funds (for which the primary government has a fiduciary relationship) but exclude the discretely presented component units (for which the primary government has a financial accountability relationship). The government-wide statements, on the other hand, exclude fiduciary funds but include discretely presented component units. The government-wide statements include governmental and business-type activities.

Question 3

In the government-wide statement of net position, net position is divided into three categories: net investment in capital assets, restricted, and unrestricted.

Accepted Answer

Governmental GAAP requires the difference between assets and liabilities-the government's net position-to be separated into three components: (1) net investment in capital assets, (2) restricted, and (3) unrestricted.

Question 4

The statement of activities must show-at a minimum-the net expense or revenue for each of the government's functions.

Accepted Answer

The statement of activities shows gross expenses less program revenues and net expense or revenue.

Question 5

Governmental GAAP requires state and local governments to present a reconciliation of the fund financial statements to the government-wide statements as part of the basic financial statements.
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Accepted Answer

Governmental GAAP requires state and local governments to present a reconciliation of the fund financial statements to the government-wide statements as part of the basic financial statements. These two reconciliations-one for the balance sheet and one for the statement of revenues, expenditures, and changes in fund balances-explain the reasons for the specific differences caused by using different measurement focuses and bases of accounting in the two sets of statements. The reconciliations may be presented either at the bottom of the fund financial statements or in accompanying schedules.

Question 6

Amounts due between individual governmental funds and individual enterprise funds are eliminated against each other and not shown on the government-wide statement of net position.

Accepted Answer

Amounts due between individual governmental funds, as reported in the governmental funds balance sheet, are eliminated against each other and are not carried forward to the governmental activities column of the government-wide statement of net position. The same is done for amounts due between individual enterprise funds. However, amounts due between the governmental and enterprise fund categories are carried forward to the respective columns for governmental- and business-type activities in the statement of net position and are reported as internal balances.

Question 7

Interfund transfers between individual governmental funds, as reported in the governmental funds statement of revenues, expenditures, and changes in fund balance, are eliminated against each other and not shown on the government-wide statement of activities.

Accepted Answer

Interfund transfers between individual governmental funds are eliminated against each other and are not carried forward to the governmental activities column of the government-wide statement of activities.

Question 8

For government-wide financial reporting, the assets and liabilities of Internal Service Funds (ISFs) are aggregated with the assets and liabilities of the activities that are the primary consumers of ISF services.

Accepted Answer

For government-wide financial reporting, the assets and liabilities of ISFs are aggregated with the assets and liabilities of the activities that are the primary consumers of ISF services. ISFs generally provide services primarily to departments accounted for in the General Fund, so ISF assets and liabilities are aggregated most often with those of governmental activities.

Question 9

To prepare the governmental activities column of the government-wide statement of net position, expenditures for capital outlay reported in governmental funds during the current year should be reclassified as capital outlay expenses.

Accepted Answer

To prepare the governmental activities column of the government-wide statement of net position, expenditures for capital outlay reported in governmental funds during the current year should be reversed and instead reported as capital assets.

Question 10

To prepare the governmental activities column of the government-wide statement of activities, expenditures for capital outlay reported in a governmental fund during the current year should be reclassified as depreciation expense.

Accepted Answer

Depreciation expense is recorded for governmental fund activities in the government-wide statement of activities. However, expenditures for capital outlay reported in governmental funds during the current year should be reversed and instead reported as capital assets. Expenses and expenditures are different concepts. Depreciation expense is the allocation of the cost of a capital asset over its estimated useful live.

Question 11

To prepare the governmental activities column of the government-wide statement of net position, other financing sources received from the issuance of bonds in a Capital Projects Fund during the current year will need to be reclassified as Bonds payable.

Accepted Answer

Under the economic resources measurement focus that is used to prepare government-wide financial statements, long-term liabilities are recorded and other financing sources are not recorded. Therefore, other financing sources related to proceeds from a bond issues in a Capital Projects funds will need to be eliminated and Bonds payable will need to be recorded.

Question 12

For government-wide reporting, property taxes associated with activities accounted for in governmental funds must be available and measurable to be recorded as revenue.

Accepted Answer

For government-wide financial reporting, there is no reference to the terms measurable and available. Only the period for which levied applies, therefore, for government-wide reporting. If a city levies real property taxes on January 1, 2019 for calendar year 2019, property tax revenues must be recognized in 2019 for the entire amount levied (net of estimated refunds and uncollectible amounts), regardless of when they are collected and even if an enforceable legal claim or the due date arises in a different period.

Question 13

A government that has deferred property tax revenues at its fiscal year-end must reclassify the deferred property tax revenues as Revenues-property taxes for its government-wide statement of activities.

Accepted Answer

Governments must remove any deferred property tax revenues at year-end, by debiting Deferred revenues-property taxes and crediting Revenues-property taxes.

Question 14

Interest expense is accrued for general long-term debt in the government-wide financial statements.

Accepted Answer

Government-wide statements are prepared using the economic resource measurement focus and the accrual basis of accounting. Interest expense is recorded on this basis in the government-wide financial statements for both governmental and business-type activities.

Question 15

For a government that has a trust fund in which it is accumulating sufficient assets to pay OPEB, the net OPEB liability should be reported in both the governmental fund balance sheet and the government-wide statement of net position.

Accepted Answer

In this situation, the government has sufficient assets in its trust funds to pay OPEB. Therefore, a net OPEB liability would not be reported in the governmental-type funds. Expenditures for pension, retiree health care, and other postemployment benefits are equal to the amount contributed to the plan or expected to be liquidated with expendable available financial resources. If plan assets were insufficient, amounts "normally expected to be liquidated with expendable available resources" must also include benefit payments that are due and payable and for which the OPEB plan has insufficient resources to pay. A net OPEB liability is reported in the government-wide financial statements equal to the total OPEB liability less the related OPEB Trust Fund's net position

Question 16

Converting governmental fund information to government-wide statements requires capital asset adjustments, long-term debt adjustments, and revenue adjustments.

Accepted Answer

Converting governmental fund information to government-wide statements requires capital asset adjustments, long-term debt adjustments, revenue adjustments, expense adjustments, and the elimination of interfund receivables, payables, and transfers.

Question 17

Capital assets and long-term debt are not reported in the government activities section of the government-wide statement of net position.

Accepted Answer

Government-wide statements are prepared using the economic resource measurement focus and the accrual basis of accounting. Therefore, both capital assets and long-term debt are reported in the government-wide statement of net position.

Question 18

The worksheet used to convert governmental fund information to the amounts needed for the governmental activities portion of the government-wide statements begins with debit and credit columns for the combined balances of the preclosing governmental fund balance sheet and statement of revenues, expenditures, and changes in fund balance.

Accepted Answer

The worksheet has two columns for the combined balances of the preclosing governmental fund balance sheet and statement of revenues, expenditures and changes in fund balance, two for the adjusting entries, and two for the adjusted trial balance.

Question 19

Capital assets of fiduciary funds are reported in both the government-wide and fund financial statements.

Accepted Answer

Capital assets of fiduciary funds are reported only in the statement of fiduciary net position.

Question 20

Infrastructure assets are long-lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets.

Accepted Answer

By definition, infrastructure assets are long-lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets.

Quiz 10: Government-Wide Financial Statements