Question 1

Both a general purpose and a special purpose government could be considered examples of primary governments under GAAP.

Accepted Answer

Both general purpose and special purpose governments are considered primary governments under GAAP.

Question 2

Under GASB standards, the financial statements that report on business-type activities at the government-wide level include the statement of net position, statement of activities, and statement of cash flows.

Accepted Answer

Under GASB standards, the government-wide financial statements for business-type activities include the statement of net position and the statement of activities, but not the statement of cash flows. The statement of cash flows is required for proprietary funds, not at the government-wide level.

Question 3

Fiduciary activities are not reported in the government-wide financial statements under GASB standards.

Accepted Answer

According to GASB standards, fiduciary activities are reported in separate fiduciary fund financial statements, and not in the government-wide financial statements.

Question 4

Similar in purpose to the International Accounting Standard Board (IASB) is the International Public Sector Accounting Standards Board.

Accepted Answer

The International Public Sector Accounting Standards Board (IPSASB) is similar to the IASB in purpose, but focuses on providing standards and guidance for financial reporting by public sector entities, while the IASB focuses on the private sector.

Question 5

Under GASB standards, only proprietary funds prepare a statement of cash flows.

Accepted Answer

According to GASB standards, only proprietary funds are required to prepare a statement of cash flows. other types of funds, such as governmental and fiduciary funds, are not required to prepare this statement.

Question 6

A discretely presented component unit is presented as a major fund on the governmental fund financial statements.

Accepted Answer

A discretely presented component unit is reported in a separate column in the government-wide financial statements, not as a major fund in the governmental fund financial statements. Major funds are determined based on specific criteria and are part of the primary government's own financial statements.

Question 7

A financial reporting entity is defined as a primary government, as well as all other organizations that have an operational relationship with the primary government.

Accepted Answer

The answer of A financial reporting entity is defined as...

Question 8

Statistical tables included in comprehensive annual financial reports should provide social and economic data, in addition to financial data, to assist financial statement users in better understanding the activities and condition of the government.

Accepted Answer

Including social and economic data in financial reports can provide a more complete picture of the government's activities and condition, and can be beneficial for users seeking a broader perspective.

Question 9

State and local governments should prepare only those financial reports required by law-generally year-end financial statements.

Accepted Answer

State and local governments should prepare more than just year-end financial statements required by law. They should also prepare comprehensive annual financial reports (CAFRs) to provide a more detailed and transparent view of their financial position and activity.

Question 10

The accounting system used by a state or local government must make it possible to prepare financial statements as required by the Financial Accounting Standards Board.

Accepted Answer

The accounting system used by a state or local government must make it possible to prepare financial statements as required by the Governmental Accounting Standards Board (GASB), not the Financial Accounting Standards Board (FASB), which sets standards for private sector accounting.

Question 11

The GASB defines a component unit as any organization for which the primary government is financially accountable.

Accepted Answer

The answer of The GASB defines a component unit as...

Question 12

The General Fund data for a blended component unit should be reported as a special revenue fund of the primary government.

Accepted Answer

The General Fund data for a blended component unit should be reported as a special revenue fund of the primary government, as it is considered a part of the primary government's financial reporting entity. Blended component units are legally separate entities but have a close relationship with the primary government, with the primary government being the primary beneficiary of its services, finances, or operations. As such, the financial data of a blended component unit is reported as a part of the primary government's financial statements.

Question 13

Similar to for-profit entities, the GASB requires governments to prepare quarterly interim financial reports.

Accepted Answer

The GASB requires governments to prepare annual financial reports, not quarterly.

Question 14

One of the required reconciliations in converting governmental fund financial statements to governmental activities statements at the government-wide level is an adjustment for internal service funds' assets, liabilities, operating income (loss), and transfers.

Accepted Answer

This statement is correct. Internal service funds are used to provide goods or services to other departments or agencies within the same government entity, and they are presented as governmental activities in the government-wide financial statements. The conversion process requires adjusting for the assets, liabilities, operating income (loss), and transfers of these funds to accurately reflect their impact on the overall financial position and performance of the government.

Question 15

The three sections of the comprehensive annual financial reports of state and local governments are (1) an introductory section, (2) a financial section, and (3) a supplemental section.

Accepted Answer

The three sections of the comprehensive annual financial reports are (1) an introductory section, (2) a financial section, and (3) a statistical section.

Question 16

A government is financially accountable for another entity if it appoints the voting majority of the entity's governing board.

Accepted Answer

Financial accountability in government involves more than just appointing a majority of an entity's governing board; it also includes factors like the ability to impose will, fiscal dependency, and the potential for financial benefit or burden.

Question 17

In reconciling between the governmental fund and government-wide statements, capital assets acquired by a governmental fund are deducted from fund balance-governmental funds to arrive at net position of governmental activities.

Accepted Answer

In reconciling between the governmental fund and government-wide statements, capital assets acquired by a governmental fund are added (not deducted) to arrive at the net position of governmental activities, as governmental funds report capital outlays as expenditures, but government-wide statements report them as assets.

Question 18

In accordance with GASB standards, both a general purpose government and a special purpose government can be considered primary governments if certain criteria are met.

Accepted Answer

According to GASB standards, a general purpose government or a special purpose government can be considered a primary government if it meets certain criteria, such as having the ability to independently issue debt or being fiscally independent from other governments.

Question 19

Popular reports provide condensed financial information that can be used by governments to communicate financial results to citizens.

Accepted Answer

Popular reports are a type of financial report that is designed to provide condensed financial information that can easily be understood by citizens. They are commonly used by governments to communicate financial results to the public in a transparent and accessible way. These reports are often published on government websites or distributed in print form to help citizens stay informed about the financial state of their local, state, or national governments.

Question 20

Special purpose accounting frameworks are considered generally accepted accounting principles (GAAP) for state and local governments.

Accepted Answer

Special purpose frameworks, also known as other comprehensive bases of accounting (OCBOA), are not considered generally accepted accounting principles (GAAP); GAAP for state and local governments in the United States is established by the Governmental Accounting Standards Board (GASB).

Quiz 9: Financial Reporting of State and Local Governments