Question 1

With respect to fund basis financial statements,a government may only designate a fund to be a major fund if it meets the size thresholds established by GASB.

Accepted Answer

A government may designate any fund as a major fund if reporting that fund separately would be useful.

Question 2

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

Accepted Answer

The government-wide financial statements do present the government as a whole, including component units, and exclude fiduciary activities. This is in contrast to the fund financial statements, which focus on specific governmental funds and fiduciary funds.

Question 3

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

Accepted Answer

Fiduciary funds use the economic resources measurement focus and accrual accounting. Fiduciary funds do not have revenues or expenses, rather they have additions and deductions.

Question 4

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

Accepted Answer

The introductory and statistical sections of a CAFR are not audited but are included to provide additional information and context to the financial statements.

Question 5

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

Accepted Answer

This is because non-major columns do not provide enough detail on their own, so combining statements are necessary to provide the needed context and information.

Question 6

With respect to fund basis financial statements,a government may designate any fund to be a major fund if reporting that fund separately would be useful.

Accepted Answer

A government has the flexibility to designate any fund as a major fund if separate reporting of that fund would be useful to financial statement users. This allows governments to highlight specific funds that are especially significant or relevant to their financial situation.

Question 7

The General Fund is always considered to be a major fund when preparing fund basis financial statements.

Accepted Answer

The General Fund is the most significant fund in a government's financial activities and is always considered a major fund when preparing fund basis financial statements.

Question 8

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

Accepted Answer

The answer of According to GASB,a primary government can only...

Question 9

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

Accepted Answer

Blending of financial information is required when the component units and the primary government are so closely related that they are essentially the same entity. This means that they share resources and responsibilities to the extent that they cannot be viewed as separate entities for financial reporting purposes. In such cases, the component units' financial information is combined with the primary government's financial information to provide a comprehensive picture of the financial activities of the entity.

Question 10

In addition to the government-wide statements,governments are required to prepare fund financial statements for governmental funds only.

Accepted Answer

In addition to the government-wide statement, governments are required to prepare fund-level financial statements within the three categories of funds: governmental, proprietary and fiduciary.

Question 11

When preparing fund basis financial statements,any funds not reported separately are aggregated and reported in a single column under the label non-major funds.

Accepted Answer

This is true. Non-major funds are typically aggregated and reported together in fund basis financial statements when they are not reported separately.

Question 12

With respect to fund basis financial statements,governmental funds are considered to be a major fund when total assets,liabilities,revenues and expenditures combined are at least 10% of the total for the governmental funds category.

Accepted Answer

Governmental funds, other than the general fund, are considered to be a major fund when both of the following conditions are met: 1) Total assets, liabilities, revenues or expenditures of that individual government fund constitute 10% of the total for the governmental funds category and 2) Total assets, liabilities, revenues or expenditures of that individual government fund are 5% of the total of the governmental and enterprise categories, combined.

Question 13

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

Accepted Answer

A complete CAFR includes combining financial statements to reflect the financial activity of major funds. This includes the general fund, special revenue funds, debt service funds, capital projects funds, and enterprise funds.

Question 14

When preparing fund basis financial statements,any funds not reported separately are reported individually by function.

Accepted Answer

Any funds not reported separately are aggregated and reported in a single column under the label nonmajor funds. A schedule showing the detail of nonmajor funds is provided in the other supplementary information section.

Question 15

State and local governments are required to prepare a CAFR.

Accepted Answer

The answer of State and local governments are required to...

Question 16

In addition to the government-wide statements,governments are required to prepare fund financial statements for governmental,proprietary and fiduciary funds.

Accepted Answer

This statement is true. Governments are required to prepare separate fund financial statements for each fund type: governmental, proprietary, and fiduciary funds. These statements provide more detailed information about each fund's financial position and activities than the government-wide statements.

Question 17

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

Accepted Answer

This statement is true. The CAFR typically consists of three main sections: the Introductory section, the Financial section, and the Statistical section.

Question 18

The statistical section of the CAFR contains the combining schedules of non-major funds.

Accepted Answer

The purpose of the statistical section of the CAFR is to provide historical information and additional detail to help the financial statement user better understand and assess a government's economic condition

Question 19

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

Accepted Answer

Governmental fund statements are prepared using the current financial resources measurement focus, which means that they report on current assets and liabilities and focus on the flow of financial resources rather than the accumulation of assets. They also use the modified accrual basis of accounting, which recognizes revenues when they become "available" (i.e. when they are collectible within the current period or soon enough after the end of the period to be used to pay current liabilities) and expenses when they are incurred. This is different from the full accrual basis used in the financial statements of for-profit entities, which recognizes revenues when they are earned and expenses when they are incurred, regardless of when they are paid or collected.

Question 20

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.

Accepted Answer

The CAFR has three major sections; introductory which includes MD&A, financial which includes basic financial statements, RSI other than MD&A, combining and individual fund statements and narrative explanations, and the statistical section.

Quiz 2: Overview of Financial Reporting for State and Local Governments