Question 1

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

Accepted Answer

A complete CAFR includes combining financial statements to reflect major funds, along with notes and other required supplementary information.

Question 2

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

Accepted Answer

This is true because combining statements are necessary to show the aggregation of the non-major columns with the major columns to present a complete financial picture of the fund.

Question 3

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 4

State and local governments are not required to prepare a CAFR.

Accepted Answer

While recommended, state and local governments are not legally required to prepare a Comprehensive Annual Financial Report (CAFR).

Question 5

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

According to GASB standards, a government may designate any fund to be a major fund if reporting that fund separately would be useful. This designation is based on the significance of the fund, which is determined by criteria such as total assets, liabilities, revenues, or expenditures/expenses. Reporting a major fund separately in the financial statements helps users to better understand the financial position and results of operations of the government.

Question 6

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

Accepted Answer

Governmental funds are prepared using the economic resources measurement focus and accrual basis accounting.

Question 7

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

Accepted Answer

When preparing fund basis financial statements, any funds not reported separately are combined with other funds of a similar nature and reported as non-major funds. They are not reported individually by function.

Question 8

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 fund financial statements for governmental, proprietary, and fiduciary funds in addition to government-wide statements.

Question 9

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

Accepted Answer

Fiduciary funds are not included in the government-wide financial statements.

Question 10

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

A Comprehensive Annual Financial Report (CAFR) should include all of the listed sections, including 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.

Question 11

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 done to present a comprehensive view of the financial activities of an entity that includes its component units. It is done only when the primary government and its component units are so closely related that they are essentially the same entity. In such cases, it is appropriate to blend the financial information of both entities to present a consolidated view of their financial position and performance.

Question 12

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 13

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 statement is true. Non-major funds are those funds that are not significant enough to warrant separate reporting and therefore they are combined and reported in a single column under the label non-major funds.

Question 14

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 15

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 16

The introductory and statistical sections of a CAFR are required to be audited.

Accepted Answer

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

Question 17

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 18

The General Fund is not always considered to be a major fund when preparing fund basis financial statements.

Accepted Answer

The General Fund is considered a major fund as it typically has the largest amount of financial activity and resources among all funds in a government's financial statements.

Question 19

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 20

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

Accepted Answer

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

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