Question 1

The GASB Concept Statement on Service Efforts and Accomplishments Reporting encourages state and local governments to include inputs of nonmonetary resources in their financial reporting.

Accepted Answer

Governments have difficulty in meeting the information needs of citizens. Traditional financial statements, which measure events in dollars, are not well designed to evaluate a government's effectiveness in delivering services. Nonfinancial measures are better indicators of performance. GASB's Concept Statements No. 2 and No. 5 address service efforts and accomplishments.

Question 2

An organization is presumed to be governmental if it has the ability to issue directly debt that is exempt from federal taxes.

Accepted Answer

If an organization has the ability to issue debt directly that is exempt from federal taxes, it is classified as governmental.

Question 3

Although certain supplementary information may not be required, if presented, it must follow GASB guidance regarding its format and content.

Accepted Answer

Supplementary information may include unaudited schedules, narratives, or other information that provides additional context to the financial statements. This information must follow GASB guidance regarding its format and content if presented.

Question 4

Fund-basis statements are presented for three categories of government activities: general, proprietary and fiduciary.

Accepted Answer

The answer of Fund-basis statements are presented for three categories...

Question 5

GASB and FASB Concept Statements establish accounting standards that must be complied with to receive an unqualified audit opinion.

Accepted Answer

Concept statements do not establish accounting standards but primarily serve to guide standard setting bodies. Governments must comply with GAAP as established by Statements to receive unqualified audit opinions.

Question 6

The Federal Accounting Standards Advisory Board and the Governmental Accounting Standards Board are parallel bodies under the oversight of the Financial Accounting Foundation.

Accepted Answer

The answer of The Federal Accounting Standards Advisory Board and...

Question 7

Under modified accrual accounting, revenues are recognized when measurable and available to finance expenditures of the current period.

Accepted Answer

This statement accurately describes the recognition of revenues under modified accrual accounting. Revenues must be both measurable and available to finance expenditures of the current period in order to be recognized.

Question 8

A Management's Discussion and Analysis is required for state and local governmental units, but not the federal government.

Accepted Answer

A Management's Discussion and Analysis (MD&A) is required for the federal government under the Financial Report of the United States Government, which includes an MD&A section.

Question 9

Fund accounting exists primarily to provide assurance that resources are used according to legal or donor restrictions.

Accepted Answer

Fund accounting is a method of accounting used by non-profit organizations, government entities, and other organizations that have designated funds with specific restrictions on their use. The purpose of fund accounting is to provide assurance that resources are used according to legal or donor restrictions. Therefore, the statement is true.

Question 10

The Governmental Accounting Standards Board considers the financial reporting entity to include the primary government and its component units.

Accepted Answer

The GASB defines the financial reporting entity as including the primary government and its component units, which may be other legally separate entities that are controlled by the primary government.

Question 11

The government-wide statements and the fund statements for proprietary funds and fiduciary funds use the economic resources measurement focus and the accrual basis of accounting.

Accepted Answer

The economic resources measurement focus and accrual basis of accounting are used in the government-wide statements and the fund statements for proprietary funds and fiduciary funds.

Question 12

Governmental activities fund statements must be changed to the accrual basis from the modified accrual basis when preparing government-wide financial statements.

Accepted Answer

Governmental activities fund statements are prepared using the modified accrual basis which focuses on current financial resources and obligations. However, when preparing government-wide financial statements, which aim to provide an overall view of the government's financial position and activities, the accrual basis must be used. This basis of accounting recognizes revenues and expenses when they are earned or incurred, regardless of when cash is received or paid. Therefore, governmental activities fund statements must be changed to the accrual basis when preparing government-wide financial statements.

Question 13

All funds of a governmental unit use the current financial resources measurement focus and modified accrual basis of accounting

Accepted Answer

The answer of All funds of a governmental unit use...

Question 14

Comparison of the legally approved budget with actual results of the General Fund is included as part of required supplementary information in the CAFR.

Accepted Answer

The comparison of the legally approved budget with actual results of the General Fund is indeed included as part of required supplementary information in the Comprehensive Annual Financial Report (CAFR).

Question 15

The Governmental Accounting Standards Board sets financial reporting standards for all units of government: federal, state and local.

Accepted Answer

The GASB sets standards for state and local governments but not the federal government. GASB also sets standards for governmentally related not-for-profit organizations, health care entities, museums, libraries, and performing arts organization owned or controlled by governments.

Question 16

Common measurement focus and basis of measurement is an important feature of government-wide financial statements.

Accepted Answer

Common measurement focus and basis of measurement ensure consistency and comparability in the financial statements of the government entities, which is essential for making informed decisions by the users of financial information. Therefore, it is an important feature of government-wide financial statements.

Question 17

The Financial Accounting Standards Board sets financial reporting standards for private sector organizations, except nongovernmental, not-for-profit organizations.

Accepted Answer

The answer of The Financial Accounting Standards Board sets financial...

Question 18

One objective of the Governmental Accounting Standards Board is to help users determine compliance with finance-related laws, rules and regulations

Accepted Answer

The objective of the Governmental Accounting Standards Board is to establish and improve standards of state and local governmental accounting and financial reporting, which includes providing information useful for determining compliance with finance-related laws, rules, and regulations.

Question 19

General fixed assets of the government are reported both in the government-wide financial statements and the governmental fund financial statements.

Accepted Answer

Governmental funds are reported using the modified accrual basis of accounting. Governmental-type activities are reported in the government-wide statements using the accrual basis of accounting, including fixed assets and long-term debt.

Question 20

The Federal Accounting Standards Advisory Board requires less extensive reports than does the FASB or GASB.

Accepted Answer

FASAB requires more financial statements than are typically required of state and local governments, public and private not-for-profits and investor-owned businesses.

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