Question 1

The statistical section of the CAFR contains the combining schedules of nonmajor 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 2

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

Accepted Answer

False

Question 3

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

False

Question 4

Separate financial information is required to be presented for all funds.

Accepted Answer

The answer of Separate financial information is required to be...

Question 5

The Government-wide financial statements include separate columns for discretely presented component units.

Accepted Answer

The Government-wide financial statements do include separate columns for discretely presented component units. These are entities that are legally separate from the primary government but are still significant enough to require their own column in the financial statements. Examples may include public universities or transit authorities.

Question 6

The Government-wide financial statements include a separate column for fiduciary fund information.

Accepted Answer

Fiduciary activities are not included in the government-wide statements.

Question 7

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) is a detailed report of a government entity's financial performance that includes all of the sections mentioned in the statement.

Question 8

Special-purpose governments engaged in business type activities only are required to prepare both proprietary fund and government-wide financial statements.

Accepted Answer

The answer of Special-purpose governments engaged in business type activities...

Question 9

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

Accepted Answer

This is true as per generally accepted accounting principles (GAAP) for state and local governments in the United States. The current financial resources measurement focus means that only current assets and liabilities are recorded in the fund statements, and the modified accrual basis of accounting means that revenues and expenditures are recognized when they are measurable and available for use.

Question 10

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

Accepted Answer

The answer of The fiduciary fund financial statements are prepared...

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 required when component units and primary government are so closely related that they are essentially the same. The combined financial statements should present the government and its component units as a single entity.

Question 12

The basic financial statements of a state or local governmental unit include the MD&A, government-wide statements, fund statements and the notes.

Accepted Answer

The basic financial statements consist of the government-wide, the governmental fund, the proprietary fund, and the fiduciary fund financial statements and the notes to the financial statements).

Question 13

Prior-year data is required for government-wide financial statements.

Accepted Answer

Prior year data, typically 10 years, is presented with the statistical section of the CAFR and is optional.

Question 14

Governmental accounting standards do not require the statistical section.

Accepted Answer

The answer of Governmental accounting standards do not require the...

Question 15

The government-wide financial statements are prepared using the economic resources measurement focus and accrual basis of accounting.

Accepted Answer

This is correct. The government-wide financial statements follow the economic resources measurement focus, which means that they report all assets and liabilities of the government, including those that are not expected to be turned into cash or paid within the next year. These statements also use the accrual basis of accounting, which records revenue when it is earned and expenses when they are incurred, regardless of when cash is actually received or paid out.

Question 16

The General Fund is always a major fund for purposes of financial reporting.

Accepted Answer

The General Fund is considered a major fund because it is typically the primary operating fund for a government entity and is used for general government activities. As a result, it must be separately presented in financial statements when the government has more than one fund.

Question 17

Governmental fund financial statements include columns for the General Fund and all other "major" governmental funds.

Accepted Answer

This is true. Governmental fund financial statements include separate columns for the General Fund and all other "major" governmental funds, as well as a total column for all governmental funds combined. This is because the General Fund is typically the most important fund and is used to account for most of the day-to-day operations of the government, while the other major funds are typically used for specific purposes or projects.

Question 18

Governmental fund financial statements include the Balance Sheet and the Statement of Revenues, Expenditures and Changes in Fund Balances.

Accepted Answer

Governmental fund financial statements include the Balance Sheet (also referred to as the Statement of Net Assets) and the Statement of Revenues, Expenditures and Changes in Fund Balances.

Question 19

Government activities which meet the tests and are determined to be component units of state and local governmental units must be discretely presented in the financial statements.

Accepted Answer

The answer of Government activities which meet the tests and...

Question 20

Notes to the financial statements must distinguish between the primary government and discretely presented component units.

Accepted Answer

This is a requirement according to the Governmental Accounting Standards Board (GASB) Statement No. 34, which requires financial statements to present information separately for the primary government and any discretely presented component units. This helps provide transparency and clarity about the financial activities and status of each entity.

Quiz 1: Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations