Under GASB rules for the financial reporting entity:
A) Component units are included if the primary government is financially accountable for their operations
B) Counties are component units of the State Government
C) Blended and discretely presented component units are to be reported in government-wide financial statements but not in fund financial statements
D) Component units must be reported in columns (discrete presentation) separate from the funds of a primary government

Question

Quizplus · Accepted Answer

Under GASB rules, component units are included in the financial reporting entity if the primary government is financially accountable for their operations. This means that the primary government has the ability to appoint a voting majority of the component unit's governing board, or is otherwise able to impose its will on the component unit.

Answer: C
 Blended and discretely presented component units are to be reported in government-wide financial statements but not in fund financial statements. This means that their financial data is included in the government-wide financial statements as if they were part of the primary government, but are presented separately in columns or schedules.

Answer: D
 Component units must be reported in columns or schedules separate from the funds of a primary government. This is referred to as discrete presentation, and is required for all component units that are not blended with the primary government. It allows users of the financial statements to easily distinguish the financial data of the primary government from that of its component units.

Therefore, the best choices are A and C.

Under GASB Rules for the Financial Reporting Entity