Question 1

GASB Statement No.37 specifically requires interest during construction in governments' funds to be capitalized in the government-wide statements.

Accepted Answer

GASB Statement No. 37 does not specifically require the capitalization of interest during construction in government-wide statements; it provides guidance on other accounting and financial reporting issues.

Question 2

When converting from the enterprise funds Statement of Net Assets to the government-wide Statement of Net Assets (government-wide statements),it is necessary to add fixed assets and to deduct long-term debt.

Accepted Answer

False

Question 3

Few adjustments to internal service funds are necessary when converting from proprietary funds statements to the government-wide statements as internal service funds are generally reported as business-type activities in the government-wide statements.
FALSE

Accepted Answer

Few adjustments still need to be made when converting from proprietary funds statements to the government-wide statements, even though internal service funds are generally reported as business-type activities in the government-wide statements. These adjustments include eliminating inter-fund balances and transactions, as well as reclassifying certain expenses and revenues.

Question 4

Assume a government reported $300,000 in capital outlay expenditures in the governmental fund Statement of Revenues,Expenditures,and Changes in Fund Balances.Secondly,assume depreciation of capital assets amounted to $250,000,in the governmental activities column in the Statement of Activities.Those adjustments would cause a decrease of $50,000 when preparing the reconciliation between the change in governmental fund balances to the change in net assets of governmental activities in the Statement of Activities.

Accepted Answer

The adjustments would cause an increase of $50,000 in the reconciliation, not a decrease. The capital outlay expenditure of $300,000 would be added back, and the depreciation of $250,000 would be subtracted, resulting in a net increase of $50,000.

Question 5

When an asset is sold during the year,the proceeds from the sale which was listed as an "other financing source" is eliminated and the gain or loss is recorded when preparing the government-wide statements.

Accepted Answer

The statement is true. When an asset is sold during the year, the proceeds from the sale, which were listed as an "other financing source," are eliminated, and the gain or loss is recorded when preparing the government-wide statements. This adjustment is necessary to accurately reflect the true financial position of the government.

Question 6

When converting from governmental fund financial statements to the governmental activities column of the government-wide statements,it is necessary to make a number of adjustments,many of which convert from modified accrual accounting to accrual accounting.

Accepted Answer

Converting from the governmental fund financial statements to the government-wide statements requires adjustments to convert from modified accrual accounting to accrual accounting.

Question 7

When preparing government-wide statements,depreciation expense must be eliminated.

Accepted Answer

A worksheet entry is required to record depreciation expense on capital assets of governmental activities.

Question 8

Assume a government reported Proceeds of Bonds in the amount of $1,000,000 in the governmental fund Statement of Revenues,Expenditures,and Changes in Fund Balances.When preparing the reconciliation from the changes in fund balances in that statement to the changes in net assets in the governmental funds column in the Statement of Activities,a decrease of $1,000,000 would be entered.

Accepted Answer

In governmental accounting, bond proceeds are recorded as revenue in the fund financial statements but must be adjusted out in the government-wide financial statements to avoid overstating net assets, as they represent a liability, not revenue.

Question 9

When preparing the government-wide statements,a worksheet entry is required to record depreciation expense on general capital assets.

Accepted Answer

Depreciation expense on general capital assets needs to be recorded in a worksheet entry when preparing government-wide statements. This is because the government-wide statements provide an overview of the government's financial position and activities, and depreciation expense is an important item to consider for the valuation of the capital assets used in providing services.

Question 10

In addition to the fund basis statement,GASB Statement 34 requires government-wide statements that are prepared using the modified accrual basis and the economic resources measurement focus.

Accepted Answer

GASB Statement 34 requires fund basis statements to be prepared using the modified accrual basis and the current financial resources measurement focus. However, it requires government-wide statements to be prepared using the full accrual basis and the economic resources measurement focus.

Question 11

When converting from fund financial statements to government-wide statements,it is necessary to eliminate transfers that are between the categories of governmental activities and business-type activities.

Accepted Answer

Balances from the enterprise funds' Statement of Net Position and Statement of Revenues, Expenses and Changes in Fund Net Position are entered directly to the business-type activities sections of the government-wide statements. It is not necessary to eliminate transfers between governmental activities and business-type activities.

Question 12

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

Accepted Answer

Fiduciary activities are reported in fiduciary fund financial statements, not in the government-wide financial statements, as they are not considered part of the government's own resources.

Question 13

Fixed assets acquired through proprietary funds are reported in the Statement of Net Assets of those funds.

Accepted Answer

Fixed assets acquired through proprietary funds are reported in the Statement of Net Assets of those funds. This is because proprietary funds are used to account for the operations that are financed and operated primarily for the benefit of the government entity itself, rather than for the benefit of the general public. Examples of proprietary funds include enterprise funds, internal service funds, and trust funds. As such, it is appropriate to report the assets and liabilities of these funds on a separate statement in order to more accurately reflect the financial position of the government entity.

Question 14

GASB requires a reconciliation from proprietary fund financial statements to the government-wide statements business-activities columns from modified accrual accounting to accrual accounting.

Accepted Answer

Proprietary funds use accrual accounting.

Question 15

When preparing the government-wide statements,worksheet entries must be made to add the balances of the fiduciary funds.

Accepted Answer

Fiduciary funds are excluded from government-wide statements as they are considered to be held in trust and not part of the government's resources for operational purposes.

Question 16

GASB Statement No.34 states that general capital assets should not be reported as assets in governmental funds but should be reported in the governmental activities column of the government-wide statement of net assets.

Accepted Answer

GASB Statement No.34 does require general capital assets to be reported in the governmental activities column of the government-wide statement of net assets, but it also allows them to be reported in a separate fund called the Capital Projects Fund, which is a governmental fund. However, they should not be reported as assets in other governmental funds.

Question 17

When preparing the government-wide statements,a worksheet entry is required to eliminate the charge to expenditures for capital outlay and record those expenditures as capital assets,as is required for accrual accounting.

Accepted Answer

This is true. When preparing government-wide statements on an accrual basis, a worksheet entry is required to eliminate the charge to expenditures for capital outlay and record those expenditures as capital assets. This ensures that the financial statements reflect the true economic impact of these transactions.

Question 18

Worksheet entries are posted to the general ledger when preparing the government-wide statements and then reversed at the beginning of the next fiscal year.

Accepted Answer

The answer of Worksheet entries are posted to the general...

Question 19

GASB requires that general fixed assets be included in the government-wide financial statements.These assets are usually acquired through General,special revenue or capital projects funds.

Accepted Answer

GASB does require that general fixed assets be included in the government-wide financial statements, and these assets can be acquired through various funds, including general, special revenue, and capital projects funds.

Question 20

Enterprise funds are reported in the business-type activities column of the government-wide statements.

Accepted Answer

Enterprise funds are a type of fund used to account for activities for which a government charges a fee to external users for goods or services, such as water or sewer utilities or airport operations. These funds are considered business-like activities and are reported in the business-type activities column of the government-wide financial statements.

Quiz 8: Government-Wide Statements, capital Assets, long-Term Debt