Question 1

The governmental funds follow __________ where the government-wide statements follow ___________.

Accepted Answer

Governmental funds use modified accrual accounting, which focuses on cash inflows and outflows and measures revenues when they become both measurable and available, and expenses when they are incurred. The government-wide statements, on the other hand, use accrual accounting, which records revenues when they are earned and expenses when they are incurred, regardless of when cash exchanges hands.

Question 2

Which of the following is false regarding government-wide financial statements?

Accepted Answer

General fixed assets are required to be reported on the government-wide balance sheet.

Question 3

Which of the following is true concerning infrastructure assets?

Accepted Answer

Capitalization of infrastructure is required under Generally Accepted Accounting Principles (GAAP) for governmental entities. Infrastructure assets are considered to have a useful life of more than one year and meet the definition of a capital asset, therefore they must be recorded on the balance sheet as a capital asset and depreciated over their estimated useful life.

Question 4

Which of the following funds would not be included in the government-wide financial statements?

Accepted Answer

The Pension Trust Fund is not included in the government-wide financial statements as it is reported separately in the notes to the financial statements. The other funds listed (Capital Project Fund, Enterprise Fund, and General Fund) are included in the government-wide financial statements.

Question 5

The reconciliation(s)that are required to be presented on the face of the governmental fund financial statements or in separate schedule immediately after the fund financial statements include:

Accepted Answer

Both A and B are required reconciliations that must be presented on the face of the governmental fund financial statements or in separate schedules. The reconciliation from the governmental fund Balance Sheet to the Statement of Net Assets ensures that the fund financial statements and the entity-wide financial statements (including all government-wide financial statements such as the Statement of Net Assets) are consistent with each other. The reconciliation from the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities is needed to link the flow of financial resources (as reported in the fund financial statements) to the economic resources (as reported in the entity-wide, government-wide financial statements).

Question 6

Under which of the following circumstances would an asset be considered impaired?

Accepted Answer

The answer of Under which of the following circumstances would...

Question 7

Which of the following is false about the worksheet entry process?

Accepted Answer

This statement is false. Beginning balance of long-term assets should be entered on the worksheet in order to calculate changes in the current year.

Question 8

What would be the appropriate journal entry to adjust to the accrual basis of accounting for depreciation in prior years?

Accepted Answer

The answer of What would be the appropriate journal entry...

Question 9

Which of the following is not true regarding infrastructure assets?

Accepted Answer

This statement is not true. Infrastructure assets are depreciable, just like any other fixed asset.

Question 10

Which of the following is not a reconciliation required by GASB?

Accepted Answer

Enterprise funds are already reported in a manner consistent with the government-wide financial statements, so no reconciliation is required for them.

Question 11

Which of the following is considered a source of general revenue in the Government-wide Statement of Activities?

Accepted Answer

Sales taxes are considered a general revenue source in the Government-wide Statement of Activities. Charges for services and operating grants are considered program revenue sources.

Question 12

When making the worksheet entry to eliminate transfers which of the following would be acceptable considering transfers in of $240,000 and transfers out of $420,000?

Accepted Answer

The answer of When making the worksheet entry to eliminate...

Question 13

Which of the following items are added to government-wide financial statements through worksheet journal entries?

Accepted Answer

All of these items (General Fixed Assets, General Long Term Debt, and Internal Service) are added to government-wide financial statements through worksheet journal entries.

Question 14

The difference between assets and liabilities in the government-wide statements is called_________.

Accepted Answer

In the government-wide statements, assets and liabilities are reported on a full accrual basis, and the difference between them is called net assets. Net assets reflect the residual value of the government's resources after liabilities have been deducted. This is similar to net equity or shareholders' equity in a business entity, but the term "net assets" is used in the context of government accounting. Fund balance is the difference between assets and liabilities in the government's funds, which are reported on a modified accrual basis. Accrued equity is not a commonly used term in accounting.

Question 15

Which of the following would be included in the Equity section of the Statement of Net Assets?

Accepted Answer

The answer of Which of the following would be included...

Question 16

For the depreciation of infrastructure....

Accepted Answer

Governments are permitted a choice to use the modified approach or to record depreciation in the same manner as other depreciable fixed assets for infrastructure. The modified approach involves reporting infrastructure assets in the financial statements at their historical cost less any accumulated depreciation, but not recording annual depreciation charges. Instead, the government reports the annual decline in the condition of the infrastructure and the estimated costs required to maintain its service potential. This allows a government to report infrastructure assets at their estimated fair value without recording depreciation. However, it is important to note that the modified approach is not permitted under International Public Sector Accounting Standards (IPSAS), which require governments to record depreciation in the same manner as other depreciable fixed assets.

Question 17

Which of the following is true regarding worksheet entries?

Accepted Answer

Worksheet entries are temporary entries made to adjust the accounts for accruals and deferrals, but they are not posted to the general ledger. The purpose of a worksheet is to aid in the preparation of financial statements, not to post actual transactions to the general ledger.

Question 18

Governmental fund-basis statements are prepared using the________,and must be converted to the ________ to be incorporated in the government-wide statements.

Accepted Answer

Governmental fund-basis statements are prepared using the modified accrual basis, which is a combination of cash and accrual accounting. However, for the purpose of preparing government-wide statements, they must be converted to the full accrual basis. Therefore, the correct answer is C, which reflects the two different bases used and the need for conversion.

Question 19

The difference between the amount of debt limit calculated as prescribed by law and the net amount of outstanding indebtedness subject to limitation,is known as:

Accepted Answer

The difference between the amount of debt limit calculated as prescribed by law and the net amount of outstanding indebtedness subject to limitation is known as the debt margin. This margin represents the amount of additional debt that the government can issue before hitting the debt limit. Therefore, option B, Debt Margin, is the correct answer. The other options, Debt Limits, Long-Term Debt, and General Long-Term Debt, do not accurately describe the difference between the calculated debt limit and outstanding indebtedness.

Question 20

The governmental funds report a total of $2,000,000 Transfers In and $1,500,000 Transfers Out.To consolidate governmental activities what amount will be eliminated from the Transfers In and Transfers Out accounts?

Accepted Answer

Transfers In and Transfers Out are reciprocal accounts. When consolidating governmental activities, the amounts in these accounts are eliminated.

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

The governmental funds follow where the government-wide statements follow _.