Question 1

Under GASB Statement No.34,a government entity will not continue to present fund statements.

Accepted Answer

GASB Statement No.34 requires a government entity to present fund statements along with government-wide statements.

Question 2

For Howard and Joyce,the changes in net worth for the year ended December 31,2012,are detailed as follows. $\begin{array}{llcc}
  \text { Realized increases in net worth: } &  \
 \text { Salary } &\$50,000\
 \text {  Interest income} &500\
 \text { Dividend income } &400\
\
 \text {Realized decreases in net worth:  } &\
 \text { Income taxes } &12,000\
  \text { Interest expenses } & 4,000 \
 \text { Personal expenditures } &25,000\
\
 \text {Unrealized increases in net worth:  } &\
 \text { Marketable securities } &5,000\
 \text {Residence  } &2,000\
\
 \text { Unrealized decreases in net worth: } &\
  \text {  Furnishings} & 4,000 \
 \text {  Boat} &2,000\
 \text { Estimated income taxes on the differences between the estimated  } &\
 \text {  current values of assets and the estimated current amounts of} &\
 \text {  liabilities and their tax bases } &7,000\
 \text {Net worth at the beginning of year  } &60,000\
\end{array}$
 
Required:
Prepare a statement of changes in net worth for the year ended December 31,2010.

Accepted Answer

The answer of For Howard and Joyce,the changes in net...

Question 3

The Governmental Accounting Standards Board is a branch of the Financial Accounting Foundation.

Accepted Answer

The Governmental Accounting Standards Board (GASB) is a branch of the Financial Accounting Foundation (FAF). The FAF also oversees the Financial Accounting Standards Board (FASB), which sets accounting standards for private sector entities.

Question 4

The financial data of the component units are included with the government entities reporting entity because of the significance of their operational or financial relationships with the government entity.

Accepted Answer

This statement is true. The financial data of component units are included with the government entities reporting entity because of their significance in terms of operational or financial relationships with the primary government entity. Component units are legally separate organizations, but are financially dependent or accountable to the primary government entity. Therefore, their financial data is consolidated with the government entities reporting entity.

Question 5

State and local governments serve as a steward over public funds.This stewardship responsibility dominates the accounting for state and local governments.

Accepted Answer

State and local governments are responsible for managing and maintaining public funds, making sure they are used in the best interest of the public. Therefore, stewardship responsibility dominates the accounting for state and local governments.

Question 6

Under GASB Statement No.34,the notes to the financial statements must include budgetary information that includes the original budget and revised budgets.

Accepted Answer

GASB Statement No.34 requires the disclosure of budgetary information in the notes to the financial statements, including the original budget and any revisions made to it.

Question 7

Under GASB Statement No.34,the basic financial statements are to be preceded by the management's discussion and analysis (MD&A).

Accepted Answer

GASB Statement No.34 requires that the management's discussion and analysis (MD&A) be presented before the basic financial statements.

Question 8

Nonprofit institutions,other than governments,use forms of financial reporting that vary from the fund type of system to a commercial type of reporting.

Accepted Answer

Nonprofit institutions, other than governments, typically use either the fund type of system or a modified version of commercial reporting that addresses unique nonprofit financial reporting requirements. Therefore, the statement is true.

Question 9

The budget for a state or local government is merely a plan of future revenues and expenses.

Accepted Answer

The answer of The budget for a state or local...

Question 10

For Bill and Linda,the changes in net worth for the year ended December 31,2012,are detailed as follows. $\begin{array}{llcc}
  \text { Realized increases in net worth: } &  \
 \text { Salary } &\$40,000\
 \text { Interest income } &5,000\
\
 \text {  Realized decreases in net worth:} &\
 \text {  Income taxes} &10,000\
 \text {  Interest expenses} &8,000\
  \text {Personal expenditures  } &30,000  \
\
 \text { Unrealized increases in net worth: } &\
 \text {  Marketable securities} &3,000\
 \text {Land  } &4,000\
 \text { Residence } &2,000\
\
 \text { Unrealized decreases in net worth: } &\
  \text {  Furnishings} & 2,000 \
 \text { Estimated income taxes on the differences between the estimated  } &\
 \text {current amounts of liabilities and their tax bases  } &8,000\
\
 \text {Net worth at the beginning of year  } &80,000\
\end{array}$
 
Required:
Prepare a statement of changes in net worth for the year ended December 31,2012.

Accepted Answer

The answer of For Bill and Linda,the changes in net...

Question 11

GASB Statement No.34 makes it clear that government-wide statements are considered superior to fund statements.

Accepted Answer

GASB Statement No. 34 does not state that government-wide statements are superior to fund statements; rather, it introduces government-wide statements as a complement to fund statements, providing a broader perspective on a government's overall financial position.

Question 12

For the government-wide statements,governmental activities are to be presented separately from the financial statements of business-type activities.

Accepted Answer

This is correct according to the reporting requirements of Generally Accepted Accounting Principles (GAAP) for government-wide financial statements, which require the separation of financial information between governmental and business-type activities in order to provide transparency and accountability for the use of public resources.

Question 13

GASB Statement No.34 calls for financial statements integrated with government-wide reporting and enhanced fund reporting.

Accepted Answer

GASB Statement No.34 requires governments to report financial statements that integrate government-wide reporting and enhance fund reporting. This aims to provide a more comprehensive view of the government's financial position and results of operations.

Question 14

In general,SFAS No.116 directs that contributions received by not-for-profit organizations are recognized as revenues in the period received at their fair value.

Accepted Answer

SFAS No.116 does indeed direct that contributions received by not-for-profit organizations should be recognized as revenues in the period received at their fair value.

Question 15

The rating for an industrial revenue bond represents the probability of default by the governmental unit.

Accepted Answer

The rating for an industrial revenue bond represents the probability of default by the issuing company, not the governmental unit.

Question 16

The statement of changes in net worth is required when presenting personal financial statements.

Accepted Answer

The answer of The statement of changes in net worth...

Question 17

Some government and not-for-profit organizations have added budgeting by objectives and/or measures of productivity to their financial reporting.

Accepted Answer

Some government and not-for-profit organizations have adopted performance-based budgeting which includes budgeting by objectives and measures of productivity in their financial reporting. This approach emphasizes the achievement of goals and outcomes rather than just accounting for spending and expenses.

Question 18

The GASB has a seven-member board.A simple majority of four is needed to issue a pronouncement.

Accepted Answer

The GASB does have a seven-member board, and a simple majority of four is indeed needed to issue a pronouncement.

Question 19

Under governmental accounting,a fund is defined as a fiscal and accounting entity with a self-balancing set of accounts.

Accepted Answer

A fund is indeed defined as a fiscal and accounting entity with a self-balancing set of accounts under governmental accounting. It is often used to account for specific activities or programs, and it helps to ensure that financial resources are managed and accounted for appropriately.

Question 20

Personal financial statements present assets at their historical cost.

Accepted Answer

Personal financial statements typically present assets at their current fair market value, not their historical cost, to provide a more accurate representation of an individual's current financial position.

Quiz 13: Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations