Question 1

The document often relied on for financial analysis by investors and creditors for bonds in the secondary market is:

Accepted Answer

The answer of The document often relied on for financial...

Question 2

Which of the following items,helpful for analysis,could be found in the statistical section of the CAFR?

Accepted Answer

All of the options listed can be found in the statistical section of the CAFR and would be helpful for analysis. The assessed and actual (market) value of property would provide information on the city's tax base and potential revenue sources. Population trends could indicate changes in demand for services and infrastructure needs. Debt limit and margin would provide insight into the city's overall financial position and ability to take on additional debt if needed.

Question 3

In order to compute the interest coverage on revenue bonds,one would look in the CAFR at the:

Accepted Answer

The Enterprise funds Statement of Revenues, Expenses, and Changes in Net Assets is the section of the CAFR that provides information on revenue bonds, which are typically used to finance enterprise fund operations. The interest coverage ratio is calculated by dividing operating income by interest expense, which can be found in this statement. The other options, such as the Government-wide Statement of Activities and Budgetary Comparison Schedule, may not provide specific information on revenue bonds or enterprise funds.

Question 4

Government Auditing Standards identify which of the following categories of professional engagements?

Accepted Answer

Government Auditing Standards, also known as the Yellow Book, identify financial audits, attestation engagements, performance audits, and nonaudit services as categories of professional engagements.

Question 5

In order to compute the ratio unreserved fund balance/revenues-General Fund,one would look in the CAFR at the:

Accepted Answer

The ratio requires information on unreserved fund balance and revenues, which can be found in the Governmental funds Balance Sheet and the Governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances.

Question 6

Which of the following may be deducted in computing income from unrelated business activities?

Accepted Answer

The answer of Which of the following may be deducted...

Question 7

To compute the unreserved fund balance/revenues-General Fund,one would need to look in the CAFR for the:

Accepted Answer

To compute the unreserved fund balance/revenues-General Fund, one would need information from both the Governmental funds Balance Sheet (for fund balances) and the Governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances (for revenues).

Question 8

To compute the operating ratio-enterprise funds,one would need to look in the CAFR for the:

Accepted Answer

The operating ratio formula for enterprise funds is expenses divided by operating revenues. The information needed to calculate this ratio can be found in the Proprietary funds Statement of Revenues, Expenses, and Changes in Fund Net Assets, which provides the revenues and expenses of enterprise funds. The Government-wide Statement of Net Assets provides information about the entity's financial position, but it does not provide the specific fund-level information needed to calculate the operating ratio. Therefore, the correct answer is B.

Question 9

Which of the following activities may give rise to Unrelated Business Income Tax?

Accepted Answer

Advertising revenues from advertisements in a newsletter can be considered unrelated business income if the activity is not substantially related to the organization's exempt purpose.

Question 10

Which of the following is a governmental audit type that has a primary concern with providing reasonable assurance about whether financial statements are presented fairly?

Accepted Answer

A financial audit is specifically focused on reviewing and providing reasonable assurance about the accuracy and fairness of financial statements, including the underlying transactions and disclosures. This type of audit is typically required for organizations that receive government funding or operate in a regulated industry. Attestation engagements, performance audits, and nonaudit services may also be performed by government auditors, but they are focused on different aspects of an organization's operations and may not involve the review of financial statements.

Question 11

The use of opinion units allows the auditor to

Accepted Answer

The use of opinion units allows the auditor to provide different opinions on different components of the reporting entity. This provides a more nuanced and accurate view of the entity's financial performance and helps to ensure that investors and other stakeholders have access to the most relevant and actionable information. By differentiating between various components of the entity, the auditor can better tailor their auditing procedures and increase the overall effectiveness of the audit.

Question 12

Service Efforts and Accomplishments reporting may be important because:

Accepted Answer

SEA reporting provides a more complete picture of a government entity's performance since it includes information about the services provided and the accomplishments achieved. Financial statements such as the operating statement, balance sheet, and budgetary comparison statement only provide limited information about a government's performance.

Answer: B
 The GASB does require supplemental reporting of service efforts and accomplishments in order to provide more comprehensive information about a government entity's performance.

Answer: C is incorrect as it is not a reason why SEA reporting is important.

Answer: D is incorrect as only A and B are correct choices.

Question 13

Which of the following is not considered to be a major user group by the GASB?

Accepted Answer

The answer of Which of the following is not considered...

Question 14

To compute the net debt per capita,a user of financial statements would need to look at (in the CAFR):

Accepted Answer

To compute the net debt per capita, the user of financial statements needs to look at the outstanding debt in the government-wide Statement of Net Assets, the amount available to pay that debt in the governmental funds Balance Sheet, and the population from the statistical section. Therefore, choice A is the correct option.

Question 15

A government publishes information about its fire department.What type of service efforts and accomplishments measure would Fire Loss per Capita represent?

Accepted Answer

Fire Loss per Capita would represent an outcome measure as it is used to assess the effectiveness of the fire department's efforts in reducing fire losses in the community. In other words, it measures the ultimate outcome of the fire department's activities in protecting the community from fire-related harm.

Question 16

Which of the following is a governmental audit that is concerned with examining,reviewing,or performing agreed upon procedures on a subject matter or an assertion and reporting on the results?

Accepted Answer

An attestation engagement is a type of audit where the auditor examines, reviews, or performs agreed upon procedures on a subject matter or an assertion and reports on the results. This type of audit is often used by government agencies to attest to the accuracy of financial statements or compliance with laws and regulations. Financial audits are audits of financial statements, performance audits evaluate government programs and activities, and nonaudit services are services such as consulting or advisory work that do not involve an audit.

Question 17

Which of the following is not a type of governmental audit?

Accepted Answer

All of the options listed (Attestation engagements, Financial audits, and Performance audits) are types of governmental audits. Therefore, none of them are not a type of governmental audit.

Question 18

The highest bond rating assigned by Moody's is:

Accepted Answer

The highest bond rating assigned by Moody's is AAA.

Question 19

In order to compute the operating ratio-enterprise funds,one would look in the CAFR in which of the following sections?

Accepted Answer

The proprietary funds Statement of Revenues, Expenses, and Changes in Net Assets includes information relevant to calculating the operating ratio for enterprise funds. The government-wide Statement of Net Assets provides overall financial information about the government, but does not provide specific information on enterprise funds. The proprietary funds Statement of Net Assets provides information on the assets and liabilities of the enterprise funds, but does not provide information on revenues and expenses. The proprietary funds Statement of Cash Flows provides information on the cash flows of the enterprise funds, but does not provide information on the operating ratio.

Question 20

All of the following are differences between private sector auditing and governmental auditing except:

Accepted Answer

All of the options listed are differences between private sector auditing and governmental auditing. Private sector audits are done for private companies striving for profit, whereas governmental audits are done for government entities serving the public. Therefore, there are unique differences in the way each kind of auditing is carried out. The public availability of audit reports, testing compliance with laws and regulations, and auditor knowledge of government accounting and auditing are all distinct characteristics of a governmental audit.

Quiz 13: Auditing, tax-Exempt Organizations, and Evaluating Performance