Question 1

The federal government provided $500,000 to a university to develop and operate a bridging program for foreign-trained accountants.Which of the following statements about the above government transfer is correct?

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Question 2

One of the largest sources of revenue for governments is government transfers.Government transfers represent non-exchange revenue.Explain what "government transfer" is and why it is a non-exchange transaction.How are government transfers reported? Be sure to address reporting from the transferor and the recipient perspectives,separately.

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Question 3

What does the Public Sector Accounting Board (PSAB)recommend with respect to tax revenue?

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Question 4

To enhance users' abilities to evaluate a government's financial results,budget numbers are included on some of the financial statements.Which statements would include the budget numbers?

Accepted Answer

The statement of operations and statement of changes in net debt would include budget numbers as they show the government's revenue, expenses, and changes in net debt for the period, which can be compared to the budgeted amounts for that period. The statement of cash flows would not include budget numbers as it shows the inflows and outflows of cash during the period, while the statement of financial position only shows the government's assets, liabilities, and equity at a specific point in time.

Question 5

According to the recommendations of the Public Sector Accounting Board,when should revenue be recognized related to funds received from external parties who have imposed restrictions that limit the use of the funds?

Accepted Answer

Revenue should be recognized when the resources purchased with the funds are used, as this aligns with the fulfillment of the conditions or restrictions imposed by the external parties.

Question 6

What is the only item that will appear under the investing section of a government statement of cash flow?

Accepted Answer

The only item that will appear under the investing section of a government statement of cash flow is the sale and purchase of financial assets, such as stocks or bonds. The sale and purchase of nonfinancial assets and tangible capital assets will appear under the operating section, while the amortization of tangible capital assets will appear under the financing section.

Question 7

The CICA's Public Sector Accounting Board (PSAB)identified nine unique characteristics of governments that differentiate them from private sector reporting.List these nine characteristics.

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Question 8

A government business enterprise's net income or loss is reported on the government's statement of operations.In addition,________.

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Question 9

Which of the following are qualitative characteristics of good financial reports for governments?

Accepted Answer

Comparability among governments is important to understand how one government compares to others. Consistency between years is important to track progress and trends over time. Completeness ensures that all relevant information is included. Timeliness ensures the information is relevant and up-to-date. While full disclosure, transparency, accuracy, and audit are important characteristics, they are not included in the options given.

Question 10

The Public Sector Accounting Board suggested several objectives for the financial statements of federal,provincial and territorial governments.List and briefly explain each of the four objectives.

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Question 11

A provincial government provides a grant to one of its cities to support a winter festival.The provincial government can recognize this transfer when it has been fully authorized.When is the transfer considered fully authorized?

Accepted Answer

The transfer is considered fully authorized when it has been approved by the legislature, which is the decision-making body of the provincial government. Written approval from a government minister, receipt of the grant, or use of the grant by the city do not necessarily indicate that the transfer has been fully authorized by the appropriate governing body.

Question 12

What basis does the present government reporting method use?

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Question 13

In general,there are three types of government organizations.Identify and describe these three types and the accounting standards that are followed by each type of entity.

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Question 14

Clearly distinguish between a government business organization and a non-business government organization.

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Question 15

PSAB defines a government organization as one that is "controlled by the government".Explain what is meant by "control" and how this is assessed for governments.Explain how controlled entities are reported.

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Question 16

According to the recommendations of the Public Sector Accounting Board,which of the following organizations should be consolidated with a provincial government's financial statements?

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Question 17

Describe the major differences that exist in the purpose of accounting and reporting and in the types of reports of a large city when compared to a large public company.

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Question 18

What reporting basis should Wind Power Plus,a government business enterprise,use?

Accepted Answer

The modified equity method is appropriate for government business enterprises that have a commercial orientation and earn profits. This method combines elements of both the cost method and equity method and provides a more accurate reflection of the entity's financial performance. Consolidation is not appropriate for Wind Power Plus as it is not part of a larger group.

Question 19

One of the objectives of government reporting is to allow users the ability to assess the government's finances.A statement of financial position is prepared and the government's "net debt" is presented on this statement.Describe what is meant by "net debt" and why this is an important indicator of the government's financial position.How does net debt impact the government's accumulated deficit or surplus.

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Question 20

Recent surveys have suggested that there are several qualitative characteristics that are desirable in published financial reports of governmental units.List and briefly discuss each of the four major qualitative characteristic desired.

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Quiz 11: Public Sector Financial Reporting