Question 1

One of the purposes of the financial audit that accompanies statements is to show that the statements have been prepared in accordance with GAAP, GASB, and state, municipal, and federal laws.​

Accepted Answer

The financial audit is conducted to ensure that the financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP), Generally Accepted Government Auditing Standards (GAGAS/GASB), and laws and regulations at the state, municipal, and federal levels.

Question 2

GASB Statement No.34 requires the reporting for internal service funds by

Accepted Answer

GASB Statement No. 34 classifies internal service funds as proprietary funds and requires them to be reported in the government activities section of the government-wide financial statements, reflecting their nature as activities that provide services to other parts of the government, rather than to the public.

Question 3

The purpose of the Management Discussion and Analysis section is

Accepted Answer

The Management Discussion and Analysis section provides a concise overview and analysis of the financial statements. It is meant to provide a narrative explanation of the financial statements and highlight any significant financial trends or developments. It is not meant to provide detailed cost information, pension cost calculations, or information about short term spending and fiscal compliance.

Question 4

When operations of component units of government are blended with the primary government unit, they are reported by

Accepted Answer

A footnote disclosure is required for blended component units.

Question 5

Major funds are described as

Accepted Answer

Major funds are defined as the general fund, enterprise funds, and any other funds where assets, liabilities, revenues, or expenditures/expenses are at least 10% of the corresponding total for all governmental or enterprise funds and at least 5% of the aggregate amount for all governmental and enterprise funds combined.

Question 6

The GASB Statement No.34 reporting model includes, but is not limited to which of the following reports?

Accepted Answer

The GASB Statement No.34 reporting model includes all of the above reports, which are government-wide financial statements, a management discussion and analysis section, and funds-based financial statements.

Question 7

Which of the following were innovations in financial reporting introduced by GASB Statement No.34?

Accepted Answer

GASB Statement No.34 introduced all of the above innovations in financial reporting, including an introductory narrative section, an overall view of the government in government-wide statements, and comprehensive information about the cost of delivering services to citizens.

Question 8

The Single Audit Act requires that a governmental unit have a single audit if they programs receiving more than $300,000 annually, or 3% of all federal assistance expenditures, must be audited unless they are considered low risk.

Accepted Answer

The statement accurately reflects the requirements of the Single Audit Act.

Question 9

Required supplementary information includes all of the following except for:

Accepted Answer

The answer of Required supplementary information includes all of the...

Question 10

General purpose financial statements are part of the financial section of a comprehensive annual financial report

Accepted Answer

General purpose financial statements (such as the balance sheet, income statement, and cash flow statement) are typically included in the financial section of a comprehensive annual financial report (CAFR).

Question 11

General fixed assets, including infrastructure assets, and general long-term debt are included only in the government-wide financial statements.

Accepted Answer

General fixed assets and general long-term debt are only reported in the government-wide financial statements because they represent a long-term perspective on the government's financial position and performance. In contrast, the fund financial statements focus on the short-term measurement of financial resources and obligations used in governmental funds.

Question 12

Which of the following is not a classification of the net asset accounts of a proprietary fund?

Accepted Answer

Encumbrances are not a classification of the net asset accounts of a proprietary fund. The other classifications are Invested in capital assets, net of related debt, Restricted both externally and internally, and Unrestricted.

Question 13

The statement of Cash Flows includes only a section for operating cash flows, and investing cash flows.

Accepted Answer

The statement of Cash Flows includes three sections: operating cash flows, investing cash flows, and financing cash flows.

Question 14

General purpose financial statements are part of required supplementary information.

Accepted Answer

General purpose financial statements are not part of required supplementary information. They are part of the required financial statements that are included in a company's annual report. Required supplementary information includes items such as management's discussion and analysis and schedules of funding progress for pension plans.

Question 15

The Management Discussion and Analysis gives a detailed overview of pension cost calculations for governmental units.

Accepted Answer

The Management Discussion and Analysis (MD&A) section of a governmental unit's financial report provides an overview of the financial health, performance, and changes during the reporting period, but it does not typically give a detailed overview of pension cost calculations. Detailed pension cost calculations are usually found in the notes to the financial statements or in the required supplementary information section.

Question 16

Which of the following is/are reporting requirements in funds-based statements under GASB Statement No.34?

Accepted Answer

All of the above are reporting requirements in funds-based statements under GASB Statement No. 34. The statements must highlight major funds and aggregate non-major funds into one column, provide detailed information about short-term spending and fiscal compliance, and separate funds-based statements are required for governmental, proprietary, and fiduciary funds.

Question 17

Reciprocal interfund activities include interfund services between government and proprietary funds.

Accepted Answer

Reciprocal interfund activities involve the exchange of services, supplies, or other resources between government and proprietary funds. This includes transactions such as the provision of administrative services, personnel services, or the purchase of goods and services between different funds within the same government entity.

Question 18

Which of the following could be considered a component unit of a primary government unit?

Accepted Answer

The answer of Which of the following could be considered...

Question 19

The statement of net assets also includes general long-term liabilities accounted for at face value.

Accepted Answer

The statement of net assets includes general long-term liabilities accounted for at their carrying value, not necessarily their face value. Carrying value can be adjusted for factors like amortization or impairment, differing from the original face value.

Question 20

Required supplementary information includes pension-related information, but not a budgetary comparison or schedule.

Accepted Answer

Required supplementary information (RSI) often includes both pension-related information and a budgetary comparison schedule, especially in the context of governmental accounting standards.

Quiz 17: Financial Reporting Issues