Question 1

Which of the following is included in Required supplementary Information RSI?

Accepted Answer

RSI includes MD&A, information required when using the modified approach to infrastructure, budgetary comparison schedule, pension schedules and schedules of risk management activities.

Question 2

Which of the following is true regarding Management's Discussion and Analysis MD&A?

Accepted Answer

MD&A is part of RSI. MD&A does not take the place of footnotes. GASB requires eight specific items that must be included one of which is an analysis of significant variations between original and final budget amounts and between final budget amounts and actual results for the General Fund.

Question 3

Which of the following is true regarding the financial reporting entity of a state or local government?

Accepted Answer

Component units are more commonly reported using discrete presentation rather than blended. Government-wide statements report governmental and business activities which comprise the primary government. Similar information is presented in a separate column for the government's discretely presented component units. A school district can be a primary government.

Question 4

With respect to the preparation of fund basis financial statements, governmental funds other than the General fund are considered to be major when which of the following conditions exist?

Accepted Answer

The general fund is always considered to be a major fund. Other governmental funds are considered to be a major fund when both of the following conditions exists; 1) Total assets, liabilities, revenues or expenditures of that individual government fund constitute 10% of the total for the governmental funds category and 2) Total assets, liabilities, revenues or expenditures of that individual government fund are 5% of the total of the governmental and enterprise categories, combined. In addition, a government may designate any fund as a major fund if reporting that fund separately would be useful.

Question 5

Which of the following is false regarding the financial reporting entity of a state or local government?

Accepted Answer

Component units are more commonly reported using discrete presentation rather than blended. Government-wide statements report governmental and business activities which comprise the primary government. Similar information is presented in a separate column for the government's discretely presented component units. A school district can be a primary government.

Question 6

Which of the following is true regarding GASB's definition of the financial reporting entity?

Accepted Answer

GASB Section 2100 establishes that the financial reporting entity is the primary government together with its component units. The primary government can be a state government, a general-purpose local government, or a special-purpose government. Blending is used to incorporate component units when the component unit is so intertwined with the primary government that they are in substance the same entity.

Question 7

The total fund balances presented in Governmental Funds Statements are different from the total Net Position on the government-wide Statement of Net Position. Which of the following is not a reason for this difference?

Accepted Answer

The total fund balances presented in Governmental Funds Statements are different from the total Net Position on the government-wide Statement of Net Position because the two statements have different bases of accounting and because most internal service funds are included in the governmental activities column on the government-wide statements. Capital assets used in governmental operations are not financial resources and therefore not reported in the funds. Some liabilities are not due and payable in the current period and are not reported in fund balances. Accrued wages payable at year end are reported in both.

Question 8

Under GASB rules for the financial reporting entity:

Accepted Answer

GASB standards provide two methods for including component unit financial information: blending and discrete presentation. Counties can be a primary government. The financial reporting entity is the primary government together with its component units. Component units are legally separate organizations for which the primary government is financially accountable.

Question 9

Governmental fund statements are prepared using:

Accepted Answer

Governmental fund statements are prepared using the current financial resources measurement focus and the modified accrual basis of accounting.

Question 10

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

Accepted Answer

Prior year balances may be presented but are not required. Government-wide statements include the Statement of Net Position and the Statement of Activities. Statement of Cash Flows is not required. Capital assets are reported net of accumulated depreciation unless the modified approach is used for reporting infrastructure.

Question 11

In addition to the government-wide statements, governments are required to prepare fund financial statements for which of the following category of funds?

Accepted Answer

In addition to the government-wide statement, governments are required to prepare fund-level financial statements within the three categories of funds; governmental, proprietary and fiduciary.

Question 12

Which of the following is true regarding the composition of the Comprehensive Annual Financial Report CAFR?

Accepted Answer

The CAFR has three major sections: introductory, financial and statistical.

Question 13

Governmental-type funds label the excess of assets over liabilities on the balance sheet as:

Accepted Answer

The excess of assets and deferred outflows over liabilities and deferred inflows is labeled fund balance, an account title used only in governmental funds.

Question 14

Which of the following is true with respect to the General Fund

Accepted Answer

The general fund is always considered to be a major fund. Other governmental funds are considered to be a major fund when both of the following conditions exists; 1) Total assets, liabilities, revenues or expenditures of that individual government fund constitute 10% of the total for the governmental funds category and 2) Total assets, liabilities, revenues or expenditures of that individual government fund are 5% of the total of the governmental and enterprise categories, combined. In addition, a government may designate any fund as a major fund if reporting that fund separately would be useful.

Question 15

Which of the following is true regarding the government-wide Statement of Net Position?

Accepted Answer

In addition to the governmental activities and business-type activities, information is presented in a separate column for the government's discretely presented component units. The difference between assets and liabilities is called net position and is reported in three categories; Net investment in capital assets, Restricted net position and Unrestricted net position.

Question 16

Which of the following is considered Required supplementary Information RSI)?

Accepted Answer

RSI includes MD&A, information about infrastructure, budgetary comparison schedule, funding schedules, schedules required for external financing pools, pension schedules and schedules of risk management activities.

Question 17

Which of the following is true regarding the Comprehensive Annual Financial Report CAFR?

Accepted Answer

The CAFR has 3 main sections; introductory, financial and statistical. A budgetary comparison schedule is required of the General Fund and each major special revenue fund that has a legally adopted budget.

Question 18

With respect to the preparation of fund basis financial statements, governmental funds other than the General Fund are considered to be major when which of the following conditions exist?

Accepted Answer

The general fund is always considered to be a major fund. Other governmental funds are considered to be a major fund when both of the following conditions exists; 1) Total assets, liabilities, revenues or expenditures of that individual government fund constitute 10% of the total for the governmental funds category and 2) Total assets, liabilities, revenues or expenditures of that individual government fund are 5% of the total of the governmental and enterprise categories, combined. In addition, a government may designate any fund as a major fund if reporting that fund separately would be useful.

Question 19

Which of the following is true regarding the government-wide statements?

Accepted Answer

The government-wide statements are the Government-wide statement of Net Position and the Government-wide Statement of Activities. Government-wide statements are prepared using the accrual basis of accounting and the economic resources measurement focus.

Question 20

Which of the following statements is false?

Accepted Answer

When preparing fund basis financial statements, any funds not reported separately are aggregated and reported in a single column under the label nonmajor funds.

Quiz 2: Overview of Financial Reporting for State and Local Governments