760 exam 1 new study set

FASB Standards for NFP

-statement of financial position -statement of activities -statement of cash flows

CAFR Financial Section

1. Auditor's report 2. MD&A 3. Basic Financial Statements 4. Other Required Supplementary Information

fund financial statements

A category of the basic financial statements that assist in assessing fiscal accountability.

true

A characteristic common to governments and not-for-profit organizations is that they do not exist to provide goods or services at a profit or profit equivalent.

Introductory, financial, and statistical.

A comprehensive annual financial report (CAFR) prepared in conformity with the GASB recommendations should include which of the following sections?

Service Efforts and Accomplishments (SEA)

A conceptualization of the resources consumed (inputs), tasks performed (outputs), and goals attained (outcomes), and the relationship among these items, in providing services in selected areas (e.g., police protection, solid waste garbage collection, and elementary and secondary education).

Comprehensive Annual Financial Report (CAFR)

A government's annual report that contains three sections: introductory, financial, and statistical. A CAFR provides financial information beyond the general purpose external financial statements and conforms to guidance in the GASB Codification.

Ten percent of the corresponding element(s) of total governmental funds and 5 percent of the corresponding element(s) of total governmental and enterprise funds combined.

A major governmental fund is one that has one or more elements (e.g., assets, liabilities, revenues, or expenditures) that is at least:

Funds are necessary to help increase transparency by showing that legal constraints on spending certain revenues for the specific purpose for which the revenues were intended are being met.

A member of the city council does not understand why governments need to use funds. He believes it makes reporting too complex and that funds should be eliminated. What explanation would you use to help explain why funds are needed?

Performance and Accountability Report (PAR)

A report required to be prepared by major federal departments and agencies. It includes an annual performance report (APR), annual financial statements, and a variety of management reports on internal control and other accountability issues.

fiscal accountability

A tax watchdog group is interested in ensuring that the city does not spend more than the amount of resources it receives in the current fiscal year. The watchdog group is primarily interested in

interperiod equity

A term coined by the Governmental Accounting Standards Board indicating the extent to which current-period revenues are adequate to pay for current-period services; and whether the burden for services previously provided will be shifted to future taxpayers.

true

According to GASB Concepts Statement 1 a primary objective of financial reports is to provide information useful in determining the accountability of the government.

true

Activities a local government can engage in are classified as governmental, business-type, or fiduciary.

The fiduciary fund financial statements.

Assets and liabilities of activities for which the government is acting in either a custodial or trustee capacity for individuals, organizations, or other governments should be reported in

false

Assigned fund balances can be either positive or negative.

accountability

Being obliged to explain one's actions, to justify what one does; the requirement for government to answer to its citizenry—to justify the raising of public resources and expenditure of those resources. Also, in the GASB's view, the obligation to report whether the government operated within appropriate legal constraints; whether resources were used efficiently, economically, and effectively.

fiscal accountability

Current-period financial position and budgetary compliance reported in fund-type financial statements of governments.

CAFR Statistical Section

Data for 10 years 1. Financial trends information 2. Revenue Capacity Information 3. Debt Capacity information 4. Demographics and economic information 5. Operating information 6. Narrative explanation

donor imposed restrictions

Donor stipulations that specify use for a contributed asset that is more specific than broad limits resulting from the nature of the not-for-profit entity, the environment in which it operates, or the purposes specified in its articles of incorporation or bylaws. A donor-imposed restriction may be temporary or permanent.

false

Economic resources are cash or items expected to be converted into cash during the current period, or soon enough thereafter to pay current period liabilities.

Either governmental activities or business-type activities column of the government-wide financial statements, depending on whether the internal service fund predominantly serves governmental activities or business-type activities.

Financial information about an internal service fund should be reported in the proprietary fund financial statements and the:

true

General purpose governments generally provide a wider range of services to their residents than do special purpose governments.

Providing information on meeting current year service performance goals.

Government financial reports should be useful in assessing a government's accountability. Three objectives of government financial reporting identify how financial reporting can be useful in assessing a government's accountability. Which of the following is not related to one of the objectives?

false

Governmental funds account for current and long-term liabilities.

false

Governmental funds are identical to governmental activities, proprietary funds are identical to business-type activities, and fiduciary funds are identical to fiduciary activities of a government.

general purpose governments

Governments that provide many categories of services to their residents, such as states, counties, municipalities, and townships. Typical services include public safety, road maintenance, and health and welfare.

special purpose governments

Governments that provide only a single function or a limited number of functions, such as independent school districts and special districts.

As required supplementary information.

How does the GASB recommend governments report budgetary information?

governmental funds

In accounting for state and local governments the modified accrual basis is required for

operational accountability

Information useful in assessing operating results and short- and long-term financial position and the cost of providing services from an economic perspective reported in entitywide financial statements.

true

Interperiod equity refers to the concept that current-year revenues are sufficient to pay for services provided that year, so that future taxpayers will not be required to assume the burden for services previously provided.

Management discussion and analysis (MD&A)

Narrative information, in addition to the basic financial statements, in which management provides a brief, objective, and easily readable analysis of the government's financial performance for the year and its financial position at year-end. An MD&A is required for state and local governments and federal agencies.

true

Neither governments nor not-for-profit entities have residual equity that can be distributed to owners.

Fiduciary funds are reported as a separate column.

On the government-wide statement of net position, which of the following statements is false?

operational accountability

On what do the government-wide financial statements report?

false

Only those governmental and proprietary funds that meet the GASB size criteria for major funds are reported in separate columns of the governmental and proprietary fund financial statements.

modified accrual

Recognizing revenues when measurable and available for paying current obligations and expenditures when incurred describes which basis of accounting?

true

Revenues are an example of what the GASB terms an inflow of resources.

false

Similar to for-profit entities, net income serves as a good measure of a government's performance.

basic financial statements

Term used in GASB standards to describe required government-wide and fund financial statements.

false

The FASB, GASB, and FASAB all focus their standards on both internal and external financial reporting.

Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB).

The Financial Accounting Foundation (FAF) oversees and appoints board members to which of the following standard setting bodies?

false

The Financial Accounting Standards Board (FASB) is the body authorized to establish accounting principles for all colleges and universities and health care entities.

All not-for-profit organizations that are nongovernmental and business entities.

The Financial Accounting Standards Board has the responsibility for setting accounting and financial reporting standards for which of the following?

true

The GASB provides optional guidance for those entities providing service efforts and accomplishments (SEA) reports to the public.

true

The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all state and local governments, both general purpose and special purpose.

State and local government entities and governmentally-related units and agencies, such as utilities, authorities, hospitals, and colleges and universities.

The Governmental Accounting Standards Board is assigned responsibility for setting accounting and financial reporting standards for which of the following?

statement of changes in functional expenses

The basic financial statements of a not-for-profit include all of the following except

Current-year revenues were sufficient to pay for current-year services.

The concept of interperiod equity refers to whether

Financial Accounting Standards Board (FASB)

The designated organization in the private sector for establishing standards of financial accounting and reporting since 1973.

true

The governmental fund financial statements are intended to report on fiscal accountability.

false

The governmental funds category includes the General Fund, special revenue funds, debt service funds, capital projects funds, and internal service funds.

Governmental Accounting Standards Board (GASB)

The independent agency established under the Financial Accounting Foundation in 1984 as the official body designated by the AICPA to set accounting and financial reporting standards for state and local governments.

economic resources; accrual

The measurement focus and basis of accounting that should be used for the government-wide financial statements are

Federal Accounting Standards Advisory Board (FASAB)

The nine member standards-setting body that recommends federal governmental accounting and financial reporting standards to the U.S. Comptroller General, Secretary of the Treasury, and Director of the Office of Management and Budget.

Donors, potential donors, oversight bodies, and others need to know what percentage of total expenses are being incurred for carrying out the NFP's programs.

The primary reason that not-for-profit (NFP) organizations should report expenses incurred for program purposes separately from those for supporting services such as management and general and fund-raising is that

false

The statement of net position is a governmental fund financial statement.

true

The types of funds that may be used in governmental accounting are classified into the three categories of governmental, proprietary, and fiduciary.

CAFR Introductory Section

Title page Contents page Letter of transmittal Other (as desired by management

government wide financial statements

Two statements prescribed by GASB standards designed to provide a highly aggregated overview of a government's net position and results of financial activities.

As a note to the financial statements.

Under modified accrual accounting, revenues are recognized when management defines them as available for paying current-period obligations. Management considers its definition of the term available to be essential to the financial statement users' understanding of revenues recognized on the statement. How would management communicate to users its definition of available?

modified accrual

Under the modified accrual basis of accounting, required for use by governmental funds (q.v.), revenues are recognized in the period in which they become available and measurable, and expenditures are recognized at the time a liability is incurred pursuant to appropriation authority.

measurable and available

Under the modified accrual basis of accounting, revenues should be recognized when

Revenues are recognized when current financial resources become measurable and available to pay current-period obligations.

Under the modified accrual basis of accounting:

MD&A, government-wide financial statements, fund financial statements, notes to the financial statements, and RSI.

What are the components that are included in the minimum requirements for general purpose external financial reporting?

After the liabilities section on the statement of net position.

Where should a deferred inflow of resources be reported on the financial statements?

Resources the city manager has set aside for a major street repair.

Which of the following amounts that are identified at the end of the fiscal year would be classified as an assigned fund balance?

statement of cash flows

Which of the following financial statements is not a basic financial statement under FASAB standards?

General Fund

Which of the following fund(s) will generally be the only fund(s) that can report a positive unassigned fund balance?

Enterprise funds and internal service funds.

Which of the following funds are proprietary funds?

internal service fund

Which of the following funds would be used to account for an activity that provides centralized purchasing and sales of goods or services to other departments or agencies of the government on a cost-reimbursement basis?

citizens

Which of the following groups is considered a primary user of a state or local government's general-purpose external financial statements?

investment trust fund

Which of the following is a fiduciary fund?

Net assets with donor restrictions.

Which of the following is a net asset category reported by not-for-profit entities?

To provide information that can be used to assess a government's accountability.

Which of the following is a primary objective of financial reporting by state and local governments?

minneapolis public schools

Which of the following is a special purpose government?

accountability

Which of the following is identified by the GASB as the "cornerstone" of all financial reporting in government?

a reporting entity

Which of the following is not a characteristic of a fund as defined by GASB standards?

statement of activities

Which of the following is not a fund financial statement?

A statement of nonparticipation in political matters.

Which of the following is not a required section of a federal agency or department's performance and accountability report (PAR)?

To assist users in assessing the adequacy of systems and controls.

Which of the following is not an objective of financial reporting by state and local governments?

Statistical section.

Which of the following sections is not considered a part of a federal agency's performance and accountability report?

The basic financial statements, including notes thereto.

Which of the following should be included in the financial section of a comprehensive annual financial report?

both GASB and FASB

Which of the following standard-setting bodies requires a management's discussion and analysis as a part of the financial report?

Major funds are determined based on the size of the fund or management discretion.

Which of the following statements about major funds is true?

revenues may be earned through exchange transactions

Which of the following statements is true for both government organizations and for-profit organizations?

-Separate columns should be provided in the government-wide financial statements for governmental activities and business-type activities. -Governmental fund and proprietary fund financial statements should provide a separate column for each major fund. -Aggregate information about all nonmajor governmental funds should be reported in a single column of the governmental fund financial statements and all nonmajor enterprise funds should be reported in a single column of proprietary fund financial statements.

Which of the following statements is true regarding the basic financial statements of a state or local government?

The FASB sets standards for all business and governmental not-for-profit entities.

Which of the following statements regarding primary sources of accounting and financial reporting standards is false?

combining and individual fund fincancial statements

Which of the following would be included in a properly prepared comprehensive annual financial report (CAFR), but not in the minimum requirements for general purpose financial reporting specified by GASB standards?

Summary of the government's current financial position and results of financial activities.

Which of the following would typically not be included in the introductory section of a comprehensive annual financial report?