ACC 4043/6043 Ch. 2 (smartbook)

On the Statement of Activities ______.

-direct expenses must be reported by function -interest that cannot be identified with a single function should be shown separately

The statistical section of the CAFR ______.

-helps users assess a government's economic condition -is not audited

A budgetary comparison schedule ______.

-includes both the original and final appropriated budget -is required for all major special revenue funds that have legally adopted budgets -is required for the General Fund

The GASB format cash flow statement ______.

-includes cash received from investment income as an investing activity -requires cash flows from operating activities to be prepared using the direct method -has four sections instead of three

When presenting statistical information in a CAFR, ______.

-operating information presented provides an indicator of the demand for government services -the sources of information and important assumptions must be described

The summary of significant accounting policies note typically includes the ______.

-policy regarding restricted and unrestricted resources when an expense is incurred for both purposes -policy for capitalizing assets and estimating useful lives -revenue recognition policies used in fund financial statements

According to GASB Codification Sec. 2800, when statistical information is presented, categories should include ______ information.

-revenue capacity -operating information -debt capacity -demographic and economic

The summary of significant accounting policies note typically includes a description of ______.

-the government-wide statements including measurement focus and basis of accounting -component units and their relationship to the reporting entity -the types of transactions included in program revenues

One of the two conditions for enterprise funds to be considered major is if total assets, liabilities, revenues, or expenses are ______.

10% or more of the total for all enterprise funds

One of the two conditions for funds other than the General Fund to be considered major is that total assets, liabilities, revenues or expenditures of the individual governmental fund are ______.

5% of the total of the governmental and enterprise categories combined

One of the two conditions for enterprise funds to be considered major is if total assets, liabilities, revenues, or expenses are _______.

5% or more of the total governmental and enterprise categories combined

Which of the following statements are correct regarding internal service funds and the proprietary fund Statement of Net Position?

Governments with more than one internal service fund combine them into one column. Detailed financial statements for each fund are included in other supplementary information.

Which of the following is NOT a major section of the CAFR?

MD & A

Which fund(s) report a Statement of Cash Flows?

Proprietary only

Which of the following statements are true?

The auditor's report is placed at the beginning of the financial statement section of a CAFR. Management is responsible for the preparation and fair presentation of CAFR financial statements.

Which of the following statements regarding the Statement of Cash Flows are correct?

The reconciliation of income to cash flows begins with operating income for proprietary fund statements. Cash flows from interest do not appear in operating activities under the GASB format. The FASB format has three sections and the GASB format has four.

Which of the following MUST be present in order for a primary government to include a legally separate organization in its financial reports?

The related organization must be a financial benefit or burden to the primary government.

When governments use the modified approach for reporting infrastructure, ______.

a schedule comparing estimated and actual maintenance costs is required

On the proprietary fund Statement of Revenues, Expenses, and Changes in Fund Net Position, capital contributions and additions to endowments appear ______ nonoperating revenues and expenses.

after

On the Statement of Activities, depreciation may be ______.

allocated as an indirect expense charged in total to general government displayed as a separate line

Specific items that must be included in MD&A include a(n) ______.

analysis of overall financial position and results of operations description of significant capital assets and long-term debt activity during the year brief discussion of the financial statements

On the proprietary fund Statement of Net Position, internal service funds ______.

are combined when a government has more than one are presented in a separate column

Proprietary funds ______.

are required to present a classified balance sheet do not have to be reconciled to government-wide statements

The governmental fund Balance Sheet fund categories include ______.

assigned committed restricted nonspendable

According to GASB standards, _______ occurs when the financial information of a component unit becomes part of the financial statements of the primary government.

blending

When a component unit only provides its services to the primary government, GASB standards provide that ______ is the appropriate way to include the unit's financial information in the primary government's financial reports.

blending

Notes to the financial statement disclosures may be required for ______.

both operating and capital leases

On the Statement of Net Position ______.

capital assets are presented in the governmental and business-type activities columns capital assets include infrastructure and are reported net of accumulated deprecation

On the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance, within the current category, expenditures are reported by ______.

character

A complete CAFR presents _____ statements to reflect its nonmajor funds whenever a nonmajor column is used in one of the fund statements.

combining

Specific items that must be included in MD&A include ______.

condensed financial information that compares the current year with the prior year an analysis of balances and transactions of individual funds a description of any known items that would have a significant effect on the government's financial position or results of operations

Commonly, notes to the financial statement are included that discuss both long-term and ______ liabilities.

contingent

A relatively new category that includes resources held by a government in a fiduciary arrangement not created through a formal trust agreement is called _____ funds.

custodial

According to GASB standards, _______ occurs when the financial information of a component unit is presented in a column apart from the primary government.

discrete presentation

Component unit information is reported in a separate column from that of the primary government when ______ is used.

discrete presentation

On the government-wide statement of activities, transfers between governmental and business-type activities are ______.

displayed in the general revenues section and offset

Proprietary funds use the ______.

economic resources measurement focus accrual basis of accounting

When the basis of accounting used in the budget differs from that in the Statement of Revenues, Expenditures, and Changes in Fund Balance, the two must be reconciled in ______.

either the schedule or notes to the RSI

The governmental fund Balance Sheet ______.

excludes capital assets

The Statement of Net Position ______.

excludes fiduciary activities presents the government-wide assets and liabilities

GASB requires that trust fund investments be reported at ______.

fair value

True or false: GASB standards require that any fund that does not meet the specified criteria to be considered a major fund must be reported as part of a single column under the label nonmajor fund.

false

True or false: Unrestricted net position must be computed before net investment in capital assets and restricted net position.

false

In a CAFR, the auditor's report is placed at the beginning of the ______ section.

financial

The ________ is always considered a major fund.

general fund

Long-term debt is presented ______.

in the governmental activities column of the government-wide Statement of Net Position

On the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance, other financing sources and uses include ______.

interfund transfers proceeds from issuing debt

If a government received a GFOA Certificate of Achievement for Excellence in Financial Reporting for the prior year's report, a reproduction of the certificate is included in the ______ section of the CAFR.

introductory

The CAFR has three major sections:

introductory, financial, statistical

According to GASB Codification Section 2200.109, the MD&A section of the CAFR: ______.

is limited to a specific set of required items

The introductory section of a CAFR includes a(n) ______.

list of governmental officials transmittal letter from the preparer table of contents organizational chart

When governments use the ______ approach for reporting infrastructure, a schedule of the assessed conditions of infrastructure assets must be included in RSI.

modified

Governmental fund statements are prepared using the ______.

modified accrual basis of accounting current financial resources measurement focus

When preparing financial reports, any funds not reported separately are aggregated and reported in a single column under the label ____________ funds.

nonmajor

In a complete CAFR, the total column in the combining statements will be the same as the ______ _______ column in the basic financial statements.

nonmajor funds

On the proprietary fund Statement of Revenues, Expenses, and Changes in Fund Net Position, ______.

operating revenues and expenses are reported first depreciation expense is reported separately as an operating expense

Net investment in capital assets is computed by taking capital assets and subtracting ______.

outstanding debt related to capital asset financing accumulated depreciation

A statement of cash flows is only reported for

proprietary

On the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance, interfund transfers are ______.

reported in the other financing sources and uses section

A Statement of Fiduciary Net Position ______.

reports fiduciary funds by fund type includes all trust and agency fund types

The MD&A section of the CAFR is considered _______ information.

required supplementary

If separate GAAP basis financial statements for individual pension and other employee benefit plans are not issued, GASB ______.

requires the reports be included in notes to the basic financial statements

On the Statement of Activities, ______.

revenues that can be directly associated with functions are deducted to compute net expense or revenue special items are shown as a separate line

Auditors ______.

review MD&A material to establish that it is not misleading, but do not include it in the scope of the audit

When a legally separate entity is fiscally dependent and represents a financial benefit or burden to a primary government, the primary government ______ include the entity in its financial reports.

should

On the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance, revenues are reported by ______.

source

On the government-wide Statement of Activities, items that are within the control of management but are either unusual in nature or infrequent in occurrence are referred to as

special items

True or false: A school district is an example of a primary government.

true

True or false: The government-wide Statement of Activities is a consolidated statement within columns.

true

Failure to include the statistical section in an annual financial report ______ result in a modified or adverse audit opinion. will

will not