Chapter 2 -462

Select all that apply Which of the following statements regarding the Statement of Cash Flows are correct? -Both FASB and GASB encourage, but do not require, the use of the direct method for operating activities. -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. -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. -The reconciliation of income to cash flows begins with operating income for proprietary fund statements.

Select all that apply Which of the following statements regarding the Statement of Cash Flows are correct? -Cash flows from interest do not appear in operating activities under the GASB format. -The reconciliation of income to cash flows begins with operating income for proprietary fund statements. -The FASB format has three sections and the GASB format has four. -Both FASB and GASB encourage, but do not require, the use of the direct method for operating activities.

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

Select all that apply Which of the following statements are true? -Auditors only follow specialized auditing standards when conducting a governmental audit. -Management is responsible for the preparation and fair presentation of CAFR financial statements. -The auditor's report is placed at the beginning of the financial statement section of a CAFR. -The audit report for a CAFR includes a report on the introductory and statistical sections.

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

Select all that apply Proprietary funds use the ______. -modified accrual basis of accounting -accrual basis of accounting -current financial resources measurement focus -economic resources measurement focus

-accrual basis of accounting -economic resources measurement focus

Select all that apply On the Statement of Activities, depreciation may be ______. -allocated as an indirect expense -charged in total to business-type activities -displayed as a separate line -charged in total to general government

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

Select all that apply Proprietary funds ______. -report net position as either restricted or unrestricted -are required to present a classified balance sheet -do not have to be reconciled to government-wide statements -calculate net position as assets plus liabilities

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

Select all that apply The summary of significant accounting policies note typically includes a description of ______. -cash deposits with financial institutions -component units and their relationship to the reporting entity activities reported in major and proprietary funds -the types of transactions included in program revenues -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 -the government-wide statements including measurement focus and basis of accounting

Select all that apply 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 significant short-term debt activity during the year -a description of any known items that would have a significant effect -on the government's financial position or results of operations

-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

Select all that apply Specific items that must be included in MD&A include a(n) ______. -description of significant capital assets and long-term debt activity during the year -analysis of significant variations between original budget amounts and actual General Fund results -analysis of overall financial position and results of operations -brief discussion of the financial statements

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

Select all that apply On the Statement of Activities ______. -direct expenses must be reported by function -expenses are reported after revenues -interest that cannot be identified with a single function should be shown separately -indirect expenses must be allocated to functions

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

Select all that apply The GASB format cash flow statement ______. -includes cash received from investment income as an operating activity -requires cash flows from operating activities to be prepared using the indirect method -does not report cash flows from interest revenue and expense in the operating activities section -begins the reconciliation of income to cash flows from operating activities with operating income

-does not report cash flows from interest revenue and expense in the operating activities section -begins the reconciliation of income to cash flows from operating activities with operating income

Select all that apply The Statement of Net Position ______. -excludes fiduciary activities -is prepared using the modified accrual basis of accounting -presents the government-wide assets and liabilities -must include prior year balances

-excludes fiduciary activities -presents the government-wide assets and liabilities

Select all that apply The Statement of Net Position ______. -has one column for governmental activities and another for business-type activities -uses the economic resources measurement focus -presents information in a separate column for blended component units -presents the government-wide retained earnings

-has one column for governmental activities and another for business-type activities -uses the economic resources measurement focus

Select all that apply 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 -excludes grants from the capital and related financing activities -has four sections instead of three

-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

Select all that apply Governmental fund statements are prepared using the ______. -economic resources measurement focus -modified accrual basis of accounting -accrual basis of accounting -current financial resources measurement focus

-modified accrual basis of accounting -current financial resources measurement focus

Select all that apply The introductory section of a CAFR includes a(n) ______. -organizational chart -list of governmental officials -table of contents -transmittal letter from the preparer -independent auditor's report

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

Select all that apply A Statement of Fiduciary Net Position ______. -reports fiduciary funds by fund type -uses the current financial resources measurement focus -includes all trust and agency fund types -excludes all component units that are fiduciary in nature

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

Select all that apply The summary of significant accounting policies note typically includes the ______. -policy for defining operating and nonoperating revenues of fiduciary funds -revenue recognition policies used in fund financial statements -policy for combining internal activities in the government-wide statement of activities. -policy for capitalizing assets and estimating useful lives -policy regarding restricted and unrestricted resources when an expense is incurred for both purposes

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

Select all that apply On the Statement of Activities ______. -special items are shown as a separate line -general revenues are presented in the upper right-hand section of the statement -revenues that can be directly associated with functions are deducted to compute net expense or revenue -taxes levied are reported as general revenues unless they are restricted to a particular purposes

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

Select all that apply The summary of significant accounting policies note typically includes a description of ______. -cash deposits with financial institutions -the government-wide statements including measurement focus and basis of accounting -the types of transactions included in program revenues -activities reported in major and proprietary funds -component units and their relationship to the reporting entity

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

Select all that apply Fiduciary funds ______. -labels activity accounts as Revenues and Expenses -use accrual accounting -are not included in government-wide financial statements

-use accrual accounting -are not included in government-wide financial statements

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 ______.

10% of the total for the governmental funds category

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

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 governmental and enterprise categories combined -5% or more of the total governmental and enterprise categories combined -5% or more of the total for all enterprise funds

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

The CAFR has three major sections: _________________, _________________, and __________________. (Enter only one word per blank.)

Blank 1: introductory Blank 2: financial Blank 3: statistical

The GASB Codification Section 2100 establishes the primary government and its component units as the ________________ _____________ entity. (Enter only one word per blank.)

Financial Reporting

The _______________ _______________ is always considered a major fund. (Enter only one word per blank.)

General Fund

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

MD & A

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.

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

True

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

a schedule comparing estimated and actual maintenance costs is required

Select all that apply Net investment in capital assets is computed by taking capital assets and subtracting ______. -accumulated depreciation -liabilities incurred to finance operations -outstanding debt related to capital asset financing

accumulated depreciation outstanding debt related to capital asset financing

Fiduciary funds use accrual accounting and use the terms ____________ and _______________ for activity accounts. (Enter only one word per blank.)

addition and deduction

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

According to GASB standards, ________________ occurs when the financial information of a component unit becomes part of the financial statements of the primary government. (Enter only one word per blank.)

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

character

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

considered nonoperating items

Commonly, notes to the financial statement are included that discuss both long-term and __________________ short-tem , Incorrect Unavailable liabilities. (Enter only one word per blank.)

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. (Enter only one word per blank.)

custodial

Restricted net position includes resources restricted by ______.

either external parties or government laws or constitution provisions

The governmental Statement of Revenues, Expenditures, and Changes in Fund Balance reports ______.

expenditures only

GASB requires that trust fund investments be reported at ______.

fair value

In a CAFR, the auditor's report is placed at the beginning of the _____________ section. (Enter only one word per blank.)

financial

On the governmental fund Balance Sheet, the excess of assets and deferred outflows over liabilities and deferred inflows is labeled ____________________ ___________________ (Enter only one word per blank.)

fund balance

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

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

is limited to a specific set of required items

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

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 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 _____________________ ___________________ (Enter only one word per blank.)

special items