Question 1

Which of the following is necessary for a special-purpose local government to be considered a primary government?

Accepted Answer

A) It must operate for a single purpose. 
B) It must have a separately elected governing body. 
C) It must tax its citizens with ad valorem taxes. 
D) It must be fiscally dependent on another government. 
A) It must operate for a single purpose. 
B) It must have a separately elected governing body. 
C) It must tax its citizens with ad valorem taxes. 
D) It must be fiscally dependent on another government.

Question 2

The State has a legally separate State Building Authority which has a board appointed by the governor.The authority issues debt in its own name, holds title to buildings in its own name, and leases its building exclusively to the state.In what manner would the authority be included in the State's basic financial statements?

Accepted Answer

A) Blended. 
B) Discretely presented. 
C) Note disclosure only. 
D) Not included in any manner. 
A) Blended. 
B) Discretely presented. 
C) Note disclosure only. 
D) Not included in any manner.

Question 3

With regard to combining statements, which of the following statements is true?

Accepted Answer

A) Combining statements for nonmajor governmental funds are optional. 
B) Combining statements for nonmajor governmental funds are required. 
C) Combining statements for nonmajor internal service funds are optional. 
D) Combining statements for all internal service funds are optional. 
A) Combining statements for nonmajor governmental funds are optional. 
B) Combining statements for nonmajor governmental funds are required. 
C) Combining statements for nonmajor internal service funds are optional. 
D) Combining statements for all internal service funds are optional.

Question 4

Required supplementary information (RSI)is considered part of the basic financial statements.

Accepted Answer

A) True 
 B)False

Question 5

The financial section of a CAFR includes:

Accepted Answer

A) MD&A and other RSI. 
B) Statistical section. 
C) Letter of transmittal. 
D) GFOA certificate of achievement. 
A) MD&A and other RSI. 
B) Statistical section. 
C) Letter of transmittal. 
D) GFOA certificate of achievement.

Question 6

The Hospital Foundation is a legally separate, tax-exempt 501(c)(3)entity organized for the purpose of raising funds to provide scholarships only to academically qualified students at the Hospital Medical School.Members of the board of the Hospital Foundation are elected by the existing board of trustees.The foundation provides scholarships to students of the Hospital Medical School, but the foundation receives no financial support from the Hospital.In what manner would the Hospital include the foundation in its financial statements?

Accepted Answer

A) Blended. 
B) Discretely presented. 
C) Consolidated. 
D) Note disclosure only. 
A) Blended. 
B) Discretely presented. 
C) Consolidated. 
D) Note disclosure only.

Question 7

A special-purpose government that engages in more than one program or in both governmental-type and business-type programs

Accepted Answer

A) May combine fund and government-wide statements into a single statement. 
B) Should be reported upon as one or more discretely presented component units of a general-purpose government. 
C) May present a government-wide income statement in a business format showing expenses deducted from revenues. 
D) Should prepare both government-wide and fund statements, similar to those required of general-purpose governments. 
A) May combine fund and government-wide statements into a single statement. 
B) Should be reported upon as one or more discretely presented component units of a general-purpose government. 
C) May present a government-wide income statement in a business format showing expenses deducted from revenues. 
D) Should prepare both government-wide and fund statements, similar to those required of general-purpose governments.

Question 8

Of the following powers possessed by Government A, which is NOT an indication that Government B should be included as a component unit of Government A?

Accepted Answer

A) The governing documents state that, if dissolved, the assets of Government B will become the property of Government A. 
B) Government A issues revenue bonds in its name backed by the revenues of a project to be undertaken by Government B.Government A is neither legally nor morally liable for repayment. 
C) Government A has agreed to provide financial support to Government B if Government B operates at a deficit but in the entire 75 years that Government B has operated, it has never operated at a loss. 
D) The governing documents state that once Government B has equity in excess of a certain amount, 50 percent of all future operating profits will be used to reduce bonded debt of Government A. 
A) The governing documents state that, if dissolved, the assets of Government B will become the property of Government A. 
B) Government A issues revenue bonds in its name backed by the revenues of a project to be undertaken by Government B.Government A is neither legally nor morally liable for repayment. 
C) Government A has agreed to provide financial support to Government B if Government B operates at a deficit but in the entire 75 years that Government B has operated, it has never operated at a loss. 
D) The governing documents state that once Government B has equity in excess of a certain amount, 50 percent of all future operating profits will be used to reduce bonded debt of Government A.

Question 9

Required notes are an essential element of the basic financial statements.

Accepted Answer

A) True 
 B)False

Question 10

Fund financial statements include which of the following for a governmental fund?

Accepted Answer

A) Statement of net position and statement of changes in net position. 
B) Statement of net position, statement of changes in net position, and statement of cash flows. 
C) Balance sheet; statement of revenue, expenditures, and changes in fund balance; and statement of cash flows. 
D) Balance sheet; and statement of revenue, expenses, and changes in fund balance. 
A) Statement of net position and statement of changes in net position. 
B) Statement of net position, statement of changes in net position, and statement of cash flows. 
C) Balance sheet; statement of revenue, expenditures, and changes in fund balance; and statement of cash flows. 
D) Balance sheet; and statement of revenue, expenses, and changes in fund balance.

Question 11

The state established the State Housing Authority to finance construction of low-income housing.The authority, a state corporation, is governed by an independent board of directors, the members of which are appointed by the governor.They can be removed only for cause.The board of directors has complete control over the authority's operations.The director is hired by the board and reports to the board; the director cannot be removed by the governor.Although the state constitution limits the state to $2 million of bonds outstanding, the authority issued $970 million in bonds to finance construction projects.In earlier years, the authority issued debt that was backed by the taxing power of the state (moral obligation debt).The newer bonds are revenue bonds only.
The authority uses the proceeds of the debt it issues to make loans to finance housing construction.Debt is serviced from monies received in repayment of loans made by the authority.
Do you believe the state should include the authority in its reporting entity? If so, how? Justify your answer using the GASB Financial Reporting Entity criteria.

Accepted Answer

The authority is a separate legal entity

Question 12

It is unacceptable for a special-purpose government that is a component unit of a general-purpose government to issue its own "stand-alone" financial report.

Accepted Answer

A) True 
 B)False

Question 13

The Friends of the City Public Library Foundation is a legally separate, tax-exempt 501(c)(3)entity organized for the purpose of raising funds to provide financial assistance to the library.Members of the board of the foundation are elected by the existing foundation board members.The foundation provides financial assistance to the library, but the foundation receives no financial support from the library.If dissolved, all of the foundation assets would revert to the library.The foundation would be considered a(n)

Accepted Answer

A) Primary government. 
B) Component unit. 
C) Related organization. 
D) Affiliated organization. 
A) Primary government. 
B) Component unit. 
C) Related organization. 
D) Affiliated organization.

Question 14

The Hospital Foundation is a legally separate, tax-exempt 501(c)(3)entity organized for the purpose of raising funds to provide scholarships only to academically qualified students at the Hospital Medical School.Members of the board of the Hospital Foundation are elected by the existing board of trustees.The foundation provides scholarships to students of the Hospital Medical School, but the foundation receives no financial support from the hospital.The foundation would be considered a(n)

Accepted Answer

A) Primary government. 
B) Component unit. 
C) Related organization. 
D) Affiliated organization. 
A) Primary government. 
B) Component unit. 
C) Related organization. 
D) Affiliated organization.

Question 15

The county created a legally separate county hospital authority.Members of the board of the county hospital are elected in county-wide elections.The hospital receives no financial support from the county, except that the county pays the hospital bills for county indigents.All revenues of the hospital are user fees.In what manner would the hospital be included in the county's basic financial statements?

Accepted Answer

A) Blended. 
B) Discretely presented. 
C) Note disclosure only. 
D) Not included in any manner. 
A) Blended. 
B) Discretely presented. 
C) Note disclosure only. 
D) Not included in any manner.

Question 16

Which of the following is necessary for a government to be considered fiscally independent?

Accepted Answer

A) It must be able to hire its own management. 
B) It must be able to issue bonds that are tax-exempt. 
C) It must not be subsidized by another government. 
D) It must be able to levy taxes and/or set rates for its services. 
A) It must be able to hire its own management. 
B) It must be able to issue bonds that are tax-exempt. 
C) It must not be subsidized by another government. 
D) It must be able to levy taxes and/or set rates for its services.

Question 17

One ratio measure of fiscal effort is Revenue from own sources/Intergovernmental revenues.

Accepted Answer

A) True 
 B)False

Question 18

For a government that depreciates infrastructure, RSI likely would not include which of the following?

Accepted Answer

A) MD&A. 
B) Actual to budget comparison. 
C) Information about infrastructure condition. 
D) Details of pension actuarial valuations. 
A) MD&A. 
B) Actual to budget comparison. 
C) Information about infrastructure condition. 
D) Details of pension actuarial valuations.

Question 19

When a government's Unassigned fund balance/Total operating revenues ratio is high

Accepted Answer

A) It is a sign of fiscal strength. 
B) It indicates the government is spending too little. 
C) It indicates the government is taxing too much. 
D) Any of the above may be indicated. 
A) It is a sign of fiscal strength. 
B) It indicates the government is spending too little. 
C) It indicates the government is taxing too much. 
D) Any of the above may be indicated.

Question 20

There are only two government-wide statements: the statement of net position and the statement of activities.

Accepted Answer

A) True 
 B)False

Which of the following is necessary for a special-purpose local government to be considered a primary government?

With regard to combining statements, which of the following statements is true?

Required supplementary information (RSI)is considered part of the basic financial statements.

The financial section of a CAFR includes:

A special-purpose government that engages in more than one program or in both governmental-type and business-type programs

Of the following powers possessed by Government A, which is NOT an indication that Government B should be included as a component unit of Government A?

Required notes are an essential element of the basic financial statements.

Fund financial statements include which of the following for a governmental fund?

It is unacceptable for a special-purpose government that is a component unit of a general-purpose government to issue its own "stand-alone" financial report.

Which of the following is necessary for a government to be considered fiscally independent?

One ratio measure of fiscal effort is Revenue from own sources/Intergovernmental revenues.

For a government that depreciates infrastructure, RSI likely would not include which of the following?

When a government's Unassigned fund balance/Total operating revenues ratio is high

There are only two government-wide statements: the statement of net position and the statement of activities.

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Long-Term Obligations

Business-Type Activities

Pensions and Other Fiduciary Activities

Not-For-Profit Organizations

Colleges and Universities

Health Care Providers

Managing for Results

Auditing Governments and Notforprofit Organizations

Federal Government Accounting

Filters

Exam 11: Issues of Reporting, Disclosure, and Financial Analysis

Which of the following is necessary for a special-purpose local government to be considered a primary government?

With regard to combining statements, which of the following statements is true?

Required supplementary information (RSI)is considered part of the basic financial statements.

The financial section of a CAFR includes:

A special-purpose government that engages in more than one program or in both governmental-type and business-type programs

Of the following powers possessed by Government A, which is NOT an indication that Government B should be included as a component unit of Government A?

Required notes are an essential element of the basic financial statements.

Fund financial statements include which of the following for a governmental fund?

It is unacceptable for a special-purpose government that is a component unit of a general-purpose government to issue its own "stand-alone" financial report.

Which of the following is necessary for a government to be considered fiscally independent?

One ratio measure of fiscal effort is Revenue from own sources/Intergovernmental revenues.

For a government that depreciates infrastructure, RSI likely would not include which of the following?

When a government's Unassigned fund balance/Total operating revenues ratio is high

There are only two government-wide statements: the statement of net position and the statement of activities.

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Long-Term Obligations

Business-Type Activities

Pensions and Other Fiduciary Activities

Not-For-Profit Organizations

Colleges and Universities

Health Care Providers

Managing for Results

Auditing Governments and Notforprofit Organizations

Federal Government Accounting

Filters