Question 1

How do credit analysts assist decision makers in evaluating the creditworthiness of a state or local government?

Accepted Answer

Credit analysts,such as those with Moody's,Standard and Poor's,and Fitch,Inc.,analyze external financial statements of a government along with other available economic and demographic information,make initial assessments,compare municipalities,and then assign a bond rating to each bond a government issues.Investors considering the purchase or sale of municipal bonds use this rating to compare the risk associated with each bond relative to other municipal bonds.

Question 2

Political culture,one of the environmental factors affecting financial condition,includes such factors as form of government and the entity's economic,political,and social history.

Accepted Answer

A) True 
 B)False  True

Question 3

The management discussion and analysis (MD&A)is designed to provide substantial information in "plain English" so financial statement users can assess the financial health of the government.

Accepted Answer

A) True 
 B)False  True

Question 4

Failure to achieve interperiod equity may negatively impact a government's financial condition.

Accepted Answer

A) True 
 B)False

Question 5

The following are key terms in Chapter 10 that relate to analysis of governmental financial performance:
A.Benchmarking
B.Budgetary solvency
C.Cash solvency
D.Economic condition
E.Financial condition
F.Financial position
G.Fiscal capacity
H.Long-run solvency
I.Service capacity
J.Service-level solvency
For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition

Accepted Answer

1.E,2.D,3.

Question 6

Match the following financial ratios that are based on comprehensive annual financial report (CAFR)governmental funds information with the explanation for that ratio.

Accepted Answer

1.k,2.l,3.e,4.j,5.f,

Question 7

After financial ratios are calculated,the results should be compared to any of the following except

Accepted Answer

A) The same indicator from prior years. 
B) Budgeted information for the government for the upcoming year. 
C) A comparative benchmark value,such as those from Moody's Medians. 
D) Any credit market or other red flag indicators. 
A) The same indicator from prior years. 
B) Budgeted information for the government for the upcoming year. 
C) A comparative benchmark value,such as those from Moody's Medians. 
D) Any credit market or other red flag indicators.

Question 8

Which of the following ratios would be considered favorable if it was low?

Accepted Answer

A) Total revenues to population. 
B) Debt service to total revenues. 
C) Capital outlay from operating funds to operating expenditures. 
D) Cash and short-term investments to current liabilities. 
A) Total revenues to population. 
B) Debt service to total revenues. 
C) Capital outlay from operating funds to operating expenditures. 
D) Cash and short-term investments to current liabilities.

Question 9

Describe how financial performance is related to the operating performance of a governmental entity.

Accepted Answer

Good financial performance,measured by f

Question 10

"Financial statements are virtually useless in evaluating a city's financial condition." Do you agree with this statement? Why or why not?

Accepted Answer

Disagree.While it is true that much usef

Question 11

A measure of the adequacy of the amount of the government's total unrestricted net assets or deficit at the measurement date is

Accepted Answer

A) Unrestricted net assets/total revenues. 
B) Business-type activities revenues/business-type activities expenses. 
C) Total net assets (governmental activities and business-type activities)less total net assets at the beginning of the year. 
D) Total revenues/total expenses. 
A) Unrestricted net assets/total revenues. 
B) Business-type activities revenues/business-type activities expenses. 
C) Total net assets (governmental activities and business-type activities)less total net assets at the beginning of the year. 
D) Total revenues/total expenses.

Question 12

The term that is defined as determining whether current-year revenues are sufficient to pay for the services provided that year and whether future taxpayers will be required to assume burdens for services previously provided is

Accepted Answer

A) Financial position. 
B) Interperiod equity. 
C) Financial condition. 
D) Economic condition. 
A) Financial position. 
B) Interperiod equity. 
C) Financial condition. 
D) Economic condition.

Question 13

Fiscal capacity is the government's ongoing ability and willingness to supply the capital and human resources needed to meet its commitments to provide services.

Accepted Answer

A) True 
 B)False

Question 14

Cash solvency is the government's long-run ability to pay all the costs of doing business,such as expenditures in the annual budget and those that appear only in the years in which they must be paid.

Accepted Answer

A) True 
 B)False

Question 15

How do the objectives of evaluating financial condition differ between internal managers and credit analysts? How are their objectives similar?

Accepted Answer

Internal managers are primarily concerne

Question 16

Describe some ratios that can be calculated using the basic financial statements that will help a decision maker assess the financial position of the government.

Accepted Answer

Seven ratios are described in Illustrati

Question 17

The financial condition of a government is easily determined by calculating the financial ratios discussed in Chapter 10.

Accepted Answer

A) True 
 B)False

Question 18

A financial capability ratio that measures the degree to which the annual budget is loaded with disbursements to pay off long-term debt is:

Accepted Answer

A) Revenue dispersion. 
B) Debt service load. 
C) Financing margin-bonded debt per capita. 
D) Financing margin-legal debt limit. 
A) Revenue dispersion. 
B) Debt service load. 
C) Financing margin-bonded debt per capita. 
D) Financing margin-legal debt limit.

Question 19

One of the most important reasons to evaluate the financial performance of a government is to

Accepted Answer

A) Determine if property taxes and other revenue sources should be increased. 
B) Assign responsibility for success or failure of the government to certain parties. 
C) Determine whether the government is accomplishing its mission. 
D) Have an early warning of impending financial difficulty for a diverse set of decision makers. 
A) Determine if property taxes and other revenue sources should be increased. 
B) Assign responsibility for success or failure of the government to certain parties. 
C) Determine whether the government is accomplishing its mission. 
D) Have an early warning of impending financial difficulty for a diverse set of decision makers.

Question 20

Which of the following trends is most likely to be a signal of impending fiscal stress?

Accepted Answer

A) An increasing ratio of own source revenues to total revenues. 
B) A decreasing ratio of total revenues to total expenditures. 
C) A decreasing ratio of debt service expenditures to operating revenues. 
D) A decreasing ratio of operating expenditures to total revenues. 
A) An increasing ratio of own source revenues to total revenues. 
B) A decreasing ratio of total revenues to total expenditures. 
C) A decreasing ratio of debt service expenditures to operating revenues. 
D) A decreasing ratio of operating expenditures to total revenues.

How do credit analysts assist decision makers in evaluating the creditworthiness of a state or local government?

Political culture,one of the environmental factors affecting financial condition,includes such factors as form of government and the entity's economic,political,and social history.

The management discussion and analysis (MD&A)is designed to provide substantial information in "plain English" so financial statement users can assess the financial health of the government.

Failure to achieve interperiod equity may negatively impact a government's financial condition.

Match the following financial ratios that are based on comprehensive annual financial report (CAFR)governmental funds information with the explanation for that ratio.

After financial ratios are calculated,the results should be compared to any of the following except

Which of the following ratios would be considered favorable if it was low?

Describe how financial performance is related to the operating performance of a governmental entity.

"Financial statements are virtually useless in evaluating a city's financial condition." Do you agree with this statement? Why or why not?

A measure of the adequacy of the amount of the government's total unrestricted net assets or deficit at the measurement date is

The term that is defined as determining whether current-year revenues are sufficient to pay for the services provided that year and whether future taxpayers will be required to assume burdens for services previously provided is

Fiscal capacity is the government's ongoing ability and willingness to supply the capital and human resources needed to meet its commitments to provide services.

Cash solvency is the government's long-run ability to pay all the costs of doing business,such as expenditures in the annual budget and those that appear only in the years in which they must be paid.

How do the objectives of evaluating financial condition differ between internal managers and credit analysts? How are their objectives similar?

Describe some ratios that can be calculated using the basic financial statements that will help a decision maker assess the financial position of the government.

The financial condition of a government is easily determined by calculating the financial ratios discussed in Chapter 10.

A financial capability ratio that measures the degree to which the annual budget is loaded with disbursements to pay off long-term debt is:

One of the most important reasons to evaluate the financial performance of a government is to

Which of the following trends is most likely to be a signal of impending fiscal stress?

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Entities

Principles of Accounting and Financial Reporting for State and Local Governments

Governmental Operating Statement Accounts; Budgetary Accounting

Accounting for Governmental Operating Activitiesillustrative Transactions and Financial Statements

Accounting for General Capital Assets and Capital Projects

Accounting for General Long-Term Liabilities and Debt Service

Accounting for the Business-Type Activities of State and Local Governments

Accounting for Fiduciary Activities Agency and Trust Funds

Financial Reporting of State and Local Governments

Auditing of Governmental and Not-For-Profit Organizations

Budgeting and Performance Measurement

Accounting for Not-For-Profit Organizations

Not-For-Profit Organizations Regulatory, taxation, and Performance Issues

Accounting for Colleges and Universities

Accounting for Health Care Organizations

Accounting and Reporting for the Federal Government

Filters

Exam 10: Analysis of Governmental Financial Performance

How do credit analysts assist decision makers in evaluating the creditworthiness of a state or local government?

Political culture,one of the environmental factors affecting financial condition,includes such factors as form of government and the entity's economic,political,and social history.

The management discussion and analysis (MD&A)is designed to provide substantial information in "plain English" so financial statement users can assess the financial health of the government.

Failure to achieve interperiod equity may negatively impact a government's financial condition.

Match the following financial ratios that are based on comprehensive annual financial report (CAFR)governmental funds information with the explanation for that ratio.

After financial ratios are calculated,the results should be compared to any of the following except

Which of the following ratios would be considered favorable if it was low?

Describe how financial performance is related to the operating performance of a governmental entity.

"Financial statements are virtually useless in evaluating a city's financial condition." Do you agree with this statement? Why or why not?

A measure of the adequacy of the amount of the government's total unrestricted net assets or deficit at the measurement date is

The term that is defined as determining whether current-year revenues are sufficient to pay for the services provided that year and whether future taxpayers will be required to assume burdens for services previously provided is

Fiscal capacity is the government's ongoing ability and willingness to supply the capital and human resources needed to meet its commitments to provide services.

Cash solvency is the government's long-run ability to pay all the costs of doing business,such as expenditures in the annual budget and those that appear only in the years in which they must be paid.

How do the objectives of evaluating financial condition differ between internal managers and credit analysts? How are their objectives similar?

Describe some ratios that can be calculated using the basic financial statements that will help a decision maker assess the financial position of the government.

The financial condition of a government is easily determined by calculating the financial ratios discussed in Chapter 10.

A financial capability ratio that measures the degree to which the annual budget is loaded with disbursements to pay off long-term debt is:

One of the most important reasons to evaluate the financial performance of a government is to

Which of the following trends is most likely to be a signal of impending fiscal stress?

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Entities

Principles of Accounting and Financial Reporting for State and Local Governments

Governmental Operating Statement Accounts; Budgetary Accounting

Accounting for Governmental Operating Activitiesillustrative Transactions and Financial Statements

Accounting for General Capital Assets and Capital Projects

Accounting for General Long-Term Liabilities and Debt Service

Accounting for the Business-Type Activities of State and Local Governments

Accounting for Fiduciary Activities Agency and Trust Funds

Financial Reporting of State and Local Governments

Auditing of Governmental and Not-For-Profit Organizations

Budgeting and Performance Measurement

Accounting for Not-For-Profit Organizations

Not-For-Profit Organizations Regulatory, taxation, and Performance Issues

Accounting for Colleges and Universities

Accounting for Health Care Organizations

Accounting and Reporting for the Federal Government

Filters