Question 1

"Interim financial reports are needed for state and local governments even though external users of financial reports have no need to assess monthly or quarterly performance of the government." Do you agree? Why or why not?

Accepted Answer

The answer of "Interim financial reports are needed for state...

Question 2

Describe the alternative processes for capturing the financial accounting information required for government-wide financial statements.

Accepted Answer

The answer of Describe the alternative processes for capturing the...

Question 3

The following are key terms in Chapter 9 that relate to the reporting entity:
A.Component unit
B.Financial reporting entity
C.Financial accountability
D.Joint venture
E.Other stand-alone government
F.Primary government
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

The answer of The following are key terms in Chapter...

Question 4

The comprehensive annual financial report (CAFR)of a government should contain a statement of revenues,expenses,and changes in net position for :

Accepted Answer

A)  Both proprietary and governmental funds. 
B)  Governmental but not proprietary funds. 
C)  Proprietary but not governmental funds. 
D)  Both proprietary and fiduciary funds.

Question 5

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

Accepted Answer

A)  To provide information that can be used for capital allocation decisions made by external investors. 
B)  To report on the legal requirements imposed on the government by its elected officials. 
C)  To provide information that can be used to assess a government's accountability. 
D)  To fulfill the government's statutory duty to report on cash received and cash disbursed.

Question 6

In reconciling the net change in fund balances to the change in net position of governmental activities which of the following would be added to the change in net position of governmental activities?

Accepted Answer

A)  Issuance of long-term debt. 
B)  Construction of capital assets. 
C)  Accrual of interest expense. 
D)  Depreciation expense.

Question 7

Which of the following would decrease the governmental activities balance in Net Position-Net Investment in Capital Assets?

Accepted Answer

A)  An increase in accumulated depreciation. 
B)  Acquisition of a capital lease. 
C)  Sale of a fully depreciated capital asset. 
D)  Receipt of a capital grant that has not been expended at fiscal year-end.

Question 8

Which of the following circumstances would indicate that a potential component unit (PCU)should be included as part of the government financial reporting entity?

Accepted Answer

A)  The primary government is entitled to the resources of the PCU. 
B)  Officials of the primary government appoint a majority of the members of the governing board of the PCU. 
C)  The primary government significantly influences the programs and activities of the PCU. 
D)  Officials of the primary government appoint a majority of the members of the PCU's governing board and the primary government is able to impose its will on the PCU.

Question 9

Popular reports provide condensed financial information that can be used by governments to communicate financial results to citizens.

Accepted Answer

A) True 
 B)False

Question 10

The accounting system used by a state or local government must make it possible to prepare financial statements as required by the Financial Accounting Standards Board.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following would not be included within the financial section of the comprehensive annual financial report (CAFR)?

Accepted Answer

A)  Letter of transmittal. 
B)  Management's discussion and analysis (MD&
A) . 
C)  Independent auditor's report. 
D)  Required supplementary information (RSI).

Question 12

What constitutes the basic financial statements of a government?

Accepted Answer

A)  Financial section of the comprehensive annual financial report (CAFR). 
B)  Government-wide financial statements plus notes. 
C)  Government-wide financial statements plus fund financial statements plus notes. 
D)  Government-wide financial statements plus fund financial statements plus notes plus required supplementary information (RSI).

Question 13

Which of the following statements concerning interfund transfers is ?

Accepted Answer

A)  Interfund transfers are reported in the statement of revenues, expenditures, and changes in fund balance when transfers occur among governmental funds. 
B)  Interfund transfers are reported in the statement of activities when transfers occur among governmental funds. 
C)  Interfund transfers are reported in the statement of revenues, expenditures, and changes in fund balance and the statement of activities when transfers occur among governmental funds. 
D)  Interfund transfers are reported as internal balances on the statement of net position when activity occurs among governmental activities and business-type activities.

Question 14

Government-wide financial statements present the government's financial position using the:

Accepted Answer

A)  Financial resources measurement focus and the accrual basis of accounting. 
B)  Economic resources measurement focus and the accrual basis of accounting. 
C)  Current financial resources measurement focus and the modified accrual basis of accounting. 
D)  Current financial resources measurement focus and the cash basis of accounting.

Question 15

Other comprehensive bases of accounting (OCBOA)are considered generally accepted accounting principles (GAAP)for state and local governments.

Accepted Answer

A) True 
 B)False

Question 16

In your own words,describe the relationships between a component unit and a primary government.Provide some examples and describe the financial reporting for a component unit.

Accepted Answer

The answer of In your own words,describe the relationships between...

Question 17

Which of the following are government-wide financial statements required by GASB standards?

Accepted Answer

A)  Statement of net position and statement of cash flows. 
B)  Statement of net position, statement of activities, and statement of cash flows. 
C)  Statement of net position and statement of activities. 
D)  Statement of activities and statement of cash flows.

Question 18

The two methods for presenting component units in the financial statements are aggregated and disaggregated.

Accepted Answer

A) True 
 B)False

Question 19

Where should infrastructure assets and long-term liabilities issued to finance infrastructure be reported?

Accepted Answer

A)  Letter of transmittal. 
B)  Fund financial statements. 
C)  Management's discussion and analysis. 
D)  Government-wide financial statements.

Question 20

Which of the following is not a category found in the statistical section of the comprehensive annual financial report (CAFR)?

Accepted Answer

A)  Expenditure trend information. 
B)  Revenue capacity information. 
C)  Demographic and economic information. 
D)  Debt capacity information.

Exam 9: Financial Reporting of State and Local Governments

"Interim financial reports are needed for state and local governments even though external users of financial reports have no need to assess monthly or quarterly performance of the government." Do you agree? Why or why not?

Describe the alternative processes for capturing the financial accounting information required for government-wide financial statements.

The comprehensive annual financial report (CAFR) of a government should contain a statement of revenues,expenses,and changes in net position for :

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

In reconciling the net change in fund balances to the change in net position of governmental activities which of the following would be added to the change in net position of governmental activities?

Which of the following would decrease the governmental activities balance in Net Position-Net Investment in Capital Assets?

Which of the following circumstances would indicate that a potential component unit (PCU) should be included as part of the government financial reporting entity?

Popular reports provide condensed financial information that can be used by governments to communicate financial results to citizens.

The accounting system used by a state or local government must make it possible to prepare financial statements as required by the Financial Accounting Standards Board.

Which of the following would not be included within the financial section of the comprehensive annual financial report (CAFR) ?

What constitutes the basic financial statements of a government?

Which of the following statements concerning interfund transfers is ?

Government-wide financial statements present the government's financial position using the:

Other comprehensive bases of accounting (OCBOA)are considered generally accepted accounting principles (GAAP)for state and local governments.

In your own words,describe the relationships between a component unit and a primary government.Provide some examples and describe the financial reporting for a component unit.

Which of the following are government-wide financial statements required by GASB standards?

The two methods for presenting component units in the financial statements are aggregated and disaggregated.

Where should infrastructure assets and long-term liabilities issued to finance infrastructure be reported?

Which of the following is not a category found in the statistical section of the comprehensive annual financial report (CAFR) ?