Question 1

Governmental-type funds label the excess of assets over liabilities on the balance sheet as:
A) Net Assets
B) Net Fund Balance and Liabilities
C) Fund Balance
D) Assets Net of Liabilities

Accepted Answer

Governmental-type funds use the term "fund balance" to indicate the difference between assets and liabilities. This represents the amount of resources that remain after specific obligations and restrictions have been satisfied. Choice A, net assets, is used in proprietary funds, and Choice D, assets net of liabilities, is not a term commonly used in governmental-type accounting. Choice B, net fund balance and liabilities, is not a commonly used term either.

Question 2

The fund balance reported in the Governmental Funds Balance Sheet must be reconciled to the total net assets in the governmental activities column of the government-wide Statements of Net Assets.

Accepted Answer

The fund balance reported in the Governmental Funds Balance Sheet is only a component of the total net assets in the governmental activities column of the government-wide Statements of Net Assets. Therefore, a reconciliation is necessary to explain the difference between the two amounts.

Question 3

The Comprehensive Annual Financial Report (CAFR)contains four major sections:
 introductory,financial,supplementary,and statistical.

Accepted Answer

The CAFR has three major sections: introductory, financial and statistical.

Question 4

Which of the following is true regarding the Comprehensive Annual Financial Report (CAFR)?
A) The CAFR has three main sections: introductory, financial, and statistical.
B) Required Supplementary Information includes a Budgetary Comparison Schedule for the General Fund and all major special revenue funds that have a legally adopted annual budget (unless a statement is prepared).
C) Both of the above.
D) Neither of the above.

Accepted Answer

Both statements are true. The CAFR typically includes three main sections: introductory, financial, and statistical. In addition to the financial statements, the CAFR includes Required Supplementary Information (RSI) which may include a Budgetary Comparison Schedule for the General Fund and all major special revenue funds that have a legally adopted annual budget (unless a statement is prepared).

Question 5

In addition to the government-wide statements,governments are required to prepare fund financial statements for which of the following category of funds?
A) Proprietary funds
B) Governmental type funds
C) Fiduciary funds
D) All of the above

Accepted Answer

In addition to the government-wide statement, governments are required to prepare fund-level financial statements within the three categories of funds; governmental, proprietary and fiduciary.

Question 6

Prior-year data are required to be presented on government-wide statements

Accepted Answer

Prior year data may be presented, but it is not required.

Question 7

Government-wide financial statements use the economic resources measurement focus and the accrual basis of accounting.

Accepted Answer

This is true as per the standards set by the Federal Accounting Standards Advisory Board (FASAB) and applies to all branches of the U.S. government.

Question 8

Which of the following is considered Required Supplementary Information (RSI)?
A) Management's Discussion and Analysis.
B) Budgetary Comparison Schedule.
C) Schedule of Risk Management Activities.
D) All of the above are considered RSI.

Accepted Answer

The answer of Which of the following is considered Required...

Question 9

A Comprehensive Annual Financial Report for a state or local governmental unit should contain an introductory section,a financial section,and a statistical section

Accepted Answer

This is true. The introductory section typically includes a letter of transmittal, organizational chart, and information about the government's structure and services. The financial section includes the government's financial statements, management's discussion and analysis, and other financial information such as schedules and notes. The statistical section provides trend and other non-financial data about the government's operations, demographics, and economics.

Question 10

Which of the following is true regarding the government-wide Statement of Net Assets?
A) Discretely presented component units are included in a separate column (or columns).
B) Net assets are broken down into three categories: invested in capital assets, reserved, and unreserved.
C) Both of the above.
D) Neither of the above.

Accepted Answer

Discretely presented component units are included in a separate column in the government-wide Statement of Net Assets. However, net assets are categorized as invested in capital assets, restricted, and unrestricted, not reserved and unreserved.

Question 11

Which of the following is true regarding the government-wide statements?
A) The government-wide statements include a Statement of Net Assets and a Statement of Activities.
B) The governmental activities portion of the government-wide statements is prepared using the current financial resources measurement focus and modified accrual basis of accounting.
C) Both of the above.
D) Neither of the above.

Accepted Answer

The government-wide statements do include a Statement of Net Assets and a Statement of Activities.

Answer: B
 The governmental activities portion of the government-wide statements is prepared using the economic resources measurement focus and accrual basis of accounting, not the current financial resources measurement focus and modified accrual basis of accounting.

Question 12

Which of the following is true regarding the fiduciary fund financial statements?
A) Fiduciary fund financial statements include the Statement of Fiduciary Net Assets and Statement of Changes in Fiduciary Net Assets.
B) Fiduciary fund financial statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.
C) Fiduciary fund financial statements reflect equity as reserved and unreserved.
D) Agency funds are reported only on the Statement of Changes in Fiduciary Net Assets.

Accepted Answer

Fiduciary fund financial statements include both the Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets, which report on the fund's assets and liabilities as well as any changes that occur during the reporting period.

B is incorrect because fiduciary funds use the economic resources measurement focus and accrual basis of accounting, rather than the current financial resources measurement focus and modified accrual basis of accounting typically used by governmental funds.

C is incorrect because fiduciary fund financial statements reflect assets and liabilities, not equity.

D is incorrect because agency funds are excluded from fiduciary fund financial statements altogether, as they are not considered a separate fund type.

Question 13

The fund balance reported in the Governmental Funds Balance Sheet must equal the total net assets in the governmental activities column of the government-wide Statements of Net Assets.

Accepted Answer

The fund balance in the Governmental Funds Balance Sheet does not equal the total net assets in the governmental activities column of the government-wide Statements of Net Assets due to differences in measurement focus and basis of accounting.

Question 14

Which of the following is true regarding the proprietary fund financial statements?
A) The Statement of Net Assets (or Balance Sheet) reflects equity as contributed equity and retained earnings.
B) Normally, a reconciliation is required between the proprietary fund financial statements and the business-type activities column in the government-wide financial statements.
C) Statements include the Statement of Net Assets, Statement of Revenues, Expenses, and Changes in Fund Net Assets, and Statement of Cash Flows.
D) The Statement of Cash Flows may be prepared using either the direct or indirect methods.

Accepted Answer

The proprietary fund financial statements include the Statement of Net Assets, Statement of Revenues, Expenses, and Changes in Fund Net Assets, and Statement of Cash Flows. Option A is incorrect as it is not necessary to reflect equity as contributed and retained earnings. Option B is incorrect as the statement does not require reconciliation with the government-wide financial statements. Option D is incorrect as the Statement of Cash Flows is prepared using the indirect method only.

Question 15

Which of the following is not considered Required Supplementary Information (RSI)?
A) Management's Discussion and Analysis.
B) Budgetary Comparison Schedule.
C) Notes to the financial statements.
D) None of the above; all are considered RSI.

Accepted Answer

Notes to the financial statements are not considered RSI. RSI includes Management's Discussion and Analysis and the Budgetary Comparison Schedule.

Question 16

Fiduciary funds are required to prepare a Statement of Cash Flows using the direct method.

Accepted Answer

Fiduciary funds are not required to prepare a Statement of Cash Flows; this requirement applies to proprietary funds.

Question 17

Prior-year data may be presented but are not required on government-wide statements

Accepted Answer

Prior-year data may be presented but are not required on government-wide statements, according to accounting standards.

Question 18

Fund balance is an account title used only in governmental funds to indicate the excess of assets over liabilities.

Accepted Answer

This is correct. Fund balance is a term used in governmental accounting to represent the difference between assets and liabilities in a fund. It is used to indicate the amount of resources that are available for spending in a fund.

Question 19

Which of the following is true with respect to the General Fund
A) The General Fund is considered to be a major fund if the combined total of assets, liabilities, revenues and expenses exceeds 10% of the total of all governmental funds
B) The General Fund is always considered to be a major fund when preparing fund basis financial statements.
C) The General Fund is considered to be a major fund when preparing fund basis financial statements if it bears a financial benefit or burden to the primary government.
D) The General Fund is not reported as part of the CAFR.

Accepted Answer

The General Fund is always considered a major fund when preparing fund basis financial statements because it is the primary operating fund of a government.

Question 20

A government may designate any fund to be a major fund if reporting the fund separately would be useful.

Accepted Answer

According to GASB Statement No. 54, a government may designate any fund to be a major fund if reporting the fund separately would be useful.

Quiz 2: Overview of Financial Reporting for State and Local Governments

Governmental-type funds label the excess of assets over liabilities on the balance sheet as:

The fund balance reported in the Governmental Funds Balance Sheet must be reconciled to the total net assets in the governmental activities column of the government-wide Statements of Net Assets.

The Comprehensive Annual Financial Report (CAFR)contains four major sections: introductory,financial,supplementary,and statistical.

Which of the following is true regarding the Comprehensive Annual Financial Report (CAFR) ?

In addition to the government-wide statements,governments are required to prepare fund financial statements for which of the following category of funds?

Prior-year data are required to be presented on government-wide statements

Government-wide financial statements use the economic resources measurement focus and the accrual basis of accounting.

Which of the following is considered Required Supplementary Information (RSI) ?

A Comprehensive Annual Financial Report for a state or local governmental unit should contain an introductory section,a financial section,and a statistical section

Which of the following is true regarding the government-wide Statement of Net Assets?

Which of the following is true regarding the government-wide statements?

Which of the following is true regarding the fiduciary fund financial statements?

The fund balance reported in the Governmental Funds Balance Sheet must equal the total net assets in the governmental activities column of the government-wide Statements of Net Assets.

Which of the following is true regarding the proprietary fund financial statements?

Which of the following is not considered Required Supplementary Information (RSI) ?

Fiduciary funds are required to prepare a Statement of Cash Flows using the direct method.

Prior-year data may be presented but are not required on government-wide statements

Fund balance is an account title used only in governmental funds to indicate the excess of assets over liabilities.

Which of the following is true with respect to the General Fund

A government may designate any fund to be a major fund if reporting the fund separately would be useful.