Question 1

Following are some of the county's governmental funds. The county has asked you to determine is any of the funds listed should be classified as major funds based on the GASB size criteria. Clearly indicate which fund(s) you believe should be classified as major and provide support for your choice(s).

Accepted Answer

The answer of Following are some of the county's governmental...

Question 2

Explain the nature of the three major activity categories of a state or local government: governmental activities, business-type activities, and fiduciary activities. Provide examples of each.

Accepted Answer

The answer of Explain the nature of the three major...

Question 3

Which of the following is not one of the seven elements defined by the GASB concept statements?
A) Deferred inflow of resources.
B) Expenses.
C) Assets.
D) Net position.

Accepted Answer

Expenses are not one of the seven elements defined by the GASB concept statements. The seven elements defined are assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position, revenues, and expenses.

Question 4

The GASB concept statements indicate that in certain instances a remeasured value for an asset or liability should be reported on the financial statements. Which of the following is not one of the methods recommended by the GASB for remeasured amounts?
A) Historical cost.
B) Lower of cost or market.
C) Fair value.
D) Replacement cost.

Accepted Answer

The answer of The GASB concept statements indicate that in...

Question 5

The GASB recommends that budget-to-actual comparison information be provided as which of the following?
A) A stand-alone financial statement.
B) A schedule in the notes to the financial statements.
C) As a part of the basic financial statements.
D) As a required supplementary information schedule.

Accepted Answer

The GASB recommends that budget-to-actual comparison information be presented as a required supplementary information schedule, which is presented after the basic financial statements but before the notes to the financial statements. This schedule is necessary to provide information about whether the actual results are consistent with the budgeted amounts and to aid in evaluating the government's fiscal performance.

Question 6

Explain the difference between measurement focus and basis of accounting. Also, explain the difference between the economic resources measurement focus and the current financial resources measurement focus as well as the difference between the accrual and modified accrual bases of accounting. Which funds and government-wide activities use each focus and each basis?

Accepted Answer

The answer of Explain the difference between measurement focus and...

Question 7

For each of the following descriptive phrases, indicate the type of fund from the list.
A. Governmental funds
B. Proprietary funds
C. Fiduciary funds
________ 1. Includes permanent funds held in trust to be used for public purposes
________ 2. Sometimes referred to as self-supporting or business-like funds
________ 3. Any fund held by a government in a custodial or trustee relationship for an external party
________ 4. Used when the government collects taxes or amounts to be invested for external parties
________ 5. Enterprise and internal service funds

Accepted Answer

The answer of For each of the following descriptive phrases,...

Question 8

"The primary purpose of an accounting system for a state or a local government is to make it possible for financial statements to demonstrate compliance with finance-related legal and contractual provisions." Explain why you believe this statement to be correct or incorrect.

Accepted Answer

The answer of "The primary purpose of an accounting system...

Question 9

List the seven fund financial statements that are required as part of the basic financial statements by GASB standards. What measurement focus and basis of accounting should be used in preparing each of these statements?

Accepted Answer

The answer of List the seven fund financial statements that...

Question 10

Use the following information to determine whether the Development Special Revenue and the Debt Service Funds should be reported as major funds based on asset amounts provided. $ \begin{array}{llr}\text { Development Special Revenue Fund Assets } & \$ & 740,000 \ \text { Debt Service Fund Assets } & \$ & 150,000 \ \text { Total Governmental Fund Assets } & \$ &7,500,000 \ \text { Total Governmental Fund and Enterprise Fund Assets } & \$ &8,750,000\end{array} $
 
A) The Development Special Revenue Fund should be reported as major.
B) The Debt Service Fund should be reported as major.
C) Both the Development Special Revenue Fund and the Debt Service Fund should be reported as major.
D) Neither the Development Special Revenue Fund nor the Debt Service Fund should be reported as major.

Accepted Answer

To determine if a fund should be reported as major, it generally needs to meet certain criteria, such as containing 10% or more of the total assets for its category (governmental or enterprise) and 5% or more of the combined total assets of all governmental and enterprise funds. The Development Special Revenue Fund's assets are $740,000, which is less than 10% of the total governmental fund assets ($7,500,000), and the Debt Service Fund's assets are $150,000, also less than 10% of the total governmental fund assets. Neither fund meets the 10% criterion, nor do they likely meet the 5% criterion when considering the combined total assets of $8,750,000. Therefore, neither should be reported as major based on the information provided.

Question 11

For each of the following scenarios, indicate how they would be classified for fund balance reporting purposes using the classification list.
A.	Nonspendable
B.	Restricted
C.	Committed
D.	Assigned
E.	Unassigned
________ 1.	Bond proceeds of $15,000,000 that must be used for construction of a fire substation remain unspent at the end of the fiscal year.
________ 2.	Prepaid rent of $6,000 remains at the end of the fiscal year.
________ 3.	The city council adopted a plan to set aside 2% of revenues over the next three years to help build cash reserves. At the end of the fiscal year 2% of the revenues were set aside.
________ 4.	The state transportation department provided $1,000,000 in state funds to be used for street widening. At the end of the fiscal year $750,000 remained unspent.
________ 5.	The county received a $3,000,000 endowment during the year.

Accepted Answer

The answer of For each of the following scenarios, indicate...

Question 12

The GASB requires budget-to-actual comparison information for which of the following?
A) The General Fund.
B) All governmental funds.
C) The General Fund and major special revenue funds with legally adopted budgets.
D) All special revenue, debt service and capital projects funds with legally adopted budgets.

Accepted Answer

The GASB requires budget-to-actual comparison information for the General Fund and major special revenue funds with legally adopted budgets.

Question 13

List the basic financial statements required by GASB standards and briefly explain their purposes.

Accepted Answer

The answer of List the basic financial statements required by...

Quiz 2: Principles of Accounting and Financial Reporting for State and Local Governments

Explain the nature of the three major activity categories of a state or local government: governmental activities, business-type activities, and fiduciary activities. Provide examples of each.

Which of the following is not one of the seven elements defined by the GASB concept statements?

The GASB concept statements indicate that in certain instances a remeasured value for an asset or liability should be reported on the financial statements. Which of the following is not one of the methods recommended by the GASB for remeasured amounts?

The GASB recommends that budget-to-actual comparison information be provided as which of the following?

"The primary purpose of an accounting system for a state or a local government is to make it possible for financial statements to demonstrate compliance with finance-related legal and contractual provisions." Explain why you believe this statement to be correct or incorrect.

List the seven fund financial statements that are required as part of the basic financial statements by GASB standards. What measurement focus and basis of accounting should be used in preparing each of these statements?

The GASB requires budget-to-actual comparison information for which of the following?

List the basic financial statements required by GASB standards and briefly explain their purposes.