Question 1

Internal Service funds are treated as governmental activities in the government-wide statements if the principal customers are other departments within the General Fund.

Accepted Answer

Internal Service funds are considered to be part of the governmental activities if their principal customers are other departments within the same governmental entity, such as the General Fund. This is because the purpose of these funds is to provide support services to other departments, rather than to generate revenue or profit. As such, their financial activities are reported as part of the overall financial results of the government in the government-wide financial statements.

Question 2

GASB and FASB Concept Statements establish accounting standards that must be complied with to receive an unqualified audit opinion.

Accepted Answer

Concept statements do not establish accounting standards but primarily serve to guide standard setting bodies. Governments must comply with GAAP as established by Statements to receive unqualified audit opinions.

Question 3

Long-term debt that is to be paid with tax revenues is reported both in the government-wide statements and in the governmental fund statements

Accepted Answer

In governmental accounting, long-term debt to be paid with tax revenues is reported in the government-wide financial statements but not in the governmental fund statements, which focus on short-term financial resources.

Question 4

Fiduciary funds of a governmental unit use the current financial resources measurement focus and modified accrual basis of accounting

Accepted Answer

Fiduciary funds use the economic resources measurement focus and the accrual basis of accounting.

Question 5

FASB sets the reporting standards for private and public not-for-for profits

Accepted Answer

The answer of FASB sets the reporting standards for private...

Question 6

Under the accrual basis of accounting,revenues are recognized when measurable and available to finance expenditures of the current period.

Accepted Answer

The accrual basis of accounting recognizes revenues when they are earned and are expected to be realized, and recognizes expenses when the related goods or services are used up. The modified accrual basis of accounting measures revenues when measurable and available to finance the expenditures of the current period.

Question 7

Measurement focus refers to those items,such as current and long-term assets,that are being reported on the financial statements.

Accepted Answer

Measurement focus refers to the items that are being reported on the financial statements, such as current and long-term assets.

Question 8

The government-wide statements and the fund statements for proprietary funds and fiduciary funds use the economic resources measurement focus and the accrual basis of accounting.

Accepted Answer

The government-wide financial statements and the fund statements for proprietary funds and fiduciary funds use the economic resources measurement focus and the accrual basis of accounting. This means that transactions are recorded when they occur, regardless of when cash is actually received or paid, and assets and liabilities are reported at their current market value or fair value.

Question 9

The Financial Accounting Standards Board has authority to establish accounting and financial reporting standards for both private and state universities.

Accepted Answer

Accounting and financial reporting standards for profit-seeking businesses and for nongovernmental not-for-profit organizations are set by the FASB which includes private universities. The GASB sets standards for governmentally related not-for-profits organizations such as colleges and universities.

Question 10

Infrastructure is not capitalized by state and local governmental units.

Accepted Answer

State and local governmental units typically capitalize infrastructure as it represents a long-term asset that provides benefits over many years.

Question 11

State and local governments may use eleven different fund types.

Accepted Answer

State and local governments may use eleven different fund types including General Fund, Special Revenue Fund, Debt Service Fund, Capital Projects Fund, Permanent Fund, Enterprise Fund, Internal Service Fund, Trust and Agency Fund, Pension Trust Fund, Investment Trust Fund, and Agency Fund.

Question 12

Comparison of the legally approved budget with actual results of the General Fund is not part of required supplementary information in the CAFR.

Accepted Answer

The comparison of the legally approved budget with actual results of the General Fund is part of required supplementary information in the CAFR, specifically in the Budgetary Comparison Schedule.

Question 13

Governmental activities fund statements may use modified accrual basis when preparing government-wide financial statements.

Accepted Answer

Governmental activities fund statements typically use the modified accrual basis of accounting for their financial statements. However, when preparing government-wide financial statements, full accrual basis is used.

Question 14

Fiduciary funds include agency,pension trust,investment trust,and permanent funds.

Accepted Answer

Fiduciary funds include private-purpose trust, investment trust, pension trust and agency funds.

Question 15

Fund-basis statements are presented for three categories of government activities:
 governmental,proprietary,and fiduciary.

Accepted Answer

This statement is true. Fund-basis statements are presented for three categories of government activities: governmental, proprietary, and fiduciary.

Question 16

FASAB,GASB and FASB standards are set forth primarily in documents called interpretations.

Accepted Answer

FASAB, GASB and FASB standards are primarily set forth in documents called standards, not interpretations. While interpretations may exist, they are not the primary document for setting accounting standards for these organizations.

Question 17

Business activities fund statements must be changed to the accrual basis from the modified accrual basis when preparing government-wide financial statements.

Accepted Answer

The answer of Business activities fund statements must be changed...

Question 18

The economic resource measurement focus and accrual basis of measurement is an important feature of government-wide financial statements.

Accepted Answer

The economic resource measurement focus and accrual basis of measurement are key components of government-wide financial statements as they provide a more comprehensive and accurate representation of a government's financial position and performance. This approach takes into account all economic resources controlled by the government and recognizes transactions when they occur, regardless of when cash is received or paid out.

Question 19

Comparison of the legally approved budget with actual results of the General Fund is included as part of required supplementary information in the CAFR.

Accepted Answer

The comparison of the legally approved budget with actual results of the General Fund is included in the Required Supplementary Information (RSI) section of the Comprehensive Annual Financial Report (CAFR).

Question 20

General fixed assets of the government are reported both in the government-wide financial statements and the governmental fund financial statements.

Accepted Answer

Governmental funds are reported using the modified accrual basis of accounting. Governmental-type activities are reported in the government-wide statements using the accrual basis of accounting, including fixed assets and long-term debt.

Quiz 1: Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations