Question 1

In reconciling the total fund balances of the governmental funds to the net position of governmental activities,which of the following would be added to the net position of governmental activities?
A) Accumulated depreciation.
B) Premium on bonds payable.
C) Construction work in progress.
D) Bond interest payable.

Accepted Answer

Construction work in progress is a capital asset that is not reported in the governmental funds but is included in the government-wide financial statements. Therefore, it would be added to the net position of governmental activities in the reconciliation process.

Question 2

Which of the following statements concerning the reporting of internal balances by a government at the end of its fiscal year is ?
A) The internal balances amounts reported in the balance sheet columns represent activity among governmental funds.
B) The internal balances amounts reported in the statement of net position columns represent activity between governmental activities and business-type activities.
C) The internal balances amounts are reported in both the asset and liability sections on the statement of net position.
D) The internal balances amounts reported represent the difference between interfund transfers in and interfund transfers out.

Accepted Answer

Internal balances in the statement of net position represent activity between governmental activities and business-type activities, reflecting the net amount due between these two types of activities.

Question 3

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

Accepted Answer

The Governmental Accounting Standards Board (GASB) requires two primary government-wide financial statements: the Statement of Net Position and the Statement of Activities. These statements provide a broad overview of a government's finances.

Question 4

Balsam City's library board is appointed by the city council,which has agreed to subsidize the operating costs of the library at a material amount to be determined each year.In addition,the city is paying debt service on general obligation bonds issued to construct the library.Based on generally accepted accounting principles (GAAP)criteria for defining the reporting entity:
A) The library is a component unit.
B) The library is a special purpose government.
C) The library is a joint venture.
D) The library is a jointly governed organization.

Accepted Answer

The library is a component unit because it is legally separate from the city council, even though it is appointed by them and receives substantial funding from them. The debt service on the general obligation bonds also adds to the significance of the library as a separate entity that should be reported in the financial statements.

Question 5

The comprehensive annual financial report (CAFR)of a government should contain a statement of revenues,expenses,and changes in net position for :
A) Both proprietary and governmental funds.
B) Governmental but not proprietary funds.
C) Proprietary but not governmental funds.
D) Both proprietary and fiduciary funds.

Accepted Answer

The statement of revenues, expenses, and changes in net position is specific to proprietary funds, which operate similarly to private sector businesses, and thus report their financial activities in this manner. Governmental funds use different reporting formats, focusing on sources and uses of financial resources.

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

Accepted Answer

The answer of In reconciling the net change in fund...

Question 7

For the following items that require reconciliation between governmental funds financial statements and governmental activities financial statements at the government-wide level according to GASB standards,indicate whether the reconciliation will (A)always be subtracted from fund balances-governmental funds,(B)always be added to fund balances-governmental funds,or (C)may be added to or subtracted from fund balances-governmental funds in arriving at net position of governmental activities.
_____ 1.Capital assets used in governmental activities
_____ 2.Long-term liabilities that are not payable in the current period
_____ 3.Net position of internal service funds that are primarily governmental in nature
_____ 4.Accrued interest payable not due in the current period

Accepted Answer

The answer of For the following items that require reconciliation...

Question 8

Under GASB standards,where are nonmajor funds reported?
A) In the management's discussion and analysis preceding the financial statements.
B) In aggregate amounts in a single column in the fund financial statements.
C) In a note disclosure following the financial statements.
D) In the government-wide financial statements.

Accepted Answer

Nonmajor funds are reported in aggregate amounts in a single column in the fund financial statements under GASB standards.

Question 9

Which of the following items are typically reported differently between the governmental fund statements and the Governmental Activities column of the government-wide statements?
A) Capital outlays.
B) Cash collected on property taxes receivable.
C) Accounts payable and other accrued expenses.
D) Inventories.

Accepted Answer

The answer of Which of the following items are typically...

Question 10

On the statement of revenues,expenditures,and changes in fund balance for governmental funds,how are capital outlays reported?
A) As a separate line item in the expenditures section of the statement.
B) Capital outlays are allocated to the functional areas, much like depreciation.
C) As a separate line item in the other financing sources (uses) section of the statement.
D) Below net change in fund balances, but before beginning fund balance.

Accepted Answer

Capital outlays are reported as a separate line item in the expenditures section of the statement of revenues, expenditures, and changes in fund balance for governmental funds. This allows for transparency and clear reporting of the government's spending on long-term assets.

Question 11

"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 12

Which of the following statements concerning interfund transfers is ?
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.

Accepted Answer

Interfund transfers among governmental funds are reported in the statement of revenues, expenditures, and changes in fund balance.

Question 13

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 14

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

Accepted Answer

An increase in accumulated depreciation would decrease the governmental activities balance in Net Position-Net Investment in Capital Assets as it reduces the net book value of the capital assets. Option B would increase the balance as a new capital asset would be added to the balance sheet. Option C would have no effect on the balance as the fully depreciated capital asset would have already been removed from the balance sheet. Option D would increase the balance as the receipt of a capital grant would increase Net Investment in Capital Assets.

Question 15

Which of the following is not one of the methods recommended by the GASB Concepts Statement 3 for communicating information to external users of government financial reports?
A) Providing a popular report.
B) Recognition in the financial statements.
C) Presentation as required supplementary information.
D) Disclosure in the notes to the financial statements.

Accepted Answer

The GASB Concepts Statement 3 recommends methods such as recognition in the financial statements, presentation as required supplementary information, and disclosure in the notes to the financial statements for communicating information to external users. Providing a popular report is not mentioned as one of the recommended methods in GASB Concepts Statement 3.

Question 16

Where should infrastructure assets and long-term liabilities issued to finance infrastructure be reported?
A) Letter of transmittal.
B) Fund financial statements.
C) Management's discussion and analysis.
D) Government-wide financial statements.

Accepted Answer

Infrastructure assets and long-term liabilities issued to finance them should be reported in the government-wide financial statements as they provide an overall view of the government's financial position, results of operations, and cash flows. The letter of transmittal, fund financial statements, and management's discussion and analysis provide more specific information about individual funds and their financial activities.

Question 17

Some governments provide to their citizens highly condensed financial information,budget summaries,and narrative descriptions.This report is called a(an)
A) Comprehensive annual financial report.
B) Basic financial statements.
C) Required supplementary information.
D) Popular report.

Accepted Answer

The report described in the prompt is known as a "Popular Report", which is a condensed and simplified version of financial information and budget summaries provided by some governments to their citizens. The other options given (Comprehensive Annual Financial Report, Basic Financial Statements, Required Supplementary Information) refer to more detailed and technical financial reports that may be produced by governments, but are not as condensed or simplified as a Popular Report.

Question 18

Which of the following statements concerning the reporting of expenses on the statement of activities is ?
A) Expenses are reported after program revenues.
B) Expenses are reported after general revenues.
C) Expenses are reported after program and general revenues.
D) Expenses are reported before program and general revenues.

Accepted Answer

The answer of Which of the following statements concerning the...

Question 19

GASB standards require that governmental fund financial statements include which of the following?
A) Balance sheet.
B) Statement of activities.
C) Statement of cash flows.
D) Both A and B)

Accepted Answer

The answer of GASB standards require that governmental fund financial...

Question 20

What is meant by the term "reporting entity" in accounting for state and local governments?

Accepted Answer

The answer of What is meant by the term "reporting...

Quiz 9: Financial Reporting of State and Local Governments

In reconciling the total fund balances of the governmental funds to the net position of governmental activities,which of the following would be added to the net position of governmental activities?

Which of the following statements concerning the reporting of internal balances by a government at the end of its fiscal year is ?

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

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

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?

Under GASB standards,where are nonmajor funds reported?

Which of the following items are typically reported differently between the governmental fund statements and the Governmental Activities column of the government-wide statements?

On the statement of revenues,expenditures,and changes in fund balance for governmental funds,how are capital outlays reported?

"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?

Which of the following statements concerning interfund transfers is ?

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

Which of the following is not one of the methods recommended by the GASB Concepts Statement 3 for communicating information to external users of government financial reports?

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

Some governments provide to their citizens highly condensed financial information,budget summaries,and narrative descriptions.This report is called a(an)

Which of the following statements concerning the reporting of expenses on the statement of activities is ?

GASB standards require that governmental fund financial statements include which of the following?

What is meant by the term "reporting entity" in accounting for state and local governments?