Question 1

What are the three broad sections of a state or local government's CAFR?

Accepted Answer

A)  Introductory, financial, and statistical. 
B)  Financial statements, notes to the financial statements, and component units. 
C)  Introductory, statistical, and component units. 
D)  Component units, financial, and statistical. 
E)  Financial statements, notes to the financial statements, and statistical. 
A)  Introductory, financial, and statistical. 
B)  Financial statements, notes to the financial statements, and component units. 
C)  Introductory, statistical, and component units. 
D)  Component units, financial, and statistical. 
E)  Financial statements, notes to the financial statements, and statistical.

Question 2

Which of the following is true regarding Management's Discussion and Analysis (MD&A)?

Accepted Answer

A)  MD&A should provide an objective analysis of the financial activities based on currently known facts, decisions, or conditions. 
B)  MD&A should disclose total assets and liabilities for all substantial component units. 
C)  Management should provide a cash flow projection for at least three consecutive fiscal years in MD&A. 
D)  MD&A is optional for city governments. 
E)  MD&A is the final element of the introductory section of the comprehensive annual financial report (CAFR). 
A)  MD&A should provide an objective analysis of the financial activities based on currently known facts, decisions, or conditions. 
B)  MD&A should disclose total assets and liabilities for all substantial component units. 
C)  Management should provide a cash flow projection for at least three consecutive fiscal years in MD&A. 
D)  MD&A is optional for city governments. 
E)  MD&A is the final element of the introductory section of the comprehensive annual financial report (CAFR).

Question 3

For the purpose of government-wide financial statements, the cost of cleaning up a government-owned landfill and closing the landfill

Accepted Answer

A)  Is not recognized until the costs are actually incurred. 
B)  Is accrued and amortized over the expected useful life of the landfill. 
C)  Is accrued on a pro-rated basis each period based on how full the landfill is. 
D)  Is accrued in full at the time the costs become estimable. 
E)  Is treated as an encumbrance at the time it become estimable, and then as an expenditure when it is actually paid. 
A)  Is not recognized until the costs are actually incurred. 
B)  Is accrued and amortized over the expected useful life of the landfill. 
C)  Is accrued on a pro-rated basis each period based on how full the landfill is. 
D)  Is accrued in full at the time the costs become estimable. 
E)  Is treated as an encumbrance at the time it become estimable, and then as an expenditure when it is actually paid.

Question 4

The City of Wade has a fiscal year ending June 30. Examine the following transactions for Wade:(A.) On 6/5/21, Wade opens a new landfill. The engineers estimate that at the end of 12 years the landfill will be full. Estimated costs to close the landfill are currently $4,800,000.(B.) On 6/18/21, Wade receives a donation of a vintage railroad steam engine. The engine will be put on display at the local town park. A fee will be charged to actually climb up into the engine. The engine has been valued at $650,000.(C.) On 6/30/21, Wade estimates that the landfill is 2% filled.Determine and prepare the journal entries for the City of Wade for each lettered item for the purposes of preparing the government-wide financial statements.

Accepted Answer

Entries for preparin

Question 5

All of the following are true about the modified approach to infrastructure depreciation except:

Accepted Answer

A)  If specific guidelines are met, a government can choose to expense all maintenance costs each year in lieu of recording depreciation. 
B)  The modified approach specifically excludes infrastructure assets within a network or subsystem of a network. 
C)  If specific guidelines are met, additions and improvements must be capitalized. 
D)  For eligible assets, the government must establish a minimum acceptable condition level. 
E)  The government must have an asset management system in place to monitor the eligible assets. 
A)  If specific guidelines are met, a government can choose to expense all maintenance costs each year in lieu of recording depreciation. 
B)  The modified approach specifically excludes infrastructure assets within a network or subsystem of a network. 
C)  If specific guidelines are met, additions and improvements must be capitalized. 
D)  For eligible assets, the government must establish a minimum acceptable condition level. 
E)  The government must have an asset management system in place to monitor the eligible assets.

Question 6

Which of the following is false regarding defined benefit pension plans provided to employees by a state or local government?

Accepted Answer

A)  Defined benefit pension plans are fully funded by the employees of a state or local government. 
B)  Pension requirements create a huge financial obligation for many governments across the United States. 
C)  Many state and local governments establish pension trust funds to accumulate and invest monetary resources and to pay out pension benefits. 
D)  Pension trusts are classified as fiduciary funds. 
E)  Pension trusts are not included in reporting government-wide financial statements. 
A)  Defined benefit pension plans are fully funded by the employees of a state or local government. 
B)  Pension requirements create a huge financial obligation for many governments across the United States. 
C)  Many state and local governments establish pension trust funds to accumulate and invest monetary resources and to pay out pension benefits. 
D)  Pension trusts are classified as fiduciary funds. 
E)  Pension trusts are not included in reporting government-wide financial statements.

Question 7

Which one of the following is a criterion for identifying a primary government?

Accepted Answer

A)  it has an appointed board of directors. 
B)  it is fiscally dependent. 
C)  it is a local government. 
D)  it has a separately elected governing board. 
E)  it must prepare financial statements. 
A)  it has an appointed board of directors. 
B)  it is fiscally dependent. 
C)  it is a local government. 
D)  it has a separately elected governing board. 
E)  it must prepare financial statements.

Question 8

What information is required in the introductory section of a state or local government's CAFR?

Accepted Answer

A letter of transmittal from a

Question 9

Which statement is false regarding the Statement of Revenues, Expenditures, and Other Changes in Fund Balance when it is included with government-wide financial statements?

Accepted Answer

A)  The Statement of Revenues, Expenditures, and Other Changes in Fund Balance uses the modified accrual method of accounting. 
B)  The Statement of Revenues, Expenditures, and Changes in Fund Balance presents revenues as either program revenues or general revenues. 
C)  A presentation reconciles the change in governmental fund balance to the change in net position for governmental activities. 
D)  Other financing sources are presented on the Statement of Revenues, Expenditures, and Other Changes in Fund Balance. 
E)  All non-major funds are combined and reported together. 
A)  The Statement of Revenues, Expenditures, and Other Changes in Fund Balance uses the modified accrual method of accounting. 
B)  The Statement of Revenues, Expenditures, and Changes in Fund Balance presents revenues as either program revenues or general revenues. 
C)  A presentation reconciles the change in governmental fund balance to the change in net position for governmental activities. 
D)  Other financing sources are presented on the Statement of Revenues, Expenditures, and Other Changes in Fund Balance. 
E)  All non-major funds are combined and reported together.

Question 10

Which of the following is not a step in reporting a pension liability?

Accepted Answer

A)  The pension benefit payments that will ultimately be required are estimated by an actuary. 
B)  The portion of those payments that are attributable to past periods of employee service is calculated. 
C)  The present value of amounts attributable to past periods of employee service is determined in order to arrive at the government's obligation at the present time. 
D)  Excess liability balance is shown in the government-wide financial statements as a net pension asset. 
E)  Excess liability balance is shown in the government-wide financial statements as a net pension liability. 
A)  The pension benefit payments that will ultimately be required are estimated by an actuary. 
B)  The portion of those payments that are attributable to past periods of employee service is calculated. 
C)  The present value of amounts attributable to past periods of employee service is determined in order to arrive at the government's obligation at the present time. 
D)  Excess liability balance is shown in the government-wide financial statements as a net pension asset. 
E)  Excess liability balance is shown in the government-wide financial statements as a net pension liability.

Question 11

On December 31, 2020, the City of Oliver leases a large piece of construction equipment with a 25-year life for five years to use during a construction project. After the contract ends, the city must return the equipment to the lessor but has not guaranteed any residual value. The lease requires five annual payments of $40,000 per year beginning immediately. Oliver uses its own incremental borrowing rate of 10 percent per year because it does not know the implicit interest rate the lessor is charging. The present value of a $40,000 annuity due for five years at an annual interest rate of 10 percent is $166,795 (rounded).Prepare the journal entry/entries required for fund financial statements for this lease contract for 2020 and 2021.

Accepted Answer

The answer of On December 31, 2020, the City of...

Question 12

On December 31, 2020, the City of Oliver leases a large piece of construction equipment with a 25-year life for five years to use during a construction project. After the contract ends, the city must return the equipment to the lessor but has not guaranteed any residual value. The lease requires five annual payments of $40,000 per year beginning immediately. Oliver uses its own incremental borrowing rate of 10 percent per year because it does not know the implicit interest rate the lessor is charging. The present value of a $40,000 annuity due for five years at an annual interest rate of 10 percent is $166,795 (rounded).Prepare the journal entry/entries required for government-wide financial statements for this lease contract for 2020 and 2021.

Accepted Answer

The answer of On December 31, 2020, the City of...

Question 13

Under GASB Statement No. 87, Leases, which of the following is false?

Accepted Answer

A)  Unless the maximum life of a lease is one year or less, all leases are the equivalent of financing leases. 
B)  A lessee is required to recognize a lease liability and an intangible right-to-use lease asset. 
C)  The lessor records both a receivable and a deferred lease revenue at present value. 
D)  The lessor is provided with separate categories for all lease contracts. 
E)  The lessor reclassifies the deferred lease revenue as lease revenue over time and in a systematic and rational manner. 
A)  Unless the maximum life of a lease is one year or less, all leases are the equivalent of financing leases. 
B)  A lessee is required to recognize a lease liability and an intangible right-to-use lease asset. 
C)  The lessor records both a receivable and a deferred lease revenue at present value. 
D)  The lessor is provided with separate categories for all lease contracts. 
E)  The lessor reclassifies the deferred lease revenue as lease revenue over time and in a systematic and rational manner.

Question 14

Which of the following is a section of the financial section of the comprehensive annual financial report (CAFR) of a state or local government?(1) Management's discussion and analysis (MD&A).(2) Required supplementary information (other than MD&A).(3) Basic financial statements and notes to financial statements.

Accepted Answer

A)  1 and 2. 
B)  2 and 3. 
C)  1 and 3. 
D)  3 only. 
E)  1, 2, and 3. 
A)  1 and 2. 
B)  2 and 3. 
C)  1 and 3. 
D)  3 only. 
E)  1, 2, and 3.

Question 15

Which item is not included on the government-wide Statement of Activities?

Accepted Answer

A)  Revenues. 
B)  Expenses. 
C)  Assets. 
D)  Operating grants. 
E)  Capital contributions. 
A)  Revenues. 
B)  Expenses. 
C)  Assets. 
D)  Operating grants. 
E)  Capital contributions.

Question 16

Madison Township has received a donation of a rare painting worth $1,400,000. For Madison's government-wide financial statements, three criteria must be met before Madison can opt not to recognize the painting as an asset. Which of the following is not one of the three criteria?(1.) The painting is held for public exhibition, education, or research in furtherance of public service, rather than financial gain.(2.) The painting is scheduled to be sold immediately at auction.(3.) The painting is protected, kept unencumbered, cared for, and preserved.

Accepted Answer

A)  Item 1 is not one of the three criteria. 
B)  Item 2 is not one of the three criteria. 
C)  Item 3 is not one of the three criteria. 
D)  All three items are required criteria. 
E)  None of the three items are required criteria. 
A)  Item 1 is not one of the three criteria. 
B)  Item 2 is not one of the three criteria. 
C)  Item 3 is not one of the three criteria. 
D)  All three items are required criteria. 
E)  None of the three items are required criteria.

Question 17

The City of Ibiza maintains a collection of paintings of a former citizen in its City Hall building. During the year, one painting was purchased by the city for $3,000 at an auction using appropriated funds in the General Fund. Also during the year, a donation of a painting valued at $3,600 was made to the city.Prepare the journal entry/entries for the two transactions for the purposes of preparing the government-wide financial statements.

Accepted Answer

Government-wide fina

Question 18

Which information must be disclosed regarding tax abatement agreements?
i) The purpose of the tax abatement program.
ii) The dollar amount of abatement and the names of recipients.
iii) The type of tax being abated.

Accepted Answer

A)  i and iii. 
B)  i only. 
C)  ii only. 
D)  iii only. 
E)  i, ii, and iii. 
A)  i and iii. 
B)  i only. 
C)  ii only. 
D)  iii only. 
E)  i, ii, and iii.

Question 19

What are the four steps established by GASB Statement No. 68, Accounting for Financial Reporting for Pensions, in the reporting of a government's liability?

Accepted Answer

For pensions, GASB Statement No. 68, Acc

Question 20

The City of Athens operates a motor pool serving all city-owned vehicles. The motor pool bought a new garage by paying $34,000 in cash and signing a note with the local bank for $320,000. Subsequently, the motor pool performed work for the police department at a cost of $19,000, which had not yet been collected. Depreciation on the garage amounted to $24,000. The first $14,000 payment made on the note included $5,200 in interest.Required:Prepare the journal entries for these transactions that are necessary to prepare government-wide financial statements.

Accepted Answer

Entries fo

What are the three broad sections of a state or local government's CAFR?

Which of the following is true regarding Management's Discussion and Analysis (MD&A)?

For the purpose of government-wide financial statements, the cost of cleaning up a government-owned landfill and closing the landfill

All of the following are true about the modified approach to infrastructure depreciation except:

Which of the following is false regarding defined benefit pension plans provided to employees by a state or local government?

Which one of the following is a criterion for identifying a primary government?

What information is required in the introductory section of a state or local government's CAFR?

Which statement is false regarding the Statement of Revenues, Expenditures, and Other Changes in Fund Balance when it is included with government-wide financial statements?

Which of the following is not a step in reporting a pension liability?

Under GASB Statement No. 87, Leases, which of the following is false?

Which item is not included on the government-wide Statement of Activities?

Which information must be disclosed regarding tax abatement agreements? i) The purpose of the tax abatement program. ii) The dollar amount of abatement and the names of recipients. iii) The type of tax being abated.

What are the four steps established by GASB Statement No. 68, Accounting for Financial Reporting for Pensions, in the reporting of a government's liability?

Accounting for Estates and Trusts

Accounting and Reporting for Private Not-For-Profit Organizations

Accounting for State and Local Governments, Part I

Partnerships: Termination and Liquidation

Partnerships: Formation and Operation

Accounting for Legal Reorganizations and Liquidations

Financial Reporting and the Securities and Exchange Commission

Worldwide Accounting Diversity and International Accounting Standards

Translation of Foreign Currency Financial Statements

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Segment and Interim Reporting

Consolidated Financial Statements - Ownership Patterns and Income Taxes

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Consolidated Financial Statements Intra-Entity Asset Transactions

Consolidated Financial Statements and Outside Ownership

Consolidations - Subsequent to the Date of Acquisition

Consolidation of Financial Information

The Equity Method of Accounting for Investments

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Exam 17: Accounting for State and Local Governments, Part II

What are the three broad sections of a state or local government's CAFR?

Which of the following is true regarding Management's Discussion and Analysis (MD&A)?

For the purpose of government-wide financial statements, the cost of cleaning up a government-owned landfill and closing the landfill

All of the following are true about the modified approach to infrastructure depreciation except:

Which of the following is false regarding defined benefit pension plans provided to employees by a state or local government?

Which one of the following is a criterion for identifying a primary government?

What information is required in the introductory section of a state or local government's CAFR?

Which statement is false regarding the Statement of Revenues, Expenditures, and Other Changes in Fund Balance when it is included with government-wide financial statements?

Which of the following is not a step in reporting a pension liability?

Under GASB Statement No. 87, Leases, which of the following is false?

Which item is not included on the government-wide Statement of Activities?

Which information must be disclosed regarding tax abatement agreements? i) The purpose of the tax abatement program. ii) The dollar amount of abatement and the names of recipients. iii) The type of tax being abated.

What are the four steps established by GASB Statement No. 68, Accounting for Financial Reporting for Pensions, in the reporting of a government's liability?

Accounting for Estates and Trusts

Accounting and Reporting for Private Not-For-Profit Organizations

Accounting for State and Local Governments, Part I

Partnerships: Termination and Liquidation

Partnerships: Formation and Operation

Accounting for Legal Reorganizations and Liquidations

Financial Reporting and the Securities and Exchange Commission

Worldwide Accounting Diversity and International Accounting Standards

Translation of Foreign Currency Financial Statements

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Segment and Interim Reporting

Consolidated Financial Statements - Ownership Patterns and Income Taxes

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Consolidated Financial Statements Intra-Entity Asset Transactions

Consolidated Financial Statements and Outside Ownership

Consolidations - Subsequent to the Date of Acquisition

Consolidation of Financial Information

The Equity Method of Accounting for Investments

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