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

There are four major activity categories reported by state and local governments: governmental, government-wide, proprietary, and fiduciary.

A deferred inflow of resources is defined as "an acquisition of net assets by the government that is applicable to a future reporting period."

The positive fund balance in a special revenue fund must at a minimum be reported as assigned.

Which of the following is not a characteristic of a fund as defined by GASB standards?

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. Development Special Revenue Fund Assets \ 740,000 Debt Service Fund Assets \ 150,000 Total Governmental Fund Assets \ 7,500,000 Total Governmental Fund and Enterprise Fund Assets \ 8,750,000  

According to GASB Concepts Statement 1 a primary objective of financial reports is to provide information useful in determining the accountability of the government.

Revenues is an example of what the GASB terms an inflow of resources.

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

Because budgetary accounts are used by governments, government financial statements can never be said to be in accord with generally accepted accounting principles.

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).

According to the GASB, information that is essential and useful to placing information in the correct context should be reported as which of the following?

The governmental funds category includes the General Fund, special revenue funds, debt service funds, capital projects funds, and internal service funds.

Economic resources are cash or items expected to be converted into cash during the current period, or soon enough thereafter to pay current period liabilities.

Which of the following would be reported as a nonspendable fund balance?

Expenditures are never recorded in governmental funds.

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.

A debt service fund is used to account for financial resources segregated for the purpose of making principal and interest payments on general long-term debt.

Which of the following governmental funds must be reported as a major fund?

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?

According to the guidance of GASB Concepts Statement 3, financial information can be communicated by recognition in the financial statements, disclosure in the notes to the financial statements, presentation as required supplementary information, or presentation as supplementary information.