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

The Governmental Accounting Standards Board has established rules for determining when a government should include another entity in its financial statements. a). Distinguish between a primary government and a component unit. Include one example of each. b). GASB permits two methods of reporting component units in the financial reporting entity. Describe the two methods and indicate when each should be used. c). The City of X is deciding whether or not to include a transit system in its financial report and how the transit system would be reported if a positive decision were made. The transit system is a legally separate entity, has its own governing board, not appointed by the city, has a different auditor and issues its own financial report. The city has signed an agreement that, for the next ten years (the life of a bond issue related to transit operations), it will make up the deficit of the transit system. During the last two years, the deficit has been $10 million, approximately 50% of the amount reported as a profit of its other enterprise operations. Make recommendations to the city, including whether or not to include the transit system and, if so, how to report it.

List the basic financial statements required by GASB Statement 34 for fiduciary type funds.

List the Government-wide financial statements required by GASB Statement 34.

Which of the following is true regarding the governmental fund statements?

Which of the following is true regarding the proprietary fund financial statements?

Which of the following is true regarding GASB's definition of the financial reporting entity?

What is the rule for determining whether a governmental fund, other than the General Fund is a major fund?

Fiduciary funds are required to prepare a Statement of Cash Flows using the direct method.

Which of the following items would likely be in a reconciliation between the governmental fund financial statements and the governmental activities column in the government-wide financial statements?

Which of the following is true regarding the government-wide Statement of Net Assets?

Which of the following is true regarding financial reporting of governmental funds?

Which of the following is true regarding fiduciary fund statements?

Prior-year data is required for government-wide financial statements.

What are the three major sections of the Comprehensive Annual Financial Report?

Which of the following is not true regarding the Statement of Cash Flows for proprietary funds?

Which of the following is true regarding the government-wide Statement of Net Assets?

GASB requires which of the following (if applicable) to be included in the Notes to Financial Statements?

Governmental fund financial statements include columns for the General Fund and all other "major" governmental funds.

Which of the following is true regarding the fiduciary fund financial statements?

The governmental fund statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.