Exam 9: Financial Reporting of State and Local Governments

The following are key terms in Chapter 9 that relate to the reporting entity: A.Component units B.Financial reporting entity C.Financial accountability D.Joint venture E.Other stand-alone governments F.Primary governments 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.

GASB reporting objectives emphasize the role of accountability in external financial reporting,and describe accountability as the "paramount objective from which all other objectives must flow."

In preparation of government-wide statements,converting information recorded using the modified accrual basis of accounting to the accrual basis,where appropriate,is conceptually preferable to using information directly from the accounting system to prepare the statements.

The government-wide financial statements required by GASB standards are a

Which of the following is evidence of fiscal independence for the purpose of considering whether one legally separate organization is a component unit of another?

Combining financial statements for nonmajor funds of a government should be included in

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

What is the minimum level of detail required for expenditures presented in the governmental fund statement of revenues,expenditures,and changes in fund balance?

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

Most citizens and financial statement users do not have a clear understanding of the financial reporting entity whose financial position,results of operations,and cash flows are included in an annual financial report.

Which of the following kinds of information would not be provided by Management's discussion and analysis (MD&A)?

One of the required reconciliations in converting governmental fund financial statements to governmental activities statements at the government-wide level is to adjust for internal service funds' assets,liabilities,operating income (loss),and transfers.

A financial reporting entity is defined as a primary government,as well as all other organizations that have an operational relationship with the primary government.

For the following items that require reconciliation between governmental funds financial statements and governmental activities financial statements at the government-wide level according to GASBS 34,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 assets of governmental activities. _____ 1.Capital assets used in governmental activities _____ 2.Long-term liabilities that are not payable in the current period _____ 3.Net assets of internal service funds that are primarily governmental in nature _____ 4.Accrued interest payable not due in the current period

Under GASB standards,nonmajor funds are reported

Statistical tables included in comprehensive annual financial reports should provide social and economic data,in addition to financial data,to assist financial statement users in better understanding the activities and condition of the government.

"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?

Infrastructure assets and long-term liabilities issued to finance infrastructure should be reported in the

The MD&A should provide information that is prospective in nature.

Comprehensive annual financial reports of state and local governments should include (1)an introductory section, (2)a financial section,and (3)a supplemental section.