Deck 13: Financial Reportingthe Basic Financial Statements and Required Supplementary Information

Question 1

Which of the following classifications is not used in the government-wide statement of activities?

A) General revenues.
B) Extraordinary items.
C) Transfers.
D) Nonoperating revenues.

Answer 1

D

Question 2

The minimum requirements for general purpose external financial reporting does not include

A) Fund financial statements.
B) A transmittal letter.
C) Management's discussion and analysis.
D) Required supplementary information.

Answer 2

B

Question 3

Which governmental fund must always be reported in a separate column in the governmental fund financial statements?

A) Capital Projects Fund.
B) Debt Service Fund.
C) General Fund.
D) Special Revenue Fund.

Answer 3

C

Question 4

The government-wide statements include

A) Statement of Activities.
B) Statement of Cash Flows.
C) Statement of Assets and Liabilities
D) Budget-to-actual statement

Question 5

The fund financial statements included in the basic financial statements include separate balance sheets (or statements of net position) for all of the following except

A) Fiduciary funds.
B) Governmental funds.
C) Proprietary funds.
D) Discretely presented component units.

Question 6

In the government-wide statements, business-type activities include

A) Primarily only Enterprise Fund operations.
B) Primarily only Internal Service Fund operations.
C) Both a government's Enterprise Fund and all of its Internal Service Fund activities.
D) A government's Enterprise Fund, Internal Service Fund, and nonexpendable trust fund activities.

Question 7

Governmental activities in the government-wide financial statements would potentially report the following equity classifications except

A) Restricted net position.
B) Restricted fund balance.
C) Unrestricted net position.
D) Net investment in capital assets.

Question 8

Below is information on total assets for various funds of the City of Dublin (all amounts are in thousands of dollars).
$$\begin{array} { | l | r | } \hline { \text { Fund } } & { \text { Assets } } \\\hline \text { General } & \$ 1,300 \\\hline \text { Federal Grants Special Reverue } & 500 \\\hline \text { State Grants Special Reverule } & 200 \\\hline \text { City Hall Capital Projects } & 900 \\\hline \text { Debt Service } & 700 \\\hline \text { Water ard Sewer Enterprise } & 8,000 \\\hline \text { Swirninirig Pool Eriterprise } & 1,000 \\\hline \text { Fleet Maragernent Internal Service } & 10,800 \\\hline \text { Employee Pension Furd } & 6,500 \\\hline\end{array}$$ Requirement: Prepare a schedule computing the threshold for asset amounts that should be used to determine which funds must be reported as major. Identify which funds are major funds.

Question 9

When preparing external financial statements that are in accordance with generally accepted accounting principles, the minimum financial report will include

A) Basic financial statements, management's discussion and analysis, and other required supplementary information.
B) A comprehensive annual financial report.
C) Basic financial statements only.
D) Only the financial section of a comprehensive annual financial report.

Question 10

The government-wide statement of net position would report the following component of net position except

A) Unrestricted net position.
B) Restricted net position.
C) Net investment in capital assets.
D) Designated net position.

Question 11

In the fund financial statements, a government should include a separate column for all of the following except

A) Each major Enterprise Fund.
B) Each major Internal Service Fund.
C) Each major Capital Projects Fund.
D) Each major Permanent Fund.

Question 12

In the statement of activities, depreciation is reported on

A) All depreciable capital assets of the government except infrastructure assets that use the modified approach.
B) All depreciable capital assets of the government.
C) Only depreciable capital assets of business-type activities of the government.
D) Only depreciable capital assets of governmental activities of the government.

Question 13

Which of the following may be reported in the government-wide statements and the fund financial statements?

A) Nonfiduciary component units
B) General government long-term debt
C) General government capital assets
D) Short-term debt.

Question 14

In the proprietary fund statements, a government should include a separate column for

A) Each major Enterprise Fund only.
B) Each major Enterprise Fund, nonmajor Enterprise Funds in the aggregate, and Enterprise Funds total only.
C) Each major Enterprise Fund, nonmajor Enterprise Funds in the aggregate, Enterprise Funds total, and Internal Service Funds in the aggregate.
D) Each major Enterprise Fund, nonmajor Enterprise Funds in the aggregate, Enterprise Funds total, Internal Service Funds in the aggregate, and Proprietary Funds total.

Question 15

For general purpose external financial reporting, discretely presented component unit information

A) Is not presented.
B) Is included in the government-wide statements only.
C) Is included in the fund financial statements only.
D) Is included in both the government-wide and the fund financial statements.

Question 16

The following information was drawn from the records of Wise County (all amounts are in thousands of dollars).
$\begin{array}{llr} \text {Local gas tax restricted for street maintenance. } &\$13,000\\ \text {State grant restricted for police training } &4,000\\ \text {Federal grant for new library } &1,222\\ \text { Gain on sale of general capital assets } &300\\ \text { License and permit fees } &70\\ \text { Interest collected on investments } &108\\ \text { Fines and forfeitures } &500\\ \text { Contributions to permanent fund which supports education } &635\\ \text { Shared state revenues restricted to public health.} &1,100\\\end{array}$

$\underline{\text{ Requirement: }}$ Prepare schedules computing amounts to be reported as Charges for Services, Operating Grants and Contributions, Capital Grants and Contributions, and General Revenues.

Question 17

A budgetary comparison schedule is required for

A) The General Fund and all major governmental funds with legally adopted annual budgets.
B) The General Fund and all major Special Revenue Funds with legally adopted annual budgets.
C) The General Fund only.
D) All governmental funds.

Question 18

Which financial statement may be presented as required supplementary information?

A) Government-wide statement of cash flows.
B) General Fund and major Special Revenue Funds statement of revenues, expenditures, and changes in fund balances-budget and actual.
C) Proprietary fund statement of cash flows.
D) Discretely presented component units statement of net position.

Question 19

The government-wide statement of net position must include a column for each of the following except

A) Governmental activities.
B) Business-type activities.
C) Component units.
D) Fiduciary activities.

Question 20

In the government-wide statement of net position, interfund receivables and payables

A) Should not be reported.
B) Should only be reported for balances payable between governmental activities and business-type activities.
C) Can be reported in either the governmental activities or business-type activities columns.
D) Should be eliminated in the governmental activities column but not the business-type activities column.

Question 21

If the General Fund has restricted fund balance, then the governmental activities column will automatically have

A) Committed net position.
B) Restricted net position.
C) Designated net position.
D) Net investment in capital assets.

Question 22

Fiduciary funds are reported

A) In both the fund financial statements and the government-wide financial statements.
B) As required supplementary information.
C) By fund type in the government-wide financial statements.
D) By fund type in the fund financial statements.

Question 23

Interest expense for governmental activities at the government-wide level should be reported

A) As part of the function for which the financing was beneficial.
B) As part of the general government function.
C) In total as capitalized interest.
D) As an indirect expense not allocated to a functional area.

Question 24

The General Fund levies taxes of $3,750,000 during the fiscal year, 1% of which is deemed to be uncollectible. $3,650,000 was collected or met the availability criteria. How much revenue should be recorded in the government-wide financial statements?

A) $3,613,500.
B) $3,650,000.
C) $3,712,500.
D) $3,750,000.

Question 25

A city reports three Pension Trust Funds, one Private-Purpose Trust Fund, one Investment Trust Fund, and three Agency Funds. How many columns would the City's statement of fiduciary net position would report?

A) Two (2).
B) Three (3).
C) Four (4).
D) Eight (8).

Question 26

Each of the following would be considered required supplementary information except

A) Management's discussion and analysis.
B) Budgetary comparison information that is eligible for basic financial statement presentation but not included therein.
C) A letter of transmittal.
D) Disclosures for governments that use the modified approach to infrastructure accounting and reporting.

Question 27

Depreciation was calculated for the police department's vehicle fleet. The expense will be reported

A) As depreciation expenditure in the General Fund.
B) As depreciation expense in the General Fund.
C) As depreciation expense in the public safety function of governmental activities.
D) As unallocated depreciation expense for governmental activities.

Question 28

Equity in a fiduciary fund is, by nature, considered to be

A) Committed.
B) Assigned.
C) Designated.
D) Restricted.

Question 29

A city had the following accounts and amounts on its statement of activities:
-Public safety expenses of $2,755,500
-Public safety charges for services of $20,500
-Public safety operating grants and contributions of $105,000
-Public safety capital grants and contributions of $75,000
-General government charges for services of $455,500
-Property tax general revenues of $2,905,000
-Unrestricted grants of $300,000
Net (expense) revenue for the public safety function would be

A) $(2,555,000).
B) $200,500.
C) $956,000.
D) $2,555,000.

Question 30

Capital assets are not reported

A) In governmental activities.
B) In business-type activities.
C) In the Enterprise Funds.
D) In the General Fund.

Question 31

Major fund reporting is required for which of the following fund types?

A) Enterprise Funds.
B) Internal Service Funds.
C) Agency Funds.
D) Private-Purpose Trust Funds.

Question 32

A government issued general obligation bonds to finance the construction of a new fire station. In the current year, the government incurred $107,000 of interest expense on the debt. This amount will be reported on the government-wide statement of activities as

A) Expenses of the general government function.
B) Expenses of the public safety function.
C) Interest expenses of the governmental activities.
D) An offset to interest earnings in the General Fund.

Question 33

A governmental entity has a General Fund, four Special Revenue Funds, two Debt Service Funds, a Permanent Fund, two Enterprise Funds, three Internal Service Funds, and two Pension Trust Funds. Using the criteria from GASB Statement No. 34 to identify major funds, the government discovers that two of the Special Revenue Funds and one Enterprise Fund meet the minimum criteria to be a major fund. How many individual governmental funds may be reported as major funds?

A) Four (4).
B) Eight (8).
C) Ten (10).
D) Fifteen (15).

Question 34

Which of the following funds would not be eligible for major fund reporting?

A) General Fund.
B) Enterprise Fund.
C) Debt Service Fund.
D) Internal Service Fund.

Question 35

A city has, in addition to the General Fund, three other governmental funds. Two of those three governmental funds have been deemed to be major funds. At most, how many funds may be reported as major funds?

A) One (1).
B) Two (2).
C) Three (3).
D) Four (4).

Question 36

Assume that a governmental entity has, in addition to the General Fund, four other governmental funds. Upon applying the quantitative criteria to determine the minimum requirements for major fund reporting it is determined that two of those four funds meet the criteria. At a minimum, the governmental entity will report how many major funds?

A) One (1).
B) Two (2).
C) Three (3).
D) Four (4).

Question 37

The government-wide financial statements report all of the following equity classifications except

A) Restricted net position.
B) Retained earnings.
C) Unrestricted net position.
D) Net investment in capital assets.

Question 38

The government-wide financial statements do not include

A) Discretely presented component units.
B) Governmental fund information.
C) Business-type activities.
D) Net position.

Question 39

Hannah Township has a General Fund, two Capital Projects Funds, one Permanent Fund, two Enterprise Funds, two Internal Service Funds, three Pension Trust Funds, and one Private-Purpose Trust Fund. Assuming all governmental and enterprise funds meet the major fund criteria, how many columns will the proprietary fund statement of net position have?

A) Two (2).
B) Three (3).
C) Four (4).
D) Five (5).

Question 40

A city determines in the current year that it has three major governmental funds, including the General Fund, and two major enterprise funds. The city will

A) Always have three major governmental funds and two major enterprise funds.
B) Evaluate each year which funds are major and which funds are considered to be nonmajor except the General Fund which is always considered a major fund.
C) Only be required to show a separate column for the General Fund.
D) Be able to report all of the major funds in one column on the respective fund financial statements.

Question 41

A government that uses the modified approach to account for qualifying assets should report all infrastructure asset related costs for the year as

A) Expenses.
B) Assets.
C) Expenses, unless they were additions or qualitative improvements.
D) Assets unless incurred in disposing of an infrastructure asset.

Question 42

Which of the following statements concerning the notes to the financial statements is true?

A) The notes to the financial statements are an integral part of the basic financial statements.
B) The notes to the financial statements are considered to be required supplementary information.
C) The auditor's opinion generally does not extend to the notes to the financial statements.
D) The notes support the basic financial statements, management's discussion and analysis, and other required supplementary information.

Question 43

Sales taxes levied by a county government are shared with the local municipal government. The municipal government chooses to use the intergovernmental revenues for drug enforcement activities. In the government-wide statement of activities, the municipal government would report the sales taxes as

A) Unrestricted grants and contributions general revenue.
B) Operating grants and contributions program revenue.
C) Capital grants and contributions program revenue.
D) A transfer in general revenue.

Question 44

For governmental activities, the minimum level of functional detail required for direct expenses on the Statement of Activities is the same level of detail required in the

A) Proprietary funds Statement of Revenues, Expenses, and Changes in Fund Net Position.
B) Business-type activities column.
C) Fiduciary funds Statement of Changes in Fiduciary Net Position.
D) Governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance.

Question 45

A county had the following earnings during the year:
-Charges for services in public works of $289,000
-Public safety operating grants of $100,000
-Property taxes of $1,950,000
-Interest earned on restricted grants of $5,750
-Interest earned on unrestricted grants of $3,250
-Public works capital grants of $310,000
-Sales taxes of $425,000
Based on this information and assuming all revenues were earned, governmental activities general revenues for the year would be

A) $704,750.
B) $1,950,000.
C) $2,378,250.
D) $3,083,000.

Question 46

Topics to be covered in the management's discussion and analysis

A) Are limited to a specific list of topics in GASB Statement No. 34.
B) Must, at a minimum, cover the specific list of topics in GASB Statement No. 34 but may include additional topics that management considers significant.
C) Are determined based upon management's judgment.
D) Can only include topics not in the specific list in GASB Statement No. 34 if agreed to by both management and the auditors.

Question 47

Which of the following statements is true regarding financial reporting by state and local governments?

A) The notes to the financial statements are not essential to fair presentation of the basic financial statements.
B) The notes are required supplementary information (RSI).
C) The notes to the financial statements are not an integral part of the basic financial statements.
D) The notes to the financial statements are essential to fair presentation of the basic financial statements.

Question 48

Which of the following types of revenue would always be reported as a general revenue in the government-wide financial statements?

A) Interest earned on a capital grant.
B) Charges for services.
C) Operating grant.
D) Property taxes.

Question 49

The government-wide statement of activities

A) Distinguishes between major and nonmajor funds.
B) Distinguishes between governmental and business-type activities.
C) Excludes discretely presented component units.
D) Excludes direct expenses of governmental and business-type activities.

Question 50

Which of the following would not be classified as charges for services?

A) Operating special assessments.
B) Licenses and permits.
C) Fines and forfeitures.
D) A special tax levied for a particular function.

Question 51

According to the GASB Codification, Management's Discussion and Analysis is

A) To be based on currently known statements, schedules, statistical data, and other information about future economic growth.
B) To be based on currently known facts, decisions, or conditions expected to have significant effects on financial activities.
C) To provide information that is necessary for fair presentation of each of the various entities reported in a government's basic financial statements.
D) To be limited to quantitative analysis only and should not state the reasons changes in the financial activities from year-to-year.

Question 52

Which of the following financial statements are prepared using the flow of economic resources measurement focus and accrual basis of accounting?
I. Government-wide
II. Governmental funds
III. Proprietary funds
IV. Fiduciary funds

A) I, II, and III only.
B) I, II, and IV only.
C) I, III, and IV only.
D) I and III only.

Question 53

Which of the following statements is true regarding the statement of cash flows for a governmental unit?

A) The statement of cash flows is included in the government-wide and proprietary fund financial statements.
B) The statement of cash flows is included in the proprietary fund financial statements only.
C) The statement of cash flows is included in the proprietary and fiduciary fund financial statements.
D) The statement of cash flows is included in the proprietary fund financial statements only, and the government can choose the presentation format-direct or indirect.

Question 54

A government that uses the modified approach will

A) Report depreciation expense on infrastructure assets.
B) Capitalize all costs related to infrastructure assets.
C) Expense all costs related to infrastructure assets.
D) Expense costs related to maintenance of infrastructure capital assets.

Question 55

Management's discussion and analysis

A) Does not have to cover any budgetary issues.
B) May not include charts and graphs.
C) Must discuss significant variations between the original budget and the final budget.
D) May provide speculative information about future government actions.

Question 56

In accordance with GAAP, Management's Discussion and Analysis is part of the

A) Required supplementary information and is presented before the basic financial statements.
B) Required supplementary information and is presented after the basic financial statements.
C) Basic financial statements and is presented before the notes to the financial statements.
D) Basic financial statements and is presented after the government-wide financial statements.

Question 57

Which of the following cannot be classified as program revenues?

A) Contributions.
B) Grants.
C) Charges for services.
D) Taxes.

Question 58

In the government-wide financial statements, a recipient government should report pass-through grants as

A) Program revenues.
B) General revenues.
C) Other financing sources.
D) Operating revenues.