Question 1

In the basic financial statements, separate sets of fund financial statements should be presented for

Accepted Answer

A)  Each fund. 
B)  Each major fund 
C)  Each fund type. 
D)  Each fund category.

Question 2

Wakefield Village and Wakefield County were partners in the development of the Wakefield Water Authority, which is a separate legal entity. Neither the village nor the county will share in any profits of the Authority. Both, however, are obligated to fund any deficits or debt defaults that may occur, though this scenario is considered to be highly unlikely. Both the village and the county appoint three of the seven Water Authority board members. The seventh is appointed by another village in the county. Both the Wakefield Village and Wakefield County should report the Authority as

Accepted Answer

A)  A related organization. 
B)  A jointly governed organization. 
C)  A joint venture. 
D)  A discretely presented component unit.

Question 3

A "dual opinion" audit is one where

Accepted Answer

A)  The auditors render an opinion on the primary government and any component units. 
B)  The auditors render an opinion on both the basic financial statements and the combining and individual fund financial statements. 
C)  The auditors render an opinion on both the financial and statistical sections of the CAFR. 
D)  The auditors render an opinion on the primary government, component units, and the CAFR as a whole.

Question 4

What is the maximum number of columns that could appear on the statement of fiduciary net position in the fund financial statements presented as part of the basic financial statements?

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4.

Question 5

Information about related party transactions must be disclosed by a state or local government for which of the following? 
I. Related organizations
II. Jointly governed organizations
III. Joint ventures

Accepted Answer

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

Question 6

How should information about each major discretely presented component unit be presented in the financial statements?

Accepted Answer

A)  Report only as condensed financial statements reported in the notes to the financial statements. 
B)  Report only in single column in the government-wide statements. 
C)  Report only in combining financial statements which are included in the primary government's basic financial statements after the fund financial statements. 
D)  Report only in a single column in the government-wide statements with condensed financial statements in the notes.

Question 7

In reviewing their governmental funds, a local municipality determines that three of the funds (including the General Fund) are considered major funds and the remaining six governmental funds are nonmajor. However, management prefers to report all of its governmental funds as major funds. What is the maximum number of fund columns that could be presented on the governmental fund balance sheet?

Accepted Answer

A)  3. 
B)  4. 
C)  6. 
D)  9.

Question 8

Which fund type would be reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances?

Accepted Answer

A)  Enterprise Funds. 
B)  Internal Service Funds. 
C)  Permanent Funds. 
D)  Pension trust funds.

Question 9

Which of the following potential component units would not be reported as blended component unit of the county?

Accepted Answer

A)  A hospital which is the primary health care provider for the county residents and whose board is appointed by the county. 
B)  A recreation district where the governing board of the county serves as its governing board and the management of the country operates the recreation district. 
C)  A financing authority that exclusively serves the county. 
D)  A school district whose debt will be repaid by the county.

Question 10

Assume that a blended component unit of the town has its own General Fund, Special Revenue Fund, and Capital Projects Fund. All funds meet the major fund criteria. The primary government has a General Fund, three Special Revenue Funds, one Permanent Fund, one Debt Service Fund, and three Capital Projects Funds. All but the Permanent Fund and two Special Revenue Funds of the primary government are major funds. How many major Special Revenue Funds would the primary government report in the governmental funds financial statements?

Accepted Answer

A)  4. 
B)  3. 
C)  2. 
D)  1.

Question 11

If a governmental entity has a blended component unit, the note disclosures should include all of the following except

Accepted Answer

A)  How the component unit met the blending criteria. 
B)  A statement that identifies the component units as a being blended. 
C)  How to access separately issued external financial statements. 
D)  The number of component unit governing board members.

Question 12

Which of the following financial statements would not be reported anywhere in the fund financial statements presented as part of the basic financial statements?

Accepted Answer

A)  Statement of net position. 
B)  Statement of cash flows. 
C)  Balance sheet. 
D)  Statement of Changes in Assets and Liabilities.

Question 13

Statistical tables are

Accepted Answer

A)  Required in the basic financial statements and in the CAFR. 
B)  Optional in the basic financial statements but required in the CAFR. 
C)  Optional in the basic financial statements and optional in the CAFR. 
D)  Required in the CAFR.

Question 14

Castlewood City School District has a separately elected governing body that administers the public school system. Although the district's budget is subject to the approval of the city council, the city is not obligated in any manner to provide financial support to the school district nor can the city access the resources of the school district. The district's financial activity should be

Accepted Answer

A)  Blended with the city's financial statements. 
B)  Excluded from the city's financial statements. 
C)  Discretely presented with the city's financial statements. 
D)  Included as other required supplementary information (RSI) to the city's financial statements.

Question 15

Assume that a government has three nonmajor Enterprise Funds. Which of the following statements regarding the reporting requirements in a CAFR is false?

Accepted Answer

A)  Nonmajor funds are not reported on an Enterprise Fund statement of cash flows. 
B)  Even if the funds are nonmajor, the government may choose to declare them as major funds and report each in a separate column on the appropriate fund statements. 
C)  The CAFR must include combining financial statements for any nonmajor fund columns that include more than one fund. 
D)  Nonmajor funds are reported in the aggregate on all proprietary fund financial statements.

Question 16

A city has three related entities. Its finance and accounting staff is trying to determine which, if any, of those entities must be included in the city reporting entity. Also, for the entities that are included the staff must determine whether they are to be blended or discretely presented. Explain how each of the related entities should be treated and why.

$\underline{\text{  Situations: }}$ 
1. The first entity is the city school district. The district has a separately elected board and is legally separate from the city. The school board can establish its own budget except that its property tax levy must be approved by the city council. The city does not guarantee the debt of the schools or have any other authority over the school district.

2. The second entity is the municipal gas utility. The city appoints the seven members of the utility governing board and can remove them at will. The city must approve the budget and the rate structure of the utility. The utility cannot issue bonded debt without the city council's prior approval. The city is entitled to, and regularly receives, the operating surpluses of the utility.

3. The third entity is the City Library Commission. According to the commission's charter, the commission board consists of the city mayor, the city finance director, and the superintendent of the city schools, and two other members of city council besides the mayor. City council consists of the mayor and four other council members. The library commission budget must be approved by the city council, and all long-term debt issued by the Library Commission is to be repaid by the city.

Accepted Answer

The answer of A city has three related entities. Its...

Question 17

Footnote information that duplicates information in financial statements included in the CAFR

Accepted Answer

A)  May be eliminated. 
B)  May be eliminated if the government does not issue its basic financial statements separately. 
C)  May be eliminated if the government does issue its basic financial statements. 
D)  Is common and must be presented despite the duplication.

Question 18

$\underline{\text{  Requirements: }}$ 
1. Describe discrete presentation in the context of the government-wide statements. Assume that a government has five major discretely presented component units. Include the reporting and disclosures required for each of the major component units.
2. Describe blending. When is it required? Is it permitted under other circumstances-i.e., when is it not required?

Accepted Answer

The answer of $\underline{\text{  Requirements: }}$ 
1. Describe discrete...

Question 19

In discrete presentation, component unit

Accepted Answer

A)  Funds are reported as the same type of funds of the primary government. 
B)  Funds are treated as Special Revenue Funds of the primary government since the resources can only be used for the component unit's programs. 
C)  Data is presented in the government-wide financial statements separate from the primary government data. 
D)  Basic financial statements must always be included in the primary government's comprehensive annual financial report.

Question 20

Which fund types report the results of operations using a Statement of Revenues, Expenditures, and Changes in Fund Balances?

Accepted Answer

A)  General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, Enterprise Funds, and Internal Service Funds. 
B)  General Fund, Special Revenue Funds, Debt Service Funds, and Enterprise Funds. 
C)  General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, and Fiduciary Funds. 
D)  General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, and Permanent Funds.

Exam 15: Financial Reportingthe Comprehensive Annual Financial Report and the Financial Reporting Entity