Question 1

The amounts reported for assets and liabilities in the total column for the combining balance sheet for nonmajor governmental funds are also reported in the other governmental funds column of the governmental funds balance sheet.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following is a required note disclosure regarding long-term debt?

Accepted Answer

A)   A schedule listing each issue of long-term debt sold for governmental activities, showing the amounts originally issued and the range of interest rates to maturity
B)   A schedule showing debt service requirements to maturity, including principal and interest, for each of the 5 subsequent years, and in 5-year increments thereafter
C)   A schedule showing the purposes of each issue of outstanding long-term governmental activity debt
D)   A schedule showing the amounts outstanding on each issue of outstanding long-term debt sold for both governmental and business-type activities B

Question 3

Which of the following are attributes of a special purpose government that is considered a primary government?
-Able to levy taxes if approved by another government

Accepted Answer

A) True 
 B)False  False

Question 4

Only general-purpose governments, like states, cities, counties, towns, and villages can be primary governments. Special purpose governmental entities, like school districts and hospitals, can never be primary governments.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following major captions are not found in the proprietary funds statement of revenues, expenses, and changes in fund net position?

Accepted Answer

A)   Operating revenues
B)   Nonoperating revenues (expenses) 
C)   Operating expenses
D)   Investing revenues (expenses)

Question 6

The relationships between two primary governments and a third organization may be such that the third organization can be a component unit of both primary governments.

Accepted Answer

A) True 
 B)False

Question 7

Required supplementary information for a state or local government may include budgetary comparisons, pension and other employee benefit information, and combining fund financial statements.

Accepted Answer

A) True 
 B)False

Question 8

In Management's Discussion and Analysis (MD&A), what is the basic purpose of analyzing the government's overall financial position and results of operations?

Accepted Answer

A)   To help users assess the government's financial position and results in relation to other governments
B)   To review the government's financial position and results over the past 10 years
C)   To help users assess whether and why the government's financial position improved or deteriorated as a result of the year's operations
D)   To help users understand how the government's component units influenced its financial position

Question 9

A discussion of accounting policies regarding individual assets and liabilities is included in the significant accounting policies section of the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 10

To what extent should matters affecting the government's future financial position and operating results be discussed in MD&A?

Accepted Answer

A)   Matters affecting the future should not be discussed in MD&A.
B)   Facts, decisions, or conditions known to management as of end of the reporting period that are expected to significantly affect the government's financial position or operating results should be discussed in MD&A.
C)   Facts, decisions, or conditions known to management as of the date of the audit report that are expected to significantly affect the government's financial position or operating results should be discussed in MD&A.
D)   Facts, decisions, or conditions known to management as of the end of the reporting period should be discussed in MD&A if management is certain that the government's financial position or operating results will be significantly affected.

Question 11

Governments should prepare financial statements by major funds in both governmental and proprietary funds.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not listed by the GASB as an objective of governmental financial reporting?

Accepted Answer

A)   Assist users in assessing government's duty to be publicly accountable
B)   Assist users in evaluating a government's operating results
C)   Assist users in assessing a government's internal controls over financial reporting
D)   Assist users in assessing the level of services that a government can provide

Question 13

Notes are an integral part of the financial statements because they contain information needed for fair presentation of the basic financial statements that is not displayed on the face of the statements.

Accepted Answer

A) True 
 B)False

Question 14

Budgetary comparison schedules for the General Fund and each Special Revenue Fund that has a legally adopted budget must be presented as required supplementary information.

Accepted Answer

A) True 
 B)False

Question 15

In the debt capacity section of the Statistical tables, which of the following ratios is not considered a valid measure of the ability of the taxpayers to finance the government's outstanding debt?

Accepted Answer

A)   Debt as a percentage of personal income
B)   Debt as a percentage of property value
C)   Debt as a percentage of governmental revenues
D)   Debt per capita

Question 16

What are the GASB's requirements concerning the preparation of a statistical section of a financial report?

Accepted Answer

A)   It is part of the minimum external financial reporting requirements.
B)   It has the same status as the notes to the financial statements.
C)   It must be prepared if the government seeks to obtain an auditor's opinion.
D)   The GASB does not require a statistical section to be prepared as part of the basic financial statements; it is prepared by governments that choose to issue a CAFR

Question 17

The GASB requires certain note disclosures regarding cash deposits. Under what circumstances are a government's deposits with financial institutions considered to be exposed to custodial credit risk?

Accepted Answer

A)   More than 85% of the deposits are with a single institution
B)   The deposits are not collateralized
C)   The deposits are not insured
D)   The deposits are not insured and the deposits are either not collateralized, collateralized with securities held by the financial institution, or collateralized with securities held by the institution's trust department or agent, but not in the government's name

Question 18

The GASB considers accountability as an important objective of financial reporting.

Accepted Answer

A) True 
 B)False

Question 19

How is the financial information for individual nonmajor funds displayed in the fund financial statements?

Accepted Answer

A)   It is aggregated and displayed in a single column in the fund statements; combining statements for nonmajor funds are not required but may be presented as supplementary information.
B)   It is not displayed anywhere in the fund financial statements.
C)   It is not displayed anywhere in the fund financial statements, but may be reported in the combining statements
D)   Individual nonmajor governmental funds are aggregated and presented in a single column in the fund statements, but nonmajor proprietary funds are not.

Question 20

Management's Discussion & Analysis, one of several items of required supplementary information, requires a government's financial managers to provide an objective analysis of the government's financial activities and financial position.

Accepted Answer

A) True 
 B)False

Exam 9: Reporting Principles and Preparation of Fund Financial Statements

The amounts reported for assets and liabilities in the total column for the combining balance sheet for nonmajor governmental funds are also reported in the other governmental funds column of the governmental funds balance sheet.

Which of the following is a required note disclosure regarding long-term debt?

Which of the following are attributes of a special purpose government that is considered a primary government? -Able to levy taxes if approved by another government

Only general-purpose governments, like states, cities, counties, towns, and villages can be primary governments. Special purpose governmental entities, like school districts and hospitals, can never be primary governments.

Which of the following major captions are not found in the proprietary funds statement of revenues, expenses, and changes in fund net position?

The relationships between two primary governments and a third organization may be such that the third organization can be a component unit of both primary governments.

Required supplementary information for a state or local government may include budgetary comparisons, pension and other employee benefit information, and combining fund financial statements.

In Management's Discussion and Analysis (MD&A) , what is the basic purpose of analyzing the government's overall financial position and results of operations?

A discussion of accounting policies regarding individual assets and liabilities is included in the significant accounting policies section of the notes to the financial statements.

To what extent should matters affecting the government's future financial position and operating results be discussed in MD&A?

Governments should prepare financial statements by major funds in both governmental and proprietary funds.

Which of the following is not listed by the GASB as an objective of governmental financial reporting?

Notes are an integral part of the financial statements because they contain information needed for fair presentation of the basic financial statements that is not displayed on the face of the statements.

Budgetary comparison schedules for the General Fund and each Special Revenue Fund that has a legally adopted budget must be presented as required supplementary information.

In the debt capacity section of the Statistical tables, which of the following ratios is not considered a valid measure of the ability of the taxpayers to finance the government's outstanding debt?

What are the GASB's requirements concerning the preparation of a statistical section of a financial report?

The GASB requires certain note disclosures regarding cash deposits. Under what circumstances are a government's deposits with financial institutions considered to be exposed to custodial credit risk?

The GASB considers accountability as an important objective of financial reporting.

How is the financial information for individual nonmajor funds displayed in the fund financial statements?

Management's Discussion & Analysis, one of several items of required supplementary information, requires a government's financial managers to provide an objective analysis of the government's financial activities and financial position.