Question 1

There are four major activity categories reported by state and local governments: governmental, government-wide, proprietary, and fiduciary.

Accepted Answer

A) True 
 B)False

Question 2

A deferred inflow of resources is defined as "an acquisition of net assets by the government that is applicable to a future reporting period."

Accepted Answer

A) True 
 B)False

Question 3

The positive fund balance in a special revenue fund must at a minimum be reported as assigned.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not a characteristic of a fund as defined by GASB standards?

Accepted Answer

A)  An accounting entity. 
B)  A fiscal entity. 
C)  A reporting entity. 
D)  A self-balancing set of accounts.

Question 5

Use the following information to determine whether the Development Special Revenue and the Debt Service Funds should be reported as major funds based on asset amounts provided. $ \begin{array}{llr}\text { Development Special Revenue Fund Assets } & \$ & 740,000 \ \text { Debt Service Fund Assets } & \$ & 150,000 \ \text { Total Governmental Fund Assets } & \$ &7,500,000 \ \text { Total Governmental Fund and Enterprise Fund Assets } & \$ &8,750,000\end{array} $

Accepted Answer

A)  The Development Special Revenue Fund should be reported as major. 
B)  The Debt Service Fund should be reported as major. 
C)  Both the Development Special Revenue Fund and the Debt Service Fund should be reported as major. 
D)  Neither the Development Special Revenue Fund nor the Debt Service Fund should be reported as major.

Question 6

According to GASB Concepts Statement 1 a primary objective of financial reports is to provide information useful in determining the accountability of the government.

Accepted Answer

A) True 
 B)False

Question 7

Revenues is an example of what the GASB terms an inflow of resources.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not one of the seven elements defined by the GASB concept statements?

Accepted Answer

A)  Deferred inflow of resources. 
B)  Expenses. 
C)  Assets. 
D)  Net position.

Question 9

Because budgetary accounts are used by governments, government financial statements can never be said to be in accord with generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 10

Following are some of the county's governmental funds. The county has asked you to determine is any of the funds listed should be classified as major funds based on the GASB size criteria. Clearly indicate which fund(s) you believe should be classified as major and provide support for your choice(s).

Accepted Answer

The answer of Following are some of the county's governmental...

Question 11

According to the GASB, information that is essential and useful to placing information in the correct context should be reported as which of the following?

Accepted Answer

A)  Required supplementary information. 
B)  Supplementary information. 
C)  Notes to the financial statements. 
D)  A line item on the financial statements.

Question 12

The governmental funds category includes the General Fund, special revenue funds, debt service funds, capital projects funds, and internal service funds.

Accepted Answer

A) True 
 B)False

Question 13

Economic resources are cash or items expected to be converted into cash during the current period, or soon enough thereafter to pay current period liabilities.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would be reported as a nonspendable fund balance?

Accepted Answer

A)  Inventory. 
B)  Restricted assets. 
C)  Assets whose use is limited. 
D)  Capital assets.

Question 15

Expenditures are never recorded in governmental funds.

Accepted Answer

A) True 
 B)False

Question 16

Explain the nature of the three major activity categories of a state or local government: governmental activities, business-type activities, and fiduciary activities. Provide examples of each.

Accepted Answer

The answer of Explain the nature of the three major...

Question 17

A debt service fund is used to account for financial resources segregated for the purpose of making principal and interest payments on general long-term debt.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following governmental funds must be reported as a major fund?

Accepted Answer

A)  The General Fund. 
B)  Any fund with total assets, liabilities, revenues, or expenditures that are 10% or more of the General Fund and 5% or more of total General Fund and Business-type Activities. 
C)  The government may opt to include or exclude any fund it choses as a major fund. 
D)  Only the General Fund and special revenue funds that meet the 10% and 5% size criteria.

Question 19

Which of the following is not one of the methods recommended by the GASB Concepts Statement 3 for communicating information to external users of government financial reports?

Accepted Answer

A)  Providing a popular report. 
B)  Recognition in the financial statements. 
C)  Presentation as required supplementary information. 
D)  Disclosure in the notes to the financial statements.

Question 20

According to the guidance of GASB Concepts Statement 3, financial information can be communicated by recognition in the financial statements, disclosure in the notes to the financial statements, presentation as required supplementary information, or presentation as supplementary information.

Accepted Answer

A) True 
 B)False

Exam 2: Principles of Accounting and Financial Reporting for State and Local Governments

There are four major activity categories reported by state and local governments: governmental, government-wide, proprietary, and fiduciary.

A deferred inflow of resources is defined as "an acquisition of net assets by the government that is applicable to a future reporting period."

The positive fund balance in a special revenue fund must at a minimum be reported as assigned.

Which of the following is not a characteristic of a fund as defined by GASB standards?

According to GASB Concepts Statement 1 a primary objective of financial reports is to provide information useful in determining the accountability of the government.

Revenues is an example of what the GASB terms an inflow of resources.

Which of the following is not one of the seven elements defined by the GASB concept statements?

Because budgetary accounts are used by governments, government financial statements can never be said to be in accord with generally accepted accounting principles.

According to the GASB, information that is essential and useful to placing information in the correct context should be reported as which of the following?

The governmental funds category includes the General Fund, special revenue funds, debt service funds, capital projects funds, and internal service funds.

Economic resources are cash or items expected to be converted into cash during the current period, or soon enough thereafter to pay current period liabilities.

Which of the following would be reported as a nonspendable fund balance?

Expenditures are never recorded in governmental funds.

Explain the nature of the three major activity categories of a state or local government: governmental activities, business-type activities, and fiduciary activities. Provide examples of each.

A debt service fund is used to account for financial resources segregated for the purpose of making principal and interest payments on general long-term debt.

Which of the following governmental funds must be reported as a major fund?

Which of the following is not one of the methods recommended by the GASB Concepts Statement 3 for communicating information to external users of government financial reports?

According to the guidance of GASB Concepts Statement 3, financial information can be communicated by recognition in the financial statements, disclosure in the notes to the financial statements, presentation as required supplementary information, or presentation as supplementary information.