Question 1

What is the general rule for reporting on funds in the fund-level financial statements for fiduciary funds?

Accepted Answer

A)  There is no requirement for reporting on fiduciary funds in the fund-level statements.
B)  All individual major funds must be reported in separate columns of the fund-level financial statements for fiduciary funds;nonmajor funds may be combined in a single column.
C)  All individual fiduciary funds,whether major or nonmajor,must be reported in separate columns of the fund-level financial statements for fiduciary funds.
D)  Separate columns should be shown for each fund type,such as Investment Trust Funds (rather than individual funds) ,in the fund-level financial statements for fiduciary funds. D

Question 2

Which basis of accounting is used when presenting governmental and proprietary funds in fund-level financial statements?

Accepted Answer

A)  governmental - modified accrual;proprietary - modified accrual
B)  governmental - accrual;proprietary - accrual
C)  governmental - modified accrual;proprietary - accrual
D)  governmental - accrual;proprietary - modified accrual C

Question 3

Why are separate operating statements prepared for governmental funds and proprietary funds in the fund-level financial statements?

Accepted Answer

A)  because a single operating statement would require too many columns for the average reader to understand readily
B)  because governmental funds use the full accrual basis of accounting in the fund financial statements,whereas proprietary funds use the modified accrual basis of accounting
C)  because governmental funds have a different measurement focus and basis of accounting than proprietary funds in the fund-level financial statements
D)  because governmental fund operating statements need to be read together with the "budget and actual" schedules,whereas proprietary fund operating statements do not C

Question 4

What is the general rule regarding the reporting of special items in fund-level financial statements?

Accepted Answer

A)  They should be displayed separately in the operating statements prepared for governmental and proprietary funds.
B)  They should be reported as part of expenditures or expenses in operating statements.
C)  They should be displayed as separate items in proprietary fund operating statements,but not in governmental fund operating statements.
D)  They should be included as part of revenues in fund operating statements.

Question 5

How are amounts due to other funds reported in fund-level financial statements?

Accepted Answer

A)  assets in the balance sheet
B)  expenditures in the statement of revenues,expenditures,and changes in fund balances
C)  liabilities in the balance sheet
D)  transfers out in the statement of revenues,expenditures,and changes in fund balances

Question 6

Statistical tables included in the Comprehensive Annual Financial Report are intended to help users by providing what kind of information?

Accepted Answer

A)  detailed data on the financial position and results of operations of each individual fund
B)  additional financial,economic,and demographic data helpful in placing the financial statements of a government in a broader context
C)  data showing whether the entity has delivered public services efficiently and effectively
D)  an overview of the financial position and results of operations of the entity as a whole

Question 7

Budgetary comparison schedules (or statements)must be prepared for:

Accepted Answer

A)  major governmental and proprietary funds
B)  the General Fund and major Special Revenue Funds
C)  only major governmental funds
D)  all major fund and fiduciary funds

Question 8

A state has different relationships with many legally separate organizations.Some elements of the relationships are: (1)the state can appoint a majority of some governing boards; (2)the state is able to impose its will on some;and (3)the state gets financial benefits from or is financially burdened by some.Which relationship or combination of relationships will cause an organization to be part of the state's financial reporting entity?

Accepted Answer

A)  Any one of the three relationships must exist.
B)  All three relationships must exist.
C)  A combination of relationship (3) and either relationship (1) or (2) must exist.
D)  A combination of relationship (1) and either relationship (2) or (3) must exist.

Question 9

(Classification of financing sources in financial statements)
Martin Township decides to construct a new city hall.Based on the following data,prepare a statement of revenues,expenditures,and changes in fund balance for Martin Township's Capital Projects Fund.All transactions occur within the calendar year 2013.
a.The Fund starts and ends the year with a zero fund balance.
b.The Fund's financing sources for the city hall project were: long-term bond proceeds - $5 million;operating transfer from the General Fund - $2 million;state grant - $1 million;interest from the temporary investment of cash - $70,000.
c.Total outlays for constructing the new city hall were: construction costs - $7,200,000;design and construction supervision fees - $600,000.
d.City laws require that,whenever bonds are used,any remaining difference between total financing sources and construction costs must be transferred to the Debt Service Fund.Therefore,$270,000 was transferred to the Debt Service Fund.

Accepted Answer

The answer of (Classification of financing sources in financial statements)
Martin...

Question 10

Which of the following financial statements is not required to be prepared for proprietary funds in the fund-level financial statements?

Accepted Answer

A)  Statement of net position (or balance sheet) 
B)  Statement of revenues,expenses,and changes in fund net assets
C)  Statement of revenues,expenditures,and changes in fund balances
D)  Statement of cash flows

Question 11

An entity can be a component unit of how many primary governments in the same fiscal year?

Accepted Answer

A)  1
B)  2
C)  3
D)  4 or more

Question 12

(Preparation of closing entries and fund level financial statements)
Following is a trial balance of City of Peachville's General Fund at December 31,2013.Prepare: (a)closing entries; (b)a post-closing trial balance; (c)a statement of revenues,expenditures,and changes in fund balance for the year ended December 31,2013;and (d)a balance sheet at December 31,2013.

Accepted Answer

The answer of (Preparation of closing entries and fund level...

Question 13

An organization is a component unit of a primary government and hence part of the primary government's financial reporting entity,provided that:

Accepted Answer

A)  the primary government provides grants to the organization
B)  the primary government sells tax-exempt debt on behalf of the organization
C)  the primary government is financially accountable for the organization
D)  the primary government makes appropriations to the organization

Question 14

(Matching transactions with funds and operating statement line items)
Harmony Township maintains four funds:
A the General Fund,
B the Library Special Revenue Fund,
C the Capital Projects Fund (recently established to account for the construction of a new city park),and
D the Water Enterprise Fund.
For each of the transactions described below,indicate by letter the fund(s)involved and by number the operating statement line item(s)that could be affected. $\begin{array}{lllr}
1 & \text { Revenues } & 4 & \text { Other financing sources } \
2 & \text { Expenditures } & 5 & \text { Other financing uses } \
3 & \text { Expenses } & 6 & \text { None (this is a balance sheet transaction) }
\end{array}$

Accepted Answer

The answer of (Matching transactions with funds and operating statement...

Question 15

What is the purpose of preparing proprietary fund balance sheets in classified format?

Accepted Answer

A)  to distinguish between current and noncurrent assets and liabilities
B)  to distinguish between assets and liabilities
C)  to distinguish between restricted and unrestricted net position
D)  to segregate net position into three components: invested in capital assets,net of related debt;restricted;and unrestricted

Question 16

The financial statements prepared for fiduciary funds are

Accepted Answer

A)  statement of fiduciary net position
B)  statement of changes in fiduciary net position
C)  statement of fiduciary cash flows
D)  only a and b
E)  only b and c

Question 17

The General Fund and other funds for which individual fund financial information is presented in separate columns in the basic governmental fund financial statements are known as

Accepted Answer

A)  principal funds
B)  primary funds
C)  major funds
D)  master funds

Question 18

In addition to the notes,what are the components of the "basic" governmental financial statements?

Accepted Answer

A)  balance sheets and cash flow statements
B)  modified accrual financial statements and full accrual financial statements
C)  fund financial statements and government-wide financial statements
D)  major fund financial statements and minor fund financial statements

Question 19

Match between columns
                        Premises: Expenditures--bond principal
Additions--employee contributions
Expenditures--public safety
Estimated revenues
Beginning fund balance
Depreciation expense--water utility
Nonspendable fund balance
Due to General Fund
Charges for services -- motor pool
Proceeds from sale of bonds

Accepted Answer

The Answer of Internal Service Fund Operating and Pension Trust is...

Question 20

In the net position component called "invested in capital assets,net of related debt" (that appears in proprietary fund financial statements),what is the meaning of net of related debt?

Accepted Answer

A)  bonds,notes,or other borrowings originally issued to acquire or improve the capital assets shown in the amount invested in capital assets
B)  outstanding balances of bonds,notes,or other borrowings,issued for any purpose approved by the governing body
C)  outstanding balances of all liabilities,regardless of their form,issued to acquire or improve the capital assets shown in the amount invested in capital assets
D)  outstanding balances of bonds,notes,or other borrowings,issued to acquire or improve the capital assets shown in the amount invested in capital assets

Exam 9: Reporting Principles and Preparation of Fund Financial Statements