Essentials of Accounting for Governmental and Not for Profit Organizations 11th Edition Test Bank Copley

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Essentials of Accounting for Governmental and Not for Profit Organizations 11th Edition Test Bank Copley

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1. A Comprehensive Annual Financial Report (CAFR) would include an introductory section, managements discussion and analysis, basic financial statements, required supplementary information other than MD&A, combining and individual fund statements, narrative explanations, and statistical section.

True False

2. The three major sections of a CAFR are the Introductory, Financial, and Statistical sections.

True False

3. The introductory and statistical sections of a CAFR are required to be audited.

True False

4. State and local governments are not required to prepare a CAFR.

True False

5. Combining statements are required whenever a non-major column is used in one of the fund financial statements.

True False

6. A complete CAFR includes combining financial statements to reflect major funds.

True False

7. In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental, proprietary and fiduciary funds.

True False

8. In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental funds only.

True False

9. The General Fund is not always considered to be a major fund when preparing fund basis financial statements.

True False

10. With respect to fund basis financial statements, governmental funds are considered to be a major fund when total assets, liabilities, revenues and expenditures combined are at least 10% of the total for the governmental funds category.

True False

11. With respect to fund basis financial statements, a government may only designate a fund to be a major fund if it meets the size thresholds established by GASB.

True False

12. With respect to fund basis financial statements, a government may designate any fund to be a major fund if reporting that fund separately would be useful.

True False

13. When preparing fund basis financial statements, any funds not reported separately are aggregated and reported in a single column under the label non-major funds.

True False

14. When preparing fund basis financial statements, any funds not reported separately are reported individually by function.

True False

15. Fiduciary fund statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.

True False

16. Governmental fund statements are prepared using the economic financial resources measurement focus and modified accrual basis of accounting.

True False

17. According to GASB, a primary government can only be a state or a general-purpose local government, such as a city or county.

True False

18. Blending of financial information is done only when component units and the primary government are so intertwined that they are essentially the same.

True False

19. The statistical section of the CAFR contains the combining schedules of non-major funds.

True False

20. The government-wide financial statements present the government as a whole, including component units and including fiduciary activities.

True False

21. The basic financial statements of a state or local governmental unit include the MD&A, government-wide statements, fund statements, and the notes.

True False

22. Governmental-type fund financial statements include the Balance Sheet and the Statement of Revenues, Expenditures, Changes in Fund Balances, and a Statement of Cash Flows.

True False

23. Governmental-type fund financial statements do not include a Statement of Cash Flows.

True False

24. Governmental fund financial statements include columns for the General Fund and all other major governmental funds.

True False

25. The total fund balances reported in the total column of the fund basis statements must be reconciled to the total Net Position presented in the governmental activities column of the government-wide Statement of Net Position.

True False

26. Entities which are determined to be component units of state and local governmental units must be discretely presented in the financial statements.

True False

27. The government-wide financial statements are prepared using the current resources measurement focus and accrual basis of accounting.

True False

28. The government-wide financial statements do not include a Statement of Cash Flows.

True False

29. Prior-year data is required for government-wide financial statements.

True False

30. The governmental fund statements are prepared using the current financial resources measurement focus and accrual basis of accounting.

True False

31. The fiduciary fund financial statements are prepared using the economic financial resources measurement focus and accrual basis of accounting.

True False

32. The General Fund is always a major fund for purposes of financial reporting.

True False

33. Notes to the financial statements must distinguish between the primary government and discretely presented component units.

True False

34. Special-purpose governments engaged in business type activities only are required to prepare both proprietary fund and government-wide financial statements.

True False

35. Only governmental fund statements include separate columns for discretely presented component units.

True False

36. Governmental accounting standards require the statistical section.

True False

37. The Government-wide financial statements include a separate column for fiduciary fund information.

True False

38. Managements Discussion and Analysis (MD&A) in The Comprehensive Annual Financial Report (CAFR) is part of the Financial Section.

True False

39. Government-wide statements are to be prepared using the economic resources measurement focus and accrual basis of accounting.

True False

40. Government-wide statements are to be prepared using the current financial resources measurement focus and modified accrual basis of accounting.

True False

41. Prior-year data may be presented but are not required on government-wide statements.

True False

42. Prior-year data are required to be presented on government-wide statements.

True False

43. Proprietary funds are required to prepare a Statement of Cash Flows from operating activities using the direct method.

True False

44. Government-wide financial statements use the economic resources measurement focus and the accrual basis of accounting.

True False

45. A Comprehensive Annual Financial Report for a state or local governmental unit should contain an introductory section, a financial section, and a statistical section.

True False

46. A government may not selectively designate any fund to be a major fund even if reporting the fund separately would be useful.

True False

47. The Comprehensive Annual Financial Report (CAFR) contains four major sections: introductory, financial, supplementary, and statistical.

True False

48. The fund balance reported in the Governmental Funds Balance Sheet must be reconciled to the total Net Position in the governmental activities column of the government-wide Statements of Net Position.

True False

49. The fund balance reported in the Governmental Funds Balance Sheet must equal the total Net Position in the governmental activities column of the government-wide Statements of Net Position.

True False

50. Fund balance is an account title used only in governmental funds to indicate the excess of assets over liabilities.

True False

51. The Governmental Accounting Standards Board considers the financial reporting entity to include the primary government, but not its component units.

True False

52. Which of the following is true regarding the proprietary fund financial statements?

A. Statements include the Statement of Net Position, Statement of Revenues, Expenses, and Changes in Fund Net Position, and Statement of Cash Flows.

B. Normally, a reconciliation is required between the proprietary fund financial statements and the business-type activities column in the government-wide financial statements.

C. The Statement of Net Position reflects equity as contributed equity and retained earnings.

D. The Statement of Cash Flows may be prepared using either the direct or indirect methods.

53. Which of the following is true regarding the fiduciary fund financial statements?

A. Fiduciary fund financial statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.

B. Fiduciary fund financial statements include the Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position.

C. Fiduciary fund financial statements reflect equity as reserved and unreserved.

D. Agency funds are reported only on the Statement of Changes in Fiduciary Net Position.

54. Which of the following is not considered Required Supplementary Information (RSI)?

A. Notes to the financial statements.

B. Budgetary Comparison Schedule.

C. Managements Discussion and Analysis.

D. None of the above; all are considered RSI.

55. Which of the following is considered Required Supplementary Information (RSI)?

A. Managements Discussion and Analysis.

B. Budgetary Comparison Schedule.

C. Schedule of Risk Management Activities.

D. All of the above are considered RSI.

56. Governmental-type funds label the excess of assets over liabilities on the balance sheet as:

A. Net Position

B. Net Fund Balance and Liabilities

C. Assets Net of Liabilities

D. Fund Balance

57. In addition to the government-wide statements, governments are required to prepare fund financial statements for which of the following category of funds?

A. Proprietary funds

B. Governmental type funds

C. Fiduciary funds

D. All of the above

58. Which of the following is true regarding the Comprehensive Annual Financial Report (CAFR)?

A. The CAFR has three main sections: introductory, financial, and statistical.

B. Required Supplementary Information includes a Budgetary Comparison Schedule for the General Fund and all major special revenue funds that have a legally adopted annual budget (unless a statement is prepared).

C. Both of the above.

D. Neither of the above.

59. Which of the following is true regarding the government-wide statements?

A. The governmental activities portion of the government-wide statements is prepared using the current financial resources measurement focus and modified accrual basis of accounting.

B. The government-wide statements include a Statement of Net Position and a Statement of Activities.

C. Both of the above.

D. Neither of the above.

60. Which of the following is true regarding the government-wide Statement of Net Position?

A. Discretely presented component units are included in a separate column (or columns).

B. Net Position is displayed in three categories: net investment in capital assets, reserved, and unreserved.

C. Both of the above.

D. Neither of the above.

61. Which of the following is true with respect to the General Fund?

A. The General Fund is considered to be a major fund if the combined total of assets, liabilities, revenues and expenses exceeds 10% of the total of all governmental funds.

B. The General Fund is considered to be a major fund when preparing fund basis financial statements if it bears a financial benefit or burden to the primary government.

C. The General Fund is always considered to be a major fund when preparing fund basis financial statements.

D. The General Fund is not reported as part of the CAFR.

62. With respect to the preparation of fund basis financial statements, governmental funds other than the General Fund are considered to be major when which of the following conditions exist?

A. With respect to fund basis financial statements, governmental funds are considered to be a major fund when total assets, liabilities, revenues, or expenditures of that individual governmental fund constitutes 10% of the total for the governmental fund category.

B. With respect to fund basis financial statements, governmental funds are considered to be a major fund when total assets, liabilities, revenues, or expenditures of that individual governmental or enterprise fund are 5% of the total of the governmental and enterprise categories, combined.

C. Both A and B are required for a governmental fund to be a major fund.

D. Either A or B would fulfill the requirements.

63. With respect to the preparation of fund basis financial statements, governmental funds other than the General fund are considered to be major when which of the following conditions exist?

A. With respect to fund basis financial statements, governmental funds are considered to be a major fund when total assets, liabilities, revenues, or expenditures of the individual governmental fund under consideration constitutes 25% of the total for the governmental fund category.

B. With respect to fund basis financial statements, governmental funds are considered to be a major fund when total assets, liabilities, revenues, or expenditures of individual governmental or enterprise fund under consideration are 15% of the total of the governmental funds and enterprise categories, combined.

C. Both A and B are required for a governmental fund to be a major fund.

D. Neither A nor B are correct.

64. Which of the following statements is false?

A. With respect to fund basis financial statements, a government may designate any fund to be a major fund if reporting that fund separately would be useful.

B. When preparing fund basis financial statements, any funds not reported separately are reported by function.

C. When preparing fund basis financial statements, any funds not reported separately are aggregated and reported in a single column under the label non-major funds.

D. In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental, proprietary and fiduciary funds.

65. Governmental fund statements are prepared using:

A. Economic resources measurement focus and modified accrual basis of accounting.

B. Current financial resources measurement focus and modified accrual basis of accounting.

C. Economic resources measurement focus and accrual basis of accounting.

D. Current financial resources measurement focus and accrual basis of accounting.

66. The total fund balances presented in Governmental Funds Statements are different from the total Net Position on the government-wide Statement of Net Position. Which of the following is not a reason for this difference?

A. The two statements have different bases of accounting

B. Capital assets used in government operations are not financial resources and therefore are not reported in the funds

C. Some liabilities are not due and payable in the current period and are not reported in fund liabilities

D. Accrued Wages Payable at year end are reported on the statement of Net Position but are not reported in the fund statements

67. Which of the following is true regarding GASBs definition of the financial reporting entity?

A. The financial reporting entity might include a primary government, component units, joint ventures, or a jointly governed organization.

B. Primary governments may be general-purpose governments (such as states, cities, and counties) or special-purpose governments that have separately elected governing bodies, are legally separate and are fiscally independent of other state or local governments.

C. Blending is used to incorporate component units when those component units are, in substance, part of the primary government.

D. All of the above are true.

68. Which of the following is true regarding the financial reporting entity of a state or local government?

A. Only a primary government is reported in the government-wide statements.

B. A school district could never be a primary government.

C. Many component units are discretely presented, rather than blended.

D. All of the above are true.

69. Which of the following is true regarding the composition of the Comprehensive Annual Financial Report (CAFR)?

A. The CAFR is to include both blended and discretely presented component units.

B. The CAFR is required in order to be in conformity with Generally Accepted Accounting Principles (GAAP).

C. The CAFR contains four major sections: introductory, financial, supplementary, and statistical.

D. All of the above are true.

70. Which of the following is true regarding Managements Discussion and Analysis (MD&A)?

A. MD&A is not considered part of Required Supplementary Information (RSI).

B. MD&A takes the place of footnotes.

C. MD&A should present an analysis of significant variations between the original and final budget.

D. All of the above are true.

71. Under GASB rules for the financial reporting entity:

A. Component units must be reported in columns (discrete presentation) separate from the funds of a primary government.

B. Counties are component units of the State Government.

C. Blended and discretely presented component units are to be reported in government-wide financial statements but not in fund financial statements.

D. Component units are included if the primary government is financially accountable for their operations.

72. Which of the following is included in Required Supplementary Information (RSI)?

A. Managements Discussion and Analysis (MD&A).

B. Budgetary Comparison Schedule.

C. The Schedule of Funding Progress and Schedule of Employer Contributions when the government reports a pension trust fund.

D. All of the above.

73. Which of the following is true regarding the government-wide financial statements?

A. The government-wide financial statements are not required to present prior-year data.

B. The government-wide financial statements include a Statement of Net Position and a Statement of Activities, but not a Statement of Cash Flows.

C. The government-wide financial statements include capital assets, including infrastructure, and reflect depreciation, except for infrastructure using the modified approach.

D. All of the above are true.

74. Which of the following is true regarding the government-wide Statement of Net Position?

A. The government-wide Statement of Net Position reflects capital assets, net of accumulated depreciation, for both governmental and business-type activities.

B. The government-wide Statement of Net Position must be prepared in a classified format; that is, both assets and liabilities must be separated between current and long-term categories.

C. The government-wide Statement of Net Position includes all resources entrusted to the government; including governmental, proprietary, and fiduciary.

D. A reporting entity (primary government plus component units) total column is required.

75. Which of the following is true regarding the government-wide Statement of Activities?

A. The government-wide Statement of Activities may reflect expenses either by function (general government, public safety, etc.) or by object or natural classification (salaries, supplies, etc.).

B. The government-wide Statement of Activities reflects taxes as general revenues.

C. The government-wide Statement of Activities is prepared using the modified accrual basis of accounting for governmental activities and using the accrual basis of accounting for business-type activities.

D. Indirect program expenses may not be allocated to the other functional areas.

76. Which of the following is true regarding the government-wide Statement of Activities?

A. In the government-wide Statement of Activities, special items are those items that are both unusual and infrequent and are not under the control of management.

B. Transfers between governmental and business type activities are eliminated and do not appear on the government-wide Statement of Activities.

C. The Statement of Activities includes depreciation expense.

D. Taxes levied, including those restricted to a particular purpose, are reported as program revenue.

77. Which of the following is true regarding the governmental fund financial statements?

A. The governmental fund financial statements include the Balance Sheet, and the Statement of Revenues, Expenditures, and Changes in Fund Balances.

B. The governmental fund financial statements are prepared on the current financial resources measurement focus and modified accrual basis of accounting.

C. The governmental fund Balance Sheet reflects the difference of assets minus liabilities as Fund Balance.

D. All of the above are true.

78. Which of the following items would likely appear in the reconciliation between the governmental fund financial statements and the governmental activities column in the government-wide financial statements?

A. The inclusion of long-term liabilities in the government-wide financial statements and not in the governmental fund financial statements.

B. The inclusion of depreciation of capital assets in the governmental activities column of the government-wide financial statements and not in the governmental fund statements.

C. The additional accrual of some revenues and expenses in the government-wide financial statements that were not made in the governmental fund financial statements.

D. All of the above.

79. Which of the following is true regarding the Budgetary Comparison Schedule?

A. The Budgetary Comparison Schedule compares the actual results to the original budget, but display of variances is optional.

B. The Budgetary Comparison Schedule is considered part of the basic financial statements.

C. The Budgetary Comparison Schedule must be prepared for the General Fund and each major special revenue fund that has a legally adopted budget.

D. Both (A) and (C) are true.

80. Which of the following is false regarding major fund reporting for governmental funds?

A. The General Fund is always a major fund.

B. Each fund that is considered major must be reported in a separate column in the governmental funds financial statements.

C. A government may designate any fund as major if it feels that reporting that fund in the basic financial statements would be useful.

D. None of the above, all are true.

81. Which of the following is true regarding the Comprehensive Annual Financial Report?

A. The basic financial statements consist of the government-wide, the governmental fund, the proprietary fund, and the fiduciary fund financial statements (and the notes to the financial statements).

B. The government-wide financial statements include the Statement of Net Position, the Statement of Activities, and the Statement of Cash Flows.

C. Both (A) and (B) are true.

D. Neither (A) nor (B) is true.

82. Funds other than the General Fund must be considered a major fund when

A. Total assets, liabilities, revenues, or expenditures/expenses of that fund constitute 10 percent of either the governmental or enterprise category.

B. Total assets, liabilities, revenues, or expenditures/expenses of that fund are 5 percent of the total of the governmental and enterprise category.

C. Conditions of either A or B exist.

D. Conditions of both A and B exist.

83. Which of the following is true regarding the governmental fund statements?

A. The governmental fund statements include a Statement of Cash Flows prepared on the direct method.

B. The governmental fund statements are prepared using the economic financial resources measurement focus and modified accrual accounting.

C. Both (A) and (B) are true.

D. Neither (A) nor (B) is true.

84. Which of the following is true regarding the proprietary fund financial statements?

A. The proprietary fund financial statements include the Statement of Net Position, the Statement of Revenues, Expenses, and Changes in Fund Net Position, and the Statement of Cash Flows.

B. The proprietary funds include enterprise, internal service, and permanent funds.

C. Both (A) and (B) are true.

D. Neither (A) nor (B) is true.

85. Which of the following is true regarding fiduciary fund financial statements?

A. Fiduciary fund financial statements include the Statement of Fiduciary Net Position, the Statement of Changes in Fiduciary Net Position, and the Statement of Cash Flows prepared on the direct method.

B. Fiduciary fund financial statements are prepared on the current financial resources measurement focus and modified accrual accounting.

C. Both (A) and (B) are true.

D. Neither (A) nor (B) is true.

86. Which of the following is true regarding the reporting of Budget-Actual Comparisons?

A. A Budget-Actual Comparison Schedule is required for the General Fund and all major special revenue funds that have a legally adopted annual budget.

B. A Budget-Actual Comparison Statement may be prepared in lieu of the Schedule.

C. Both (A) and (B) are true.

D. Neither (A) nor (B) is true.

87. An example of an expenditure classification by function for a governmental fund would be:

A. Current.

B. Salaries.

C. Police Department.

D. Public safety.

88. Which of the following is true regarding the reporting of major funds in the governmental funds financial statements?

A. The General Fund is always considered a major fund.

B. A fund is considered major if its revenues, expenditures, assets, or liabilities exceed 10% of the total governmental fund categories and if the same element (revenues, expenditures, assets, or liabilities) exceeds 5% of the governmental and enterprise funds combined.

C. Both (A) and (B) are true.

D. Neither (A) nor (B) is true.

89. Which of the following is true regarding financial reporting of governmental funds?

A. The Fund Balance of governmental funds reports fund balance as reserved and unreserved.

B. Governmental funds include the General Fund, special revenue funds, capital projects funds, debt service funds, and permanent funds.

C. Both (A) and (B) are true.

D. Neither (A) nor (B) is true.

90. Which of the following is true regarding the government-wide Statement of Activities?

A. General revenues include items such as charges for services and program fees.

B. Fiduciary activities are included.

C. Both of the above.

D. Neither of the above.

91. Which of the following is true regarding the governmental fund statements?

A. The Governmental Funds Balance Sheet does not reflect capital assets or long-term debt.

B. The Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances reports columns for major funds, non-major funds (in total), and total.

C. Both of the above.

D. Neither of the above.

92. Which of the following is true regarding component units?

A. Component units may be reported discretely in the government-wide statements or may be blended as a fund in the fund financial statements (and thus also included in the government-wide financial statements).

B. Component units could include towns, school districts, counties, and municipalities.

C. Both of the above.

D. Neither of the above.

93. Which of the following is true regarding the government-wide financial statements?

A. The government-wide financial statements include the Statement of Net Position and the Statement of Activities.

B. The government-wide financial statements are prepared using the current financial resources measurement focus and the modified accrual basis of accounting.

C. Both of the above.

D. Neither of the above.

94. Which of the following is true regarding the governmental fund financial statements?

A. The governmental fund financial statements include the Balance Sheet and the Statement of Revenues, Expenditures, and Changes in Fund Balances.

B. The governmental fund financial statements are prepared using the current financial resources measurement focus and the modified accrual basis of accounting.

C. Both of the above.

D. Neither of the above.

95. Which of the following is true regarding the proprietary fund financial statements?

A. The proprietary fund financial statements include the Statement of Net Position, the Statement of Revenues, Expenses, and Changes in Fund Net Position, and the Statement of Cash Flows.

B. The proprietary fund financial statements are prepared using the economic resources measurement focus and the accrual basis of accounting.

C. Both of the above.

D. Neither of the above.

96. Which of the following is true regarding the proprietary funds statements?

A. Major enterprise and internal service funds are reported in separate columns; a column is presented for all non-major enterprise and internal service funds (combined), and a total column is presented.

B. Financial statements include a Statement of Net Position, Statement of Revenues, Expenses, and Changes in Fund Net Position, and Statement of Cash Flows.

C. Both of the above.

D. Neither of the above.

97. Which of the following is true regarding fiduciary fund statements?

A. Fiduciary fund statements include the Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position.

B. Fiduciary fund statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.

C. Both of the above.

D. Neither of the above.

98. Which of the following is true regarding fiduciary funds?

A. Fiduciary funds are reported in the fiduciary fund financial statements but not in the government-wide financial statements.

B. Agency funds would be reported in both the Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position.

C. Both of the above.

D. Neither of the above.

99. Where in the CAFR would one find the long-term liability for revenue bonds (paid from the revenues of an enterprise fund)?

A. The proprietary funds Statement of Net Position only.

B. The government-wide Statement of Net Position only.

C. The government-wide Statement of Net Position and the RSI Schedule of Bonds Payable.

D. The government-wide Statement of Net Position and the proprietary funds Statement of Net Position.

100. Which of the following funds requires a Budgetary Comparison Schedule?

A. Enterprise Funds

B. Internal Service Funds

C. General Fund

D. Investment Trust Funds

101. Which part of the financial section of the CAFR is considered Required Supplementary Information?

A. Auditors Report

B. Managements Discussion and Analysis

C. Government-Wide Financial Statements

D. Fund Financial Statements

102. Which of the following is true regarding Government-wide financial statements?

A. Prior year data must be presented.

B. A Statement of Cash Flows is not required for Government-wide statements.

C. Depreciation may only be reported as a charge in total to the general government.

D. Fiduciary activities are only reported if they qualify as a major fund.

103. A reconciliation from Enterprise funds statements to government-wide statements is not necessary because:

A. They both use the same measurement focus and basis of accounting (economic resources, accrual)

B. They both use the same measurement focus and basis of accounting (current financial resources, modified accrual)

C. They use a different measurement focus and basis of accounting

D. Enterprise funds are not included in the government-wide statements

104. Which of the following sections of the CAFR is audited?

A. Introductory section

B. Financial section

C. Statistical section

D. Management Discussion and Analysis section

105. The statistical section typically presents ____ years of information in each table or schedule.

A. 3

B. 5

C. 10

D. 12

106. What are the three major sections of the Comprehensive Annual Financial Report?

A. Introductory Section, Financial Section, Budgetary Comparison

B. Introductory Section, Financial Section, Management Discussion and Analysis

C. Introductory Section, Financial Section, Statistical Section

D. Introductory Section, Financial Section, Reporting Infrastructure

107. In addition to a Statement of Net Position, Proprietary Fund level financial statements include which of the following?

A. Statement of revenues, expenses, and changes in fund Net Position.

B. Statement of cash flows.

C. Both of the above.

D. Neither of the above.

108. A budgetary comparison schedule is required for?

A. The General Fund.

B. Each special revenue fund that has a legally adopted annual budget.

C. Enterprise funds.

D. (A) and (B) only.

109. In addition to a Statement of Net Position, what statements are required in the government-wide Financial Statements?

A. Statement of Activities.

B. Statement of Cash Flows.

C. Both of the above.

D. Neither of the above.

110. Which Statement is presented using the Accrual Basis of Accounting?

A. Governmental Fund Balance Sheet

B. Government-Wide Statement of Activities

C. Statement of Revenues, Expenditure and changes in Fund Balances

D. A and C

111. A statement of Cash Flows is required for which type of Fund?

A. Governmental

B. Fiduciary

C. Proprietary

D. All of the above

112. GASB requires which of the following (if applicable) to be included in the Notes to
Financial Statements?

A. Outstanding encumbrances.

B. The definition of cash and cash equivalents used in the statement of cash flows for proprietary funds.

C. Interfund receivables and payables.

D. All of the above.

113. GASB provides which method(s) for including component unit financial information with that of the primary government?

A. Discrete Presentation

B. Blending

C. A and B

D. None of the above

114. The modified approach for infrastructure requires schedules and disclosures to be included in which part of the CAFR?

A. Notes to the Financial Statements

B. Other Supplementary Information

C. Required Supplementary Information

D. Proprietary Fund Statements

115. Which of the following is not true regarding the Statement of Cash Flows for proprietary funds?

A. Four categories of cash flows are used.

B. Interest and dividends received are recorded as investing activities.

C. The direct method is required for reporting cash flows from operations.

D. At the bottom of the statement, net income is reconciled to cash flows from operations.

116. Which of the following is true about the combining financial statements?

A. They are used whenever a non-major column is used in one of the fund financial statements

B. The total column in the combining statements is not always the same as the non-major funds column in the basic financial statements

C. Both of the above

D. Neither of the above

117. Which of the following funds require a Statement of Cash Flows?

A. Governmental funds

B. Proprietary funds

C. Fiduciary Funds

D. Governmental and Fiduciary Funds

118. With respect to Government-wide financial statements, which of the following is not required by GASB?

A. Statement of Cash Flow

B. Statement of Net Position

C. Statement of Activities

D. All of the above are required by GASB Statement 34

119. Which of the following is not one of the major sections of the Comprehensive Annual Financial Report (CAFR)?

A. Budgetary

B. Financial

C. Introductory

D. Statistical

120. Which of the following is one of the criteria to determine if a governmental fund is considered to be a major fund?

A. Total assets, liabilities, revenues or expenditures of the individual governmental fund constitutes 10 percent of the governmental funds category.

B. Total assets, liabilities, revenues or expenditures/expenses are 5 percent of the total of the governmental and enterprise category. Other funds may be designated major funds at the discretion of management.

C. Both A and B are required

D. Either A or B will qualify a fund to be a major fund

121. Identify three items often found in Required Supplementary Information.

122. List the Government-wide financial statements required by GASB Statement 34.

123. List the fund financial statements required by GASB Statement 34 for governmental type funds.

124. List the fund financial statements required by GASB Statement 34 for proprietary type funds.

125. List the basic financial statements required by GASB Statement 34 for fiduciary type funds.

126. In addition to government-wide statements, governments are required to prepare fund financial statements within which three categories of funds?

127. What are the five categories of fund balance on a Governmental Funds Balance Sheet?

128. List the five categories outlined in GASB Statement 44 to be included in the statistical section of the CAFR.

129. List and describe the three major sections of the Comprehensive Annual Financial Report and indicate briefly what is in each.

130. What is the rule for determining whether a governmental fund, other than the General Fund, is a major fund?

131. GASB Statement 34 requires supplementary information (RSI) for what two major areas?

132. The Governmental Accounting Standards Board has established rules for determining when a government should include another entity in its financial statements.

a) Distinguish between a primary government and a component unit. Include one example of each.
b) GASB permits two methods of reporting component units in the financial reporting entity. Describe the two methods and indicate when each should be used.
c) The City of X is deciding whether or not to include a transit system in its financial report and how the transit system would be reported if a positive decision were made. The transit system is a legally separate entity, has its own governing board, not appointed by the city, has a different auditor, and issues its own financial report. The city has signed an agreement that, for the next ten years (the life of a bond issue related to transit operations), and it will make up the deficit of the transit system. During the last two years, the deficit has been $10 million, approximately 50% of the amount reported as a profit of its other enterprise operations. Make recommendations to the city, including whether or not to include the transit system and, if so, how to report it.

133. The following information is available for the preparation of the government-wide financial statements of the City of Aurora as of June 30, 2015:

Assume all long-term liabilities were incurred in the acquisition of capital assets.

Required:

From the information given above, prepare, in good form, a Statement of Net Position for the City of Aurora as of June 30, 2015. Include the unrestricted net position, which is to be computed from the information presented above. Include a total column. Aurora has no component units.

134. The following information is available for the preparation of the government-wide financial statements for the Village of Twin Oaks for the year ended June 30, 2015:

Required:

From the information given above, prepare, in good form, a Statement of Activities for the Village of Twin Oaks for the Year Ended June 30, 2015.

135. The following General Fund information is available for the preparation of the financial statements for the City of Pine Cove for the year ended December 31, 2015.

Required:

From the information given above, prepare, in good form, a General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the City of Pine Cove for the Year Ended December 31, 2015.

136. The following water and sewer information is available for the preparation of the financial statements for the County of Augusta for the year ended June 30, 2015:

Required:

From the information given above, prepare, in good form, a Water and Sewer Fund column for the proprietary fund Statement of Revenues, Expenses, and Changes in Fund Net Position for the County of Augusta for the Year Ended June 30, 2015.

2 Key

1. A Comprehensive Annual Financial Report (CAFR) would include an introductory section, managements discussion and analysis, basic financial statements, required supplementary information other than MD&A, combining and individual fund statements, narrative explanations, and statistical section.

TRUE

Copley Chapter 02 #1

2. The three major sections of a CAFR are the Introductory, Financial, and Statistical sections.

TRUE

Copley Chapter 02 #2

3. The introductory and statistical sections of a CAFR are required to be audited.

FALSE

Copley Chapter 02 #3

4. State and local governments are not required to prepare a CAFR.

TRUE

Copley Chapter 02 #4

5. Combining statements are required whenever a non-major column is used in one of the fund financial statements.

TRUE

Copley Chapter 02 #5

6. A complete CAFR includes combining financial statements to reflect major funds.

TRUE

Copley Chapter 02 #6

7. In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental, proprietary and fiduciary funds.

TRUE

Copley Chapter 02 #7

8. In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental funds only.

FALSE

Copley Chapter 02 #8

9. The General Fund is not always considered to be a major fund when preparing fund basis financial statements.

FALSE

Copley Chapter 02 #9

10. With respect to fund basis financial statements, governmental funds are considered to be a major fund when total assets, liabilities, revenues and expenditures combined are at least 10% of the total for the governmental funds category.

FALSE

Copley Chapter 02 #10

11. With respect to fund basis financial statements, a government may only designate a fund to be a major fund if it meets the size thresholds established by GASB.

FALSE

Copley Chapter 02 #11

12. With respect to fund basis financial statements, a government may designate any fund to be a major fund if reporting that fund separately would be useful.

TRUE

Copley Chapter 02 #12

13. When preparing fund basis financial statements, any funds not reported separately are aggregated and reported in a single column under the label non-major funds.

TRUE

Copley Chapter 02 #13

14. When preparing fund basis financial statements, any funds not reported separately are reported individually by function.

FALSE

Copley Chapter 02 #14

15. Fiduciary fund statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.

FALSE

Copley Chapter 02 #15

16. Governmental fund statements are prepared using the economic financial resources measurement focus and modified accrual basis of accounting.

FALSE

Copley Chapter 02 #16

17. According to GASB, a primary government can only be a state or a general-purpose local government, such as a city or county.

FALSE

Copley Chapter 02 #17

18. Blending of financial information is done only when component units and the primary government are so intertwined that they are essentially the same.

TRUE

Copley Chapter 02 #18

19. The statistical section of the CAFR contains the combining schedules of non-major funds.

FALSE

Copley Chapter 02 #19

20. The government-wide financial statements present the government as a whole, including component units and including fiduciary activities.

FALSE

Copley Chapter 02 #20

21. The basic financial statements of a state or local governmental unit include the MD&A, government-wide statements, fund statements, and the notes.

FALSE

Copley Chapter 02 #21

22. Governmental-type fund financial statements include the Balance Sheet and the Statement of Revenues, Expenditures, Changes in Fund Balances, and a Statement of Cash Flows.

FALSE

Copley Chapter 02 #22

23. Governmental-type fund financial statements do not include a Statement of Cash Flows.

TRUE

Copley Chapter 02 #23

24. Governmental fund financial statements include columns for the General Fund and all other major governmental funds.

TRUE

Copley Chapter 02 #24

25. The total fund balances reported in the total column of the fund basis statements must be reconciled to the total Net Position presented in the governmental activities column of the government-wide Statement of Net Position.

TRUE

Copley Chapter 02 #25

26. Entities which are determined to be component units of state and local governmental units must be discretely presented in the financial statements.

FALSE

Copley Chapter 02 #26

27. The government-wide financial statements are prepared using the current resources measurement focus and accrual basis of accounting.

FALSE

Copley Chapter 02 #27

28. The government-wide financial statements do not include a Statement of Cash Flows.

TRUE

Copley Chapter 02 #28

29. Prior-year data is required for government-wide financial statements.

FALSE

Copley Chapter 02 #29

30. The governmental fund statements are prepared using the current financial resources measurement focus and accrual basis of accounting.

FALSE

Copley Chapter 02 #30

31. The fiduciary fund financial statements are prepared using the economic financial resources measurement focus and accrual basis of accounting.

TRUE

Copley Chapter 02 #31

32. The General Fund is always a major fund for purposes of financial reporting.

TRUE

Copley Chapter 02 #32

33. Notes to the financial statements must distinguish between the primary government and discretely presented component units.

TRUE

Copley Chapter 02 #33

34. Special-purpose governments engaged in business type activities only are required to prepare both proprietary fund and government-wide financial statements.

FALSE

Copley Chapter 02 #34

35. Only governmental fund statements include separate columns for discretely presented component units.

FALSE

Copley Chapter 02 #35

36. Governmental accounting standards require the statistical section.

FALSE

Copley Chapter 02 #36

37. The Government-wide financial statements include a separate column for fiduciary fund information.

FALSE

Copley Chapter 02 #37

38. Managements Discussion and Analysis (MD&A) in The Comprehensive Annual Financial Report (CAFR) is part of the Financial Section.

TRUE

Copley Chapter 02 #38

39. Government-wide statements are to be prepared using the economic resources measurement focus and accrual basis of accounting.

TRUE

Copley Chapter 02 #39

40. Government-wide statements are to be prepared using the current financial resources measurement focus and modified accrual basis of accounting.

FALSE

Copley Chapter 02 #40

41. Prior-year data may be presented but are not required on government-wide statements.

TRUE

Copley Chapter 02 #41

42. Prior-year data are required to be presented on government-wide statements.

FALSE

Copley Chapter 02 #42

43. Proprietary funds are required to prepare a Statement of Cash Flows from operating activities using the direct method.

TRUE

Copley Chapter 02 #43

44. Government-wide financial statements use the economic resources measurement focus and the accrual basis of accounting.

TRUE

Copley Chapter 02 #44

45. A Comprehensive Annual Financial Report for a state or local governmental unit should contain an introductory section, a financial section, and a statistical section.

TRUE

Copley Chapter 02 #45

46. A government may not selectively designate any fund to be a major fund even if reporting the fund separately would be useful.

FALSE

Copley Chapter 02 #46

47. The Comprehensive Annual Financial Report (CAFR) contains four major sections: introductory, financial, supplementary, and statistical.

FALSE

Copley Chapter 02 #47

48. The fund balance reported in the Governmental Funds Balance Sheet must be reconciled to the total Net Position in the governmental activities column of the government-wide Statements of Net Position.

TRUE

Copley Chapter 02 #48

49. The fund balance reported in the Governmental Funds Balance Sheet must equal the total Net Position in the governmental activities column of the government-wide Statements of Net Position.

FALSE

Copley Chapter 02 #49

50. Fund balance is an account title used only in governmental funds to indicate the excess of assets over liabilities.

TRUE

Copley Chapter 02 #50

51. The Governmental Accounting Standards Board considers the financial reporting entity to include the primary government, but not its component units.

FALSE

Copley Chapter 02 #51

52. Which of the following is true regarding the proprietary fund financial statements?

A. Statements include the Statement of Net Position, Statement of Revenues, Expenses, and Changes in Fund Net Position, and Statement of Cash Flows.

B. Normally, a reconciliation is required between the proprietary fund financial statements and the business-type activities column in the government-wide financial statements.

C. The Statement of Net Position reflects equity as contributed equity and retained earnings.

D. The Statement of Cash Flows may be prepared using either the direct or indirect methods.

Copley Chapter 02 #52

53. Which of the following is true regarding the fiduciary fund financial statements?

A. Fiduciary fund financial statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.

B. Fiduciary fund financial statements include the Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position.

C. Fiduciary fund financial statements reflect equity as reserved and unreserved.

D. Agency funds are reported only on the Statement of Changes in Fiduciary Net Position.

Copley Chapter 02 #53

54. Which of the following is not considered Required Supplementary Information (RSI)?

A. Notes to the financial statements.

B. Budgetary Comparison Schedule.

C. Managements Discussion and Analysis.

D. None of the above; all are considered RSI.

Copley Chapter 02 #54

55. Which of the following is considered Required Supplementary Information (RSI)?

A. Managements Discussion and Analysis.

B. Budgetary Comparison Schedule.

C. Schedule of Risk Management Activities.

D. All of the above are considered RSI.

Copley Chapter 02 #55

56. Governmental-type funds label the excess of assets over liabilities on the balance sheet as:

A. Net Position

B. Net Fund Balance and Liabilities

C. Assets Net of Liabilities

D. Fund Balance

Copley Chapter 02 #56

57. In addition to the government-wide statements, governments are required to prepare fund financial statements for which of the following category of funds?

A. Proprietary funds

B. Governmental type funds

C. Fiduciary funds

D. All of the above

Copley Chapter 02 #57

58. Which of the following is true regarding the Comprehensive Annual Financial Report (CAFR)?

A. The CAFR has three main sections: introductory, financial, and statistical.

B. Required Supplementary Information includes a Budgetary Comparison Schedule for the General Fund and all major special revenue funds that have a legally adopted annual budget (unless a statement is prepared).

C. Both of the above.

D. Neither of the above.

Copley Chapter 02 #58

59. Which of the following is true regarding the government-wide statements?

A. The governmental activities portion of the government-wide statements is prepared using the current financial resources measurement focus and modified accrual basis of accounting.

B. The government-wide statements include a Statement of Net Position and a Statement of Activities.

C. Both of the above.

D. Neither of the above.

Copley Chapter 02 #59

60. Which of the following is true regarding the government-wide Statement of Net Position?

A. Discretely presented component units are included in a separate column (or columns).

B. Net Position is displayed in three categories: net investment in capital assets, reserved, and unreserved.

C. Both of the above.

D. Neither of the above.

Copley Chapter 02 #60

61. Which of the following is true with respect to the General Fund?

A. The General Fund is considered to be a major fund if the combined total of assets, liabilities, revenues and expenses exceeds 10% of the total of all governmental funds.

B. The General Fund is considered to be a major fund when preparing fund basis financial statements if it bears a financial benefit or burden to the primary government.

C. The General Fund is always considered to be a major fund when preparing fund basis financial statements.

D. The General Fund is not reported as part of the CAFR.

Copley Chapter 02 #61

62. With respect to the preparation of fund basis financial statements, governmental funds other than the General Fund are considered to be major when which of the following conditions exist?

A. With respect to fund basis financial statements, governmental funds are considered to be a major fund when total assets, liabilities, revenues, or expenditures of that individual governmental fund constitutes 10% of the total for the governmental fund category.

B. With respect to fund basis financial statements, governmental funds are considered to be a major fund when total assets, liabilities, revenues, or expenditures of that individual governmental or enterprise fund are 5% of the total of the governmental and enterprise categories, combined.

C. Both A and B are required for a governmental fund to be a major fund.

D. Either A or B would fulfill the requirements.

Copley Chapter 02 #62

63. With respect to the preparation of fund basis financial statements, governmental funds other than the General fund are considered to be major when which of the following conditions exist?

A. With respect to fund basis financial statements, governmental funds are considered to be a major fund when total assets, liabilities, revenues, or expenditures of the individual governmental fund under consideration constitutes 25% of the total for the governmental fund category.

B. With respect to fund basis financial statements, governmental funds are considered to be a major fund when total assets, liabilities, revenues, or expenditures of individual governmental or enterprise fund under consideration are 15% of the total of the governmental funds and enterprise categories, combined.

C. Both A and B are required for a governmental fund to be a major fund.

D. Neither A nor B are correct.

Copley Chapter 02 #63

64. Which of the following statements is false?

A. With respect to fund basis financial statements, a government may designate any fund to be a major fund if reporting that fund separately would be useful.

B. When preparing fund basis financial statements, any funds not reported separately are reported by function.

C. When preparing fund basis financial statements, any funds not reported separately are aggregated and reported in a single column under the label non-major funds.

D. In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental, proprietary and fiduciary funds.

Copley Chapter 02 #64

65. Governmental fund statements are prepared using:

A. Economic resources measurement focus and modified accrual basis of accounting.

B. Current financial resources measurement focus and modified accrual basis of accounting.

C. Economic resources measurement focus and accrual basis of accounting.

D. Current financial resources measurement focus and accrual basis of accounting.

Copley Chapter 02 #65

66. The total fund balances presented in Governmental Funds Statements are different from the total Net Position on the government-wide Statement of Net Position. Which of the following is not a reason for this difference?

A. The two statements have different bases of accounting

B. Capital assets used in government operations are not financial resources and therefore are not reported in the funds

C. Some liabilities are not due and payable in the current period and are not reported in fund liabilities

D. Accrued Wages Payable at year end are reported on the statement of Net Position but are not reported in the fund statements

Copley Chapter 02 #66

67. Which of the following is true regarding GASBs definition of the financial reporting entity?

A. The financial reporting entity might include a primary government, component units, joint ventures, or a jointly governed organization.

B. Primary governments may be general-purpose governments (such as states, cities, and counties) or special-purpose governments that have separately elected governing bodies, are legally separate and are fiscally independent of other state or local governments.

C. Blending is used to incorporate component units when those component units are, in substance, part of the primary government.

D. All of the above are true.

Copley Chapter 02 #67

68. Which of the following is true regarding the financial reporting entity of a state or local government?

A. Only a primary government is reported in the government-wide statements.

B. A school district could never be a primary government.

C. Many component units are discretely presented, rather than blended.

D. All of the above are true.

Copley Chapter 02 #68

69. Which of the following is true regarding the composition of the Comprehensive Annual Financial Report (CAFR)?

A. The CAFR is to include both blended and discretely presented component units.

B. The CAFR is required in order to be in conformity with Generally Accepted Accounting Principles (GAAP).

C. The CAFR contains four major sections: introductory, financial, supplementary, and statistical.

D. All of the above are true.

Copley Chapter 02 #69

70. Which of the following is true regarding Managements Discussion and Analysis (MD&A)?

A. MD&A is not considered part of Required Supplementary Information (RSI).

B. MD&A takes the place of footnotes.

C. MD&A should present an analysis of significant variations between the original and final budget.

D. All of the above are true.

Copley Chapter 02 #70

71. Under GASB rules for the financial reporting entity:

A. Component units must be reported in columns (discrete presentation) separate from the funds of a primary government.

B. Counties are component units of the State Government.

C. Blended and discretely presented component units are to be reported in government-wide financial statements but not in fund financial statements.

D. Component units are included if the primary government is financially accountable for their operations.

Copley Chapter 02 #71

72. Which of the following is included in Required Supplementary Information (RSI)?

A. Managements Discussion and Analysis (MD&A).

B. Budgetary Comparison Schedule.

C. The Schedule of Funding Progress and Schedule of Employer Contributions when the government reports a pension trust fund.

D. All of the above.

Copley Chapter 02 #72

73. Which of the following is true regarding the government-wide financial statements?

A. The government-wide financial statements are not required to present prior-year data.

B. The government-wide financial statements include a Statement of Net Position and a Statement of Activities, but not a Statement of Cash Flows.

C. The government-wide financial statements include capital assets, including infrastructure, and reflect depreciation, except for infrastructure using the modified approach.

D. All of the above are true.

Copley Chapter 02 #73

74. Which of the following is true regarding the government-wide Statement of Net Position?

A. The government-wide Statement of Net Position reflects capital assets, net of accumulated depreciation, for both governmental and business-type activities.

B. The government-wide Statement of Net Position must be prepared in a classified format; that is, both assets and liabilities must be separated between current and long-term categories.

C. The government-wide Statement of Net Position includes all resources entrusted to the government; including governmental, proprietary, and fiduciary.

D. A reporting entity (primary government plus component units) total column is required.

Copley Chapter 02 #74

75. Which of the following is true regarding the government-wide Statement of Activities?

A. The government-wide Statement of Activities may reflect expenses either by function (general government, public safety, etc.) or by object or natural classification (salaries, supplies, etc.).

B.

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