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Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-1 Chapter 2 Overview of Financial Reporting for State and Local Governments
True/False Questions
- A Comprehensive Annual Financial Report (CAFR) would include an introductory
section, management's discussion and analysis, basic financial statements, required supplementary information other than MD&A, combining and individual fund statements, narrative explanations, and statistical section.
Answer: True
- The three major sections of a CAFR are the Introductory, Financial, and statistical
sections.
Answer: True
- The introductory and statistical sections of a CAFR are not audited.
Answer: True
- State and local governments are required to prepare a CAFR.
Answer: False
- Combining statements are required whenever a non-major column is used in one of the
fund financial statements.
Answer: True
- A complete CAFR includes combining financial statements to reflect major funds.
Answer: True
- In addition to the government-wide statements, governments are required to prepare fund
financial statements for governmental funds only.
Answer: False
- In addition to the government-wide statements, governments are required to prepare fund
financial statements for governmental, proprietary and fiduciary funds.
Answer: True
Essentials of Accounting for Governmental and Not-for-Profit Organizations 11th Edition Copley Test Bank Visit TestBankDeal.com to get complete for all chapters
Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-2
- The General Fund is always considered to be a major fund when preparing fund basis
financial statements.
Answer: True
- 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.
Answer: False
- 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.
Answer: False
- 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.
Answer: True
- 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.
Answer: True
- When preparing fund basis financial statements, any funds not reported separately are
reported individually by function.
Answer: False
- Fiduciary fund statements are prepared using the current financial resources measurement
focus and modified accrual basis of accounting.
Answer: False
- Governmental fund statements are prepared using the current financial resources
measurement focus and modified accrual basis of accounting.
Answer: True
Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-3
- According to GASB, a primary government can only be a state or a general-purpose local
government, such as a city or county.
Answer: False
- Blending of financial information is done only when component units and the primary
government are so intertwined that they are essentially the same.
Answer: True
- The statistical section of the CAFR contains the combining schedules of non-major funds.
Answer: False
- The government-wide financial statements present the government as a whole, including
component units and excluding fiduciary activities.
Answer: True
- The basic financial statements of a state or local governmental unit include the MD&A,
government-wide statements, fund statements, and the notes.
Answer: False
- Governmental fund financial statements include the Balance Sheet and the Statement of
Revenues, Expenditures, and Changes in Fund Balances.
Answer: True
- Governmental fund financial statements include a Statement of Cash Flows.
Answer: False
- Governmental fund financial statements include columns for the General Fund and all
other “major” governmental funds.
Answer: True
- The total fund balances reported in the total column of the fund basis statements must be
reconciled to the total net assets presented in the governmental activities column of the government-wide Statement of Net Assets
Answer: True
Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-4
- Entities which are determined to be component units of state and local governmental units
must be discretely presented in the financial statements.
Answer: False
- The government-wide financial statements are prepared using the economic resources
measurement focus and accrual basis of accounting.
Answer: True
- The government-wide financial statements include a Statement of Cash Flows.
Answer: False
- Prior-year data is required for government-wide financial statements.
Answer: False
- The governmental fund statements are prepared using the current financial resources
measurement focus and modified accrual basis of accounting.
Answer: True
- The fiduciary fund financial statements are prepared using the current financial resources
measurement focus and modified accrual basis of accounting.
Answer: False
- The General Fund is always a major fund for purposes of financial reporting.
Answer: True
- Notes to the financial statements must distinguish between the primary government and
discretely presented component units.
Answer: True
- Special-purpose governments engaged in business type activities only are required to
prepare both proprietary fund and government-wide financial statements.
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