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Chapter 2 Overview of Financial Reporting for State and Local Governments 1 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.True/False Questions 1.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
Learning Objective: 1
Topic: Overview of the CAFR
Feedback: The CAFR has three major sections; introductory which includes MD&A, financial which includes basic financial statements, RSI other than MD&A, combining and individual fund statements and narrative explanations, and the statistical section.
2.The three major sections of a CAFR are the Introductory, Financial, and Statistical sections.
Answer: True
Learning Objective: 1
Topic: Overview of the CAFR
Feedback: The CAFR has three major sections; introductory, financial and statistical.
3.The introductory and statistical sections of a CAFR are required to be audited.
Answer: False
Learning Objective: 1
Topic: Overview of the CAFR
Feedback: The introductory and statistical sections of a CAFR are not audited.
4.State and local governments are not required to prepare a CAFR.
Answer: True
Learning Objective: 1
Topic: Overview of the CAFR
Feedback: State and local governments are encouraged, but not required, to prepare a CAFR.
5.Combining statements are required whenever a non-major column is used in one of the fund financial statements.
Answer: True
Learning Objective: 1
Essentials of Accounting for Governmental and Not for Profit Organizations 13th Edition Copley Test Bank Visit TestBankDeal.com to get complete for all chapters
Chapter 2 Overview of Financial Reporting for State and Local Governments 2 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Topic: Fund basis statements
Feedback: A complete CAFR presents combining statements to reflect its nonmajor
funds whenever a nonmajor column is used in one of the fund statements.
6.A complete CAFR includes combining financial statements to reflect nonmajor funds.
Answer: True
Learning Objective: 1
Topic: Fund basis statements
Feedback: A complete CAFR presents combining statements to reflect its nonmajor
funds whenever a nonmajor column is used in one of the fund statements.
7.In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental, proprietary and fiduciary funds.
Answer: True
Learning Objective: 1
Topic: Fund basis statements
Feedback: In addition to the government-wide statement, governments are required to
prepare fund-level financial statements within the three categories of funds:
governmental, proprietary and fiduciary.
8.In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental funds only.
Answer: False
Learning Objective: 1
Topic: Fund basis statements
Feedback: In addition to the government-wide statement, governments are required to
prepare fund-level financial statements within the three categories of funds:
governmental, proprietary and fiduciary.
9.The General Fund is not always considered to be a major fund when preparing fund basis financial statements.
Answer: False
Learning Objective: 1
Topic: Reporting by Major Funds
Feedback: In addition to the government-wide statement, governments are required to prepare fund-level financial statements and are required to present separate columns for each major fund. The general fund is considered a major fund for reporting purposes.
Chapter 2 Overview of Financial Reporting for State and Local Governments 3 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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.
Answer: False
Learning Objective: 1
Topic: Reporting by Major Funds
Feedback: Governmental funds, other than the general fund, are considered to be a major fund when both of the following conditions are met: 1) Total assets, liabilities, revenues or expenditures of that individual government fund constitute 10% of the total for the governmental funds category and 2) Total assets, liabilities, revenues or expenditures of that individual government fund are 5% of the total of the governmental and enterprise categories, combined.
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.
Answer: False
Learning Objective: 1
Topic: Reporting by Major Funds
Feedback: A government may designate any fund as a major fund if reporting that fund separately would be useful.
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.
Answer: True
Learning Objective:1
Topic: Reporting by Major Funds
Feedback: The general fund is always a major fund and a fund is considered to be a major fund if certain criteria are met. In addition, governments may designate any other fund to be a major fund if reporting that fund separately would be useful.
13.When preparing fund basis financial statements, any funds not reported separately are aggregated and reported in a single column under the label nonmajor funds.
Answer: True
Learning Objective: 1
Topic: Reporting by Major Funds
Feedback: Any funds not reported separately are aggregated and reported in a single column under the label nonmajor funds. A schedule showing the detail of nonmajor
Chapter 2 Overview of Financial Reporting for State and Local Governments 4 Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.funds is provided in the other supplementary information section.
14.When preparing fund basis financial statements, any funds not reported separately are reported individually by function.
Answer: False
Learning Objective:1
Topic: Reporting by Major Funds
Feedback: Any funds not reported separately are aggregated and reported in a single column under the label nonmajor funds. A schedule showing the detail of nonmajor funds is provided in the other supplementary information section.
- Fiduciary fund statements are prepared using the current financial resources measurement
focus and modified accrual basis of accounting.
Answer: False
Learning Objective: 3
Topic: Fund basis statements
Feedback: Fiduciary funds use the economic resources measurement focus and accrual accounting. Fiduciary funds do not have revenues or expenses, rather they have additions and deductions.
16.Governmental fund statements are prepared using the economic financial resources measurement focus and modified accrual basis of accounting.
Answer: False
Learning Objective: 3
Topic: Fund basis statements
Feedback: Governmental funds are prepared using the economic resources
measurement focus and accrual basis accounting.
17.According to the GASB, a primary government can only be a state or a general-purpose local government, such as a city or county.
Answer: False
Learning Objective: 2
Topic: The governmental reporting entity
Feedback: The primary government can be a state government, a general-purpose
local government such as a city or county, or a special purpose government such as a school district.
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