TrueFalse Questions - Governments True/False Questions 1. A Comprehen...

Chapter 2 Overview of Financial Reporting for State and Local Governments

1 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 required to be audited.

Answer: False

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

Answer: True

• 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, proprietary and fiduciary funds.

Answer: True

• In addition to the government-wide statements, governments are required to prepare fund

financial statements for governmental funds only.

Answer: False

• The General Fund is not always considered to be a major fund when preparing fund basis

financial statements.Essentials of Accounting for Governmental and Not-for-Profit Organizations 12th Edition Copley Test Bank Visit TestBankDeal.com to get complete for all chapters

Chapter 2 Overview of Financial Reporting for State and Local Governments

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Answer: False

• 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 economic financial resources

measurement focus and modified accrual basis of accounting.

Answer: False

• According to GASB, a primary government can only be a state or a general-purpose local

government, such as a city or county.

Chapter 2 Overview of Financial Reporting for State and Local Governments

3

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 including fiduciary activities.

Answer: False

• 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-type fund financial statements include the Balance Sheet and the Statement

of Revenues, Expenditures, Changes in Fund Balances, and a Statement of Cash Flows.

Answer: False

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

Answer: True

• 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 Position presented in the governmental activities column of the government-wide Statement of Net Position

Answer: True

• Entities which are determined to be component units of state and local governmental units

must be discretely presented in the financial statements.

Chapter 2 Overview of Financial Reporting for State and Local Governments

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Answer: False

• The government-wide financial statements are prepared using the current resources

measurement focus and accrual basis of accounting.

Answer: False

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

Answer: True

• 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 accrual basis of accounting.

Answer: False

• The fiduciary fund financial statements are prepared using the economic financial

resources measurement focus and accrual basis of accounting.

Answer: True

• 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.

Answer: False

• Only governmental fund statements include separate columns for discretely presented

component units.