F9

Question 0

What is the definition of a governmental merger?

Answer 0

Governmental mergers are defined as the combination of legally separate entities without the exchange of significant consideration resulting in the elimination of an entity or entities and either the continuation of a single merged entity or the creation of a new government.

Question 1

What are the basic sections of the external financial reports for governmental entities using the integrated reporting model established by GASB 34?

Answer 1

MD&A(INC RSI) > Govt wide FS & Fund FS reconciled > Notes to the FS > RSI

Question 2

What sections of the external financial reporting model represents the basic financial statement?

Answer 2

Government wide FS / Fund FS / Notes to the FS

Question 3

How are merger transactions measured at the merger date? What is the difference in presentation for assets to be used as compared to be assets held for disposal?

Answer 3

Transactions are measured at their carrying value at the merger date with possible recognition of impairment and no recognition of intangible assets such as goodwill. Assets that are to be used are displayed at their carrying value. Assets that are held for disposal are subject to impairment.

Question 4

For governmental entities what are the detailed external financial reporting requirements?

Answer 4

Reporting government wide statements: Stmnt of net position / activities Reporting governmental fund FS - BS, Stmnt of revenue expenditure and changes in fund balances, reconciliation to the govt wide stmnts. Reporting proprietary fund FS - BS / Stmnt Net Position / stmnt revenue expenses and changes in fund net position statement of cash flows, direct format. Reporting fiduciary fund FS - Stmnt of fiduciary net position stmnt of changes in fiduciary net position. Combining stmnts for major component units - stmnt of net positions / stmnt of activities / notes to the financials - schedule of changes in capital assets / long term liabilities & RSI - MD&A Budgetary comparison schedules and pension and infrastructure info.

Question 5

What is the definition of a governmental acquisition?

Answer 5

Governmental acquisitions are defined as the acquisition of one legally separate entity by another legally seperate entity in exchange for significant consideration, resulting in the continuation of the acquiring government.

Question 6

What is a CAFR? What does it include?

Answer 6

CAFR: Comprehensive Annual Financial Report. Introductory Section - Letter of transmittal, organization chart, list of principal officers. Basic FS & RSI (Gasb 34) MD&A, Govt wide FS, Fund FS, Notes to the financials, RSI, Statistical Section

Question 7

How are acquisition transactions measured?

Answer 7

Transactions are measured at their acquisition value (the price that would be paid for acquiring similar assets) as of the acquisition date except for the following specifically ID transactions which are valued using the acctng principles for state and local govt that are applicable to them. Employment benefit arrangements, landfill closure costs, derivative transactions.

Question 8

What are the minimum disclosure requirements on the govt wide statement of net position?

Answer 8

Primary government - governmental activities, business type activities, total primary government activities. Discreetly presented component units.

Question 9

What is the definition of a transfer of operations?

Answer 9

Transfers of operations are defined as a combination of a governments activities (less than a legal entity) with either an existing government or with a new government.

Question 10

What are some major topics included in MD&A?

Answer 10

Description of the basic financial statements, identity of the primary government and discrete component units, economic conditions and outlook, and major initiatives.

Question 11

How are transfers of operations measured?

Answer 11

Transfer of operations are measured at their carrying value at the transfer date with possible recognition of impairment and no recognition of intangible assets such as goodwill. Assets that are to be used are displayed at their carrying value. Asset that are held for disposal are subject to impairment.

Question 12

Identify the three components of net position displayed on government wide FS

Answer 12

Invested in capital assets (net), Restricted (by category), Unrestricted

Question 13

Define infrastructure assets and describe where they are reported.

Answer 13

Infrastructure assets refer to streets, bridges, gutters, water systems and other assets of the govt. They are reported as assets in the government wide statements at historical cost and depreciated unless certain conditions are met for reporting using the modified approach.

Question 14

What is the appropriate treatment of donated work of art and historical treasures held by a governmental organization?

Answer 14

Governments may elect not to capitalize donated works of art if works are protected and displayed and proceeds from any future sales are going to be reinvested in other works.

Question 15

When are eliminating entries made as part of preparing government wide fs?

Answer 15

Interfund activities between funds that are consolidated within governmental or business type activities reporting categories are eliminated when preparing govt wide fs.

Question 16

List the components of the program revenues in the statement of activities SOC

Answer 16

Service charges / Operating grants & contributions / Capital grants & contributions.

Question 17

State the reporting treatment of internal service funds

Answer 17

Activities resulting from internal service funds are reported in proprietary funds but should be reported in the governmental activities column of the govt wide fs unless the govt enterprise funds are the primary recipient of the internal service fund services.

Question 18

What is the format of the govt wide statement of activites?

Answer 18

govt wide statement of activities is presented in a net cost format defined into revenues separated into program & general / expenses are reduced by program revenues resulting in net (expense) revenue and changes in net position / general revenues, extraordinary items, and special items are reported separately, result is change in net position.

Question 19

What is the threshold for the identification of a major fund?

Answer 19

Total assets and deferred outflows of revenues, liabilities, and deferred inflow of revenues, revenues, or expenditure / expenses of individual asset are at least 10% of the total corresponding total for fund category to which the major fund belongs and at least 5% of the total corresponding total for all govt. and enterprise funds combined.

Question 20

Name some significant potential reconciling items between fund balance accounts displayed on the balance sheet of the governmental funds fs and net position displayed in the government wide bs

Answer 20

Reconciling items may result from differences in measurement focus or basis of accounting (GALS BARE) Governmental fund equity (fund balance) + Assets(noncurrent) - LT Debt + Internal services fund net position. Basis of accounting Accrual differences resulting in receivables or payables for revenue converted fro modeified to full accrual or expenses.

Question 21

Name some significant potential reconciling items between changes in fund balance displayed on the statement of revenue expenditures and changes in fund balance in the governmental fund financial statements and the changes in net position displayed in the government wide statement of activities.

Answer 21

GOES BARE Govt fund changes in fund balance + OFS (Debt proceeeds) Expenditure - Capital outlay (net of depr.) Principal payments on debt service (internal) fund change in net position may need to be added. Basis of accounting / Accrual diff. resulting in revenues or expenses for revenue converted from modified to full accrual (60 day rule) expenditures converted to expenses (accrual of interest expense)

Question 22

The statement of cash flows is prepared for which funds? What are the sections of the statement of cash flows?

Answer 22

A statement of cash flows is prepared for proprietary funds. Cash flow from operating, cash flow from noncapital financing, cash flow from capital and related financing activities, and cash flow from investing activities.

Question 23

List the types of interfund transactions.

Answer 23

Reciprocal interfund activities : Loans, services provided and used. Nonreciprocal interfund activities: transfers, and reimbursements.

Question 24

Define a primary government SELF.

Answer 24

Primary governments are used to present a general purpose gov such as a state, county, city, or another jurisdiction that can stand by it SELF. Seperately, Elected boards, Legally seperate entity, Financially self-sufficient.

Question 25

Define a component unit.

Answer 25

Component units are those governmental or NFP organizations that either do not meet the criteria for a primary govt or are so intertwined with the primary govt that exclusion from the primary govt fs would cause the primary govt fs to be misleading.

Question 26

What two methods are available for reporting component units of a primary government in the primary governments FS?

Answer 26

Blended - Consolidated with the primary government. (rare) Discrete - Shown as a separate column of a component unit

Question 27

Define the criteria for discrete and blended presentations of component units.

Answer 27

Blended - when the component unit is, in substance, the same as the primary govt. A board of the components is substantively the same as that of the primary govt. The component unit serves the primary govt exclusively, or almost excl. The component unit is not a legal entity. Discrete: when the criteria for blended presentation is not met.

Question 28

Identify the basis of accounting for not for profit organizations.

Answer 28

Accrual basis of accounting.

Question 29

Name the primary authoritative source for GAAP for not profit organizations.

Answer 29

Financial Accounting Standards Board

Question 30

Which FS are prepared for nongovernmental not for profit entities?

Answer 30

Statement of financial position, statement of activities, statement of cash flow, and statement of functional expense (required for voluntary health and welfare organizations, optionals but encouraged for all others)

Question 31

Name the classification of net assets.

Answer 31

Permanently Restricted, Unrestricted, and Temporarily restricted.

Question 32

ID four elements in the statement of activities for not for profit organization.

Answer 32

Changes in total net assets
Change in unrestricted net assets
Change in temporarily restricted net assets
Change in peranently restricted net assets.

Question 33

Name the classifications of the statement of cash flows for not for profit

Answer 33

Cash flow from operating, investing, financing.

Question 34

Name the functional classification of expenses commonly used in not for profit organizations

Answer 34

Program expenses, support expenses [fundrasing & management & general expenses]

Question 35

What are the recognition criteria for cash contributions. Unconditional promises Conditional promises and Multiyear pledges.

Answer 35

Cash Contribution: As revenues or gains in the period in which they are recieved, measured at fair value at the date of gift. Unconditional promise(pledges) recorded at its fair value when rec’d. Conditional promises (pledges) recognition occurs when future events occur (condition met) Multi-year pledges: Recorded at net present value at the date the pledge is made with future collections considered temporarily restricted (by time)

Question 36

How are pledges accounted for?

Answer 36

Unconditional promises to contribute in the future (pledges) are reported as restricted support (time restriction) at the present value of the estimated future cash flows using a discount rate commensurate with the risks involved.

Question 37

When are donated services displayed as revenue and expense (or capital improvement) on the financial statements of not for profit organizations? SOME

Answer 37

Specialized skill was req’d to deliver service and it was delivered by individual possesing those skills. Otherwise needed (would have been purchased) Measured easily (the accurate valuation of the services is easy)

Question 38

How are donated materials recorded

Answer 38

Donated materials are recorded as revenue at fair value on date of receipt if fair value can be objectively determined. Contributions of works of arts, historical treasures, etc need not be recognized as revenue if they are protected by the organization, held by the organization as display, and if sold the proceeds of sale are designed for acquisition of other work.

Question 39

What does the term variance power mean in the context of non for profit accounting and reporting?

Answer 39

Variance power defines the extent to which an organization has discretion over the use of the resources it receives. the presence or absence of variance power governs the recognition of asset received as revenue or a liability.

Question 40

In considering transferring assets from a recipient organization to a beneficiary organization when are the assets received recognized as liability by the recipient organizations?

Answer 40

When assets are transferred without variance power so that the recipient organization does not have the unilateral authority to redirect assets to another beneficiary, those transfers are recognized as liabilities.

Question 41

In considering transferring assets from a recipient organization to a beneficiary organization when are the assets received recognition as revenue by recipient organization?

Answer 41

When assets are transferred with variance power, which gives the recipient organizations the unilateral authority to redirect assets to another beneficiary. the transfer is recognized as revenue.

Question 42

How are marketable securities reported?

Answer 42

All debt and those equity securities that have readily determinable fair value are measured at fair value/

Question 43

Where are investment gains and losses reported?

Answer 43

Gains and losses are reported on the statement of activities as increases or decreases in unrestricted net asset unless the use of the investment is restricted by explicit donor stipiulations or law.

Question 44

Is depreciation expense record in the financial statements of a NFP?

Answer 44

YES both depreciation expense and accumulated depreciation.

Question 45

For a university, identify common unrestricted revenues.

Answer 45

Student tuition and fees, at gross, Governmental aid, grants, and contracts *Gifts and private grants *Endowment income *Sales and services of educational departments *Revenue of auxiliary enterprises.

Question 46

If student tuition and fees are displayed at gross amounts what happens to scholarships and tuition waivers?

Answer 46

Scholarships and tuition waivers may be displayed as expenditures or as a contra revenue line item.

Question 47

For a health care entity, ID the revenue accounts.

Answer 47

Patient service revenue, including patient services and other operating revenue. Other operating revenue including tuition from schools, educational programs, donated supplies and equipment, and specific purpose grants. Nonoperating revenues, gains and losses including unrestricted interest and dividend income from investment activities, unrestricted grants, donated services, etc.

Question 48

Describe how patient services revenue is recorded?

Answer 48

Patient service revenue is recorded on the gross basis using established rates. Charity care is not revenue and is netted against. Provisions for contractual adjustments and discounts are than deducted to arrive at net service revenue. The allowance for uncollectible is treated as an expense for the periods in which the services are provided.

Question 49

Describe the treatement of charity care in a health care organization .

Answer 49

Charity care is not recognized as either revenue or expense on the financial statements of a health care organization. Charity care represents services for which the health care organization does not anticipate any cash flows.