FAR Module 9 Flashcards
In complying with GASB #34, a government will present separate fund financial statements for its governmental and proprietary funds. The purpose of this presentation is to:
Separate fund financial statements should be presented for governmental and proprietary funds to report additional and detailed information about the primary government.
Fund financial statements are displayed to report additional and detailed information about the primary government.
Which of the following characteristics of service efforts and accomplishments is the most difficult to report for a governmental entity?
Relevance
Timeliness
Comparability
Consistency
Relevance means the information must bear logical relationship with the needs for its purpose. It must also be reliable. The achievement of this reporting objective is more difficult to establish than it is to demonstrate consistency (adherence to the consistent application of GAAP from year to year) or comparability (the use of GAAP in a manner comparable to other governments). The timeliness objective requires that reports be issued early enough to facilitate timely decisions. The timeliness of reporting is relatively easy to demonstrate.
Which of the following lead(s) to the use of fund accounting by a governmental organization?
Financial control?
Legal Restrictions?
Fund accounting enables service and mission-driven organizations to easily monitor compliance with spending purpose (legal restrictions), spending limits (budget and financial control), and other fiscal accountability objectives.
Which event(s) is(are) supportive of interperiod equity as a financial reporting objective of a governmental unit?
I. A balanced budget is adopted.
II. Residual equity transfers out equals residual equity transfers in.
A balanced budget demonstrates interperiod equity. Interperiod equity is a significant part of accountability on behalf of a governmental entity. It helps users access whether current year revenues are sufficient to pay for the service provided that year and whether future taxpayers will be required to assume burdens for services previously provided. Residual equity transfers is an obsolete term included as a distracter.
Which of the following should be considered part of one of the three primary user groups of the external financial reports of a state government?
- Preparers of state government financial reports.
- Advocate groups within the state.
- Citizens of a neighboring state.
- Internal managers in the executive branch of state government.
External financial reports are used by three primary user groups including citizens, legislative/oversight groups, and investors/creditors.
Advocate groups within the state are logically associated with citizens, citizen groups, etc.
The measurement focus of governmental-type funds is on the determination of:
Current Financial Resources
Financial Position
Management focus for a governmental fund contemplates measurement of the flow of current financial resources and resulting financial position. A fund’s measurement focus identifies what transactions should be recorded and how they should be reported. For governmental funds, the statement of revenues and expenditures should report resources received and consumed during the current period (current financial resources focus). The balance sheet shows available resources and current obligations (financial position focus).
Which of the following fund types of a governmental unit has (have) an economic measurement focus?
General funds
Permanent funds
Neither, both funds are governmental funds that use the financial resources measurement focus.
The governmental fund measurement focus is on the determination of:
Income
Financial Position
Current Financial Resources
Measurement focus for a governmental fund contemplates measurement of the flow of current financial resources and resulting financial position. Income determination is a focus of the proprietary and fiduciary funds.
The economic resources measurement focus and accrual basis of accounting would be most appropriate for which fund a used in the fund financial statements?
Internal Service fund
Permanent fund
General Fund
Capital projects fund
The internal service fund’s fund financial statement would be prepared using an economic resources measurement focus and the accrual basis of accounting.
Which of the following funds of a government unit uses the modified accrual basis of accounting?
Private purpose trust funds
Special revenue funds
Internal service fund
Enterprise funds
Special revenue funds are governmental funds, which use the modified accrual basis of accounting.
The modified accrual basis of accounting should be used for which of the following funds for purposes of fund financial statements?
Proprietary fund
Capital projects fund
Pension trust fund
Enterprise fund
The capital projects fund uses the modified accrual basis of accounting. The capital projects fund is a GRaSPP fund which uses the modified accrual basis of accounting. Proprietary funds (SE) and fiduciary funds (PAPI) use the full accrual basis of accounting.
All of the following funds use the accrual basis of accounting and the economic resources measurement focus, except:
Private Purpose Trust Funds
Investment Trust Funds
Capital Project Funds
Internal Service Funds
Fund structure is memorized using GRaSPP SE PAPI mnemonic that orders funds by basis of accounting and measurement focus and is also grouped by government-wide display as follows:
Governmental: Modified accrual/ Financial resources measurement focus GRaSPP (General, Special Revenue, Debt Service, Capital Projects, and Permanent)
Proprietary: Accrual/ Economic resources measurement focus SE (Internal Service, Enterprise)
Fiduciary: Accrual/ Economic resources measurement focus PAPI (Pension, Agency, Private Purpose, Investment Trust)
Capital projects use modified accural basis of accounting and financial resources measurement focus.
Which of the following funds of a governmental unit recognizes revenues only in the accounting period in which they become available and measurable in their fund financial statements?
General Fund
Enterprise fund
The general fund uses modified accrual basis of accounting which recognizes revenues in the accounting period in which they become available and measurable.
Sig City used the following funds for financial reporting purposes:
General Fund Internal Service Fund Airport Enterprise Fund Pension trust fund Capital Projects fund Special revenue fund Debt service fund
How many of Sig’s funds use the accrual basis of accounting?
Three, Internal Service Fund, Airport Enterprise fund and the Pension trust fund.
The private purpose funds share the same measurement focus and basis of accounting with all of the following funds, except:
Investment trust funds
Permanent Funds
Internal Service Funds
Pension Funds
Permanent funds use the modified accrual basis to achieve a financial resources measurement focus, while the private purpose funds use the accrual basis of accounting to achieve an economic resources measurement focus.
