MCQ Review 14

Question 1

What is the general capital assets (Government accounting)

Answer 1

-General capital assets are all capital assets not reported in the proprietary funds or the fiduciary funds.

Question 2

How are expenses reported in the government-wide statement of activities?

Answer 2

• At a minimum, direct expenses should be reported for each function.
• Direct expenses are specifically associated with a service, program, or department. Thus, they are clearly identifiable with a given function.
• The net (expense) revenue for each function equals expenses (at a minimum, the direct expenses of the function) minus program revenues. Indirect expenses need not be allocated and included in the determination of net (expense) revenue for each function.

Question 3

What information information is needed to prepare the budgetary comparison schedules for a local government?

Answer 3

• Original budget
• Budgetary comparison schedules (BCSs) are required supplementary information (RSI). They are reported for (1) the general fund and (2) each major special revenue fund with a legally adopted annual budget.
• A BCS includes (1) the original budgets, that is, the first complete appropriated budgets; (2) the final appropriated budgets; and (3) the actual inflows, outflows, and balances stated on the budgetary basis of accounting. A reconciliation of budgetary and GAAP information also should be provided.

Question 4

List ‘other financing sources and uses’ reported in the governmental funds statement of revenues, expenditures, and changes in fund balances

Answer 4

(1) the face amount of long-term debt
(2) issuance premium or discount
(3) some payments to escrow agents for bond refundings
(4) interfund transfers
(5) sales of capital assets

Question 5

When is the equity method NOT required under IFRS?

Answer 5

-Under IFRS, the equity method is not required if the investment is classified as held for sale.

Question 6

Is deferred tax asset valuation allowance required under IFRS?

Answer 6

• NO
• Under IFRS, a deferred tax asset is recognized for most deductible temporary differences and for the carryforward of unused tax losses and credits, but only to the extent it is probable that taxable profit will be available. Thus, no valuation allowance is recognized.

Question 7

Is deferred tax asset valuation allowance required under US GAAP?

Answer 7

• YES
• Under U.S. GAAP, a separate valuation allowance must be recognized

-This credit equals the amount needed to reduce the asset to the amount more likely than not (the probability exceeds 50%) to be realized.

Question 8

What are characteristics of a pension plan?

Answer 8

-Answer (A) is correct.
A pension trust fund reports contributions to pension plans to be held in a fiduciary capacity by a governmental entity

• tracks investments in the fund, and calculates and disburses benefits due to members and beneficiaries.
• Typical kinds of pension plans include single-employer plans, agent multiple-employer plans, and cost-sharing multiple-employer plans.
• Thus, pension trust funds allow more than one employer to participate in a single pension plan.

Question 9

Under SFAC 8, the ability, through consensus among measurers, to ensure that information represents what it purports to represent is an example of the concept of

Answer 9

-Verifiability

Question 10

Who has the original authority to set accounting standards for publicly traded companies in the U.S.?

Answer 10

• The Securities and Exchange Commission (SEC).
• The SEC establishes rules for financial reporting by publicly traded companies (called issuers) in the United States.
• The SEC has in turn delegated the authority for detailed rule making to the Financial Accounting Standards Board (FASB).

Question 11

According to IFRS, when asset(s) must not be depreciated?

Answer 11

• A noncurrent asset is not depreciated in the period when it is classified as held for sale
• Also, investment property that is accounted for in accordance with the fair value model is not depreciated.