Section 2, Chapter 3

Question 1

What is GASB Statement 34?

Answer 1

1. ) Added the government wide level of reporting for state and local governments.
2. ) established an additional reporting requirement - MD&I.

Question 2

What does the government wide level of reporting focus on?

Answer 2

the activities of the government - governmental and business type.

Question 3

What is MD&A?

Answer 3

MD&A is required supplemental information that precedes the financial statements.

Question 4

What should be done with interfund transactions in government wide financial statements?

Answer 4

They should be eliminated.

Question 5

Where are internal funds generally included?

Answer 5

With governmental activities.

Question 6

What should the MD&A discuss? (2)

Answer 6

1. ) current year results compared with prior year.

2. ) distinguish between the primary government and component units.

Question 7

What is the primary emphasis for the MD&A?

Answer 7

The primary government

Question 8

What measurement focus are government wide financial statements prepared using?

Answer 8

economic resources measurement focus

Question 9

What basis of accounting are the government wide financial statements prepared using?

Answer 9

the accrual basis of accounting.

Question 10

What formula does the statement of net assets use?

Answer 10

Assets - Liabilities = Net Assets

Question 11

In the statement of net assets, how should assets and liabilities be presented?

Answer 11

in order of their relative liquidity and in two categories; 1) due within one year and due in more than one year.

Question 12

What three components should net assets be presented?

Answer 12

1. ) Invested in capital assets, net of related debt
2. ) Restricted assets
3. ) Unrestricted assets

Question 13

What is the formula for “invested in capital assets, net of related debt?”

Answer 13

Capital assets, net of accumulated depreciation - outstanding debt attributable to the acquisition, construction or improvement of the capital asset.

Question 14

What are restricted assets?

Answer 14

constraints placed on net asset use, either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through enabling legislation or constitutions.

Question 15

What are examples of restricted assets?

Answer 15

1. ) prohibitions against using taxes derived from the sale of gasoline to be used for purposes outside of, or not related to highways.
2. ) Intergovernmental grants

Question 16

When should the categories expendable and non expendable be used?

Answer 16

when endowments or the principal of restricted funds are included in fund balance to distinguish between those that are required to be maintained in perpetuity and those that are not.

Question 17

What is the format for the Statement of Net Activities?

Answer 17

Net Cost Format

Question 18

What is the purpose of the net cost format? (2)

Answer 18

(1) to identify the extent to which a particular function requires financial support from the taxpayers.
(2) to determine the operating results for the fiscal year including the economic cost and net cost of services.

Question 19

Who are the 4 sources of revenue?

Answer 19

1. ) Those who purchase, use or directly benefit from the goods or services.
2. ) Parties who are outside the reporting governments citizens, including other governments.
3. ) Taxes paid by taxpayers
4. ) Financing from the government itself, such as investment earnings.

Question 20

Program revenues are reported in what three categories?

Answer 20

1. ) Charges for Services
2. ) Program specific operating grants and contributions
3. ) Program specific capital grants and contributions

Question 21

When should earnings on endowments or investments from restricted funds be reported as program revenues?

Answer 21

if they are specifically restricted pursuant to an agreement or contract - if not, they are classified as general revenues.

Question 22

What are examples of general revenues?

Answer 22

1.) taxes, 2.) unrestricted grants 3.) fain from sale of assets and 4.) earnings from investments.

Question 23

What are special items?

Answer 23

significant transaction or events that are within the control of management and are either unusual in nature of infrequent in occurrence.

Question 24

How should special items be reported?

Answer 24

separately in the statement after general revenues.

Question 25

What is an example of a special item?

Answer 25

sale of major capital asset or the settlement of major lawsuit

Question 26

What is an extraordinary item?

Answer 26

transactions that are both unusual in nature and infrequent in occurrence.

Question 27

How are extraordinary items reported?

Answer 27

separately after special items

Question 28

What is an example of an extraordinary item?

Answer 28

damage from a hurricane or tornado

Question 29

What is a “near special item”?

Answer 29

either unusual in nature or infrequent in occurrence, but not in control of management.

Question 30

how is a near special item reported?

Answer 30

separately in the appropriate revenue or expense category or disclosed in the notes to financial statements.

Question 31

How are interfund receivables and payables eliminated?

Answer 31

Due from/to amounts among governmental funds would be eliminated and due from/to amounts among enterprise funds would be eliminated.

Question 32

What are the three ways that major component units can be reported?

Answer 32

1. ) separate column of the statement of net assets an statement of activities
2. ) providing combining statements in the basic financial statement after the fund financial statement
3. ) presenting condensed financial statements in the notes to the financial statemetns.