Section 2: Chapter 3

Question 1

What guidance required a new level of reporting for state and local governments to add the government-wide level?

Answer 1

GASB statement 34

Question 2

What guidance established requirements for management’s discussion and analysis (MD&A) for State and Local government?

Answer 2

GASB statement 34

Question 3

True or False: MD&A is a type of RSI, even though it is reported separately than RSI.

Answer 3

True

Question 4

What is eliminated from the government-wide financial statements?

Answer 4

Inter-fund transactions and Fiduciary funds.

Question 5

A government purchases vehicles for its fire department. What are the JEs for the purchase for both current financial resources and economic resources measurement focuses?

Answer 5

Current financial resources:
(DR) Capital Outlay - vehicles
(CR) Cash

Economic resources:
(DR) Capital Asset - vehicles
(CR) Cash

Question 6

A government purchases vehicles for its fire department paid out of the General fund. What is the adjusting entry to reconcile the fund statements to the government-wide statements?

Answer 6

(DR) Capital Asset - Vehicles

(CR) Capital Outlay - vehicles

Question 7

A government borrows $500,000 to be repaid equally over 10 years, beginning the following fiscal year. What are the JEs for the purchase for both current financial resources and economic resources measurement focuses?

Answer 7

Current financial resources:
(DR) Cash
(CR) Other financing sources - bonds

Economic resources:
(DR) Cash
(CR) Long term debt

Question 8

A government borrows $500,000 to be repaid equally over 10 years, beginning the following fiscal year. What is the adjusting entry to reconcile the fund statements to the government-wide statements?

Answer 8

(DR) Other financing sources- bonds

(CR) Long term debt

Question 9

The property tax levy of a government is $1 million for the fiscal year (and is assumed to be 100 percent collectible). By the end of the fiscal year, the government has received $900,000. The government receives an additional $50,000 during the next two months. The remaining $50,000 is received in subsequent months. What is/are the JEs for recording the transaction under the accrual basis of accounting?

Answer 9

(DR) Property tax receivable $1M
(CR) Property tax revenue $1M

(DR) Cash $900,000
(CR) Property tax receivable $900,000

Question 10

The property tax levy of a government is $1 million for the fiscal year (and is assumed to be 100 percent collectible). By the end of the fiscal year, the government has received $900,000. The government receives an additional $50,000 during the next two months. The remaining $50,000 is received in subsequent months. What is/are the JEs for recording the transaction under the modified accrual basis of accounting?

Answer 10

(DR) Property tax receivable $1M
(CR) Property tax revenue $1M

(DR) Cash $900,000
(CR) Property tax receivable $900,000

(DR) Cash $50,000
(CR) Property tax receivable $50,000

(DR) Property tax revenue $50,000
(CR) Deferred property tax revenue $50,000

Question 11

The property tax levy of a government is $1 million for the fiscal year (and is assumed to be 100 percent collectible). By the end of the fiscal year, the government has received $900,000. The government receives an additional $50,000 during the next two months. The remaining $50,000 is received in subsequent months. What is the adjusting entry to reconcile the fund statements to the government-wide statements?

Answer 11

(DR) Deferred property tax revenue

(CR) Property tax revenue

Question 12

To prepare government-wide statements from fund statements, if a government reported total expenditures of $500,000 for various capital outlays, what JE would be recorded?

Answer 12

(DR) Capital assets $500,000

(CR) Capital outlay $500,000

Question 13

What is the JE to post beginning balance for capital assets when preparing government-wide statements from fund statements?

Answer 13

(DR) Capital assets net of depreciation

(CR) Net position

Question 14

What is the JE to post beginning balance for long term liabilities when preparing government-wide statements from fund statements?

Answer 14

(DR) Net position

(CR) Long term debt

Question 15

What is the format / equation of the Statement of Net Position?

Answer 15

assets +
deferred outflows of resources - 
liabilities - 
deferred inflows of resources = 
net position

Question 16

Assets, liabilities and net position of the primary government are reported using two columns - which types of activities comprise the columns?

Answer 16

Governmental activities and business-type activities.

Question 17

A government has a long-term debt liability of $10 million. The amount due in the next fiscal year is $500,000. How would the line items would be reported on the statement of net position?

Answer 17

Long term debt - current $500,000

Long term debt - noncurrent $9,500,000

Question 18

What are the three components of Net Position?

Answer 18

• net investment in capital assets;
• restricted assets; and
• unrestricted assets (or deficit).

Question 19

If a government has capital assets net of accumulated depreciation reported as $120 million and there is $60 million in long-term debt outstanding associated with those assets, how would it be presented?

Answer 19

Assets
Capital assets net of depreciation $120M

Liabilities
Long-term debt $60M

Net Position
Net investment in capital assets $60M

Question 20

What are the criteria for using a modified approach for reporting infrastructure assets?

Answer 20

The government needs an asset management system that meets the following requirements:
• It has an up-to-date inventory of the infrastructure.
• It performs condition assessments using a measurement scale.
• It estimates, annually, the amounts needed to maintain and preserve the assets based on the condition level it has established and disclosed.

Also, condition assessments have to be performed at least every three years for all infrastructure assets and the results of the three most recent assessments have to provide reasonable assurance that the assets are being preserved at, or above, the condition level that has been established.

Question 21

What are Preservation costs?

Answer 21

Costs that extend the life of infrastructure beyond its previously established useful life.