Chapter 17: Accounting for State and Local Governments (Part II)

Chapter 17: Accounting for State and Local Governments (Part II)



1. When a city signs a capital lease, which of the following entries would be made? A. For government-wide financial statements, debit Encumbrances.
B. For fund-based financial statements, debit Encumbrances.
C. For fund-based financial statements, credit Capital Lease Obligation.
D. For government-wide financial statements, credit Capital Lease Obligation.
E. For fund-based financial statements, debit an Asset account.



2. When a city establishes a new landfill, which of the following entries would be made? A. At the time of establishing the landfill, for government-wide financial statements, credit a Liability for the cost of closing the landfill.
B. At the end of each period , for government-wide financial statements, credit a Liability for a pro-rata share of the cost of closing the landfill.
C. At the time of establishing the landfill, for fund-based financial statements, credit a Liability for the cost of closing the landfill.
D. At the end of each period , for fund-based financial statements, credit a Liability for a pro-rata share of the cost of closing the landfill.
E. For government-wide financial statements, no entry is ever made until the cost is actually paid.



3. If Dayglow, a midwestern town, receives a priceless Van Gogh painting for display in the town hall, how should the gift be recorded? A. For government-wide financial statements, a credit is made to a fiduciary trust fund.
B. For fund-based financial statements, a credit is made to a fiduciary trust fund.
C. For government-wide financial statements, a credit is made to a Revenue account.
D. For fund-based financial statements, a credit is made to a Revenue account.
E. Such a donation is never recorded, because it is not considered as an available financial resource.



4. For public colleges and universities, which statement is true? A. For comparison purposes, the financial statements of public colleges and universities should look just like the financial statements of private colleges and universities.
B. Public colleges and universities must prepare and publish, as part of their financial statements, a Management Discussion and Analysis.
C. Public colleges and universities are not required to prepare a Management Discussion and Analysis.
D. Public colleges and universities prepare only fund-based financial statements.
E. Government-Wide Statement of Revenues, Expenditures and Changes in Fund Balance.



5. Which of the following is not a CAFR requirement related to government-wide financial statements and fund-based financial statements? A. Statement of Net Assets
B. Statement of Revenues, Expenditures, and Changes in Fund Balance.
C. Statement of Activities
D. Statement of Cash Flows
E. Statement of Revenues, Expenditures and Changes in Fund Balance.



6. Which item below is one of the criteria used to define a primary governmental unit? A. The unit must be fiscally dependent on a separate governmental unit.
B. The unit must derive the majority of its revenues from its own local tax base.
C. The unit must be fiscally independent of other state and local governments.
D. The unit must not manage and fiduciary funds.
E. The unit must qualify for the modified approach to accounting for depreciation.



7. Which of the following is not required in the CAFR? A. Auditor's Report stating the GAAP was followed in the preparation of the governmental units financial statements
B. General Purpose Financial Statements
C. Combining Statements by Fund Type
D. Individual Fund and Account Group Statements
E. Schedules and Statistical Tables



8. Which of the following is not a section that is included in the Statement of Cash Flows for Proprietary Funds? A. Cash flows from Operating Activities
B. Cash flows from Noncapital Financing Activities
C. Cash flows from Investing Activities
D. Cash flows from Capital and Related Financing Activities
E. Cash flows from External Sources



9. Which of the following items is not required as part of a city's Management Discussion and Analysis? A. A brief discussion of the basic financial statements.
B. An analysis of balances and transactions of individual funds explaining the reasons for significant changes in fund balances or net assets as well as any significant restrictions.
C. A description of significant capital asset and long-term debt activity during the year.
D. An analysis of the adequacy of the current facilities and a listing of all expected costs of replacement over the succeeding 5 years.
E. An analysis of significant variations between original and final budget amounts along with variations between final budget amounts and actual results for the General Fund.

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