ch2.pdf - \r'r'dimillitu im I'luu-I'Jrim-Htul 6 Nmiiri'nlji...

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Unformatted text preview: 10/30/2016 \r'r'dimillitu' im- I'luu-I'Jrim-Htul 6.- Nmiiri'nlji I'iirl'ri'u-n _ g. \_ '\ _ _ Student Edition Home > Chapter 2 > Multiple Choice Qulz Course-wide Content *Student City of Smith... Text Updates and Errata Chapter 2 V Quizzes Multiple Choice Quiz More Resoum Lecture PowerPoints Co nte nts A Multiple Choice Quiz ”ran Onlinu . ' - EarlFl. 'LearnmgCenter Multiple Choice Quiz (See related pages) Results Reporter Out of 20 questions, you answered 14 correctly with a final grade of 70% 14 correct (70%) 6 incorrect (30%) 0 u n an swered (0%) Your Results: The correct answer for each question is indicated by a J . 1 CORRECT Which of the following is not an activity category in which general purpose governments typically engage? A) Fiduciary. V ' B) Contractual. C) Business-type. D) Governmental. Feedback: As explained in this chapter, state and local governments typically engage in governmental, business-type, and fiduciary activities. 2 All of the following are part of the basic financial statements except: INCORRECT V A) Management's discussion and analysis. B) The government-wide statement of net position. C) The statement of revenues, expenditures, and changes in fund balances—governmental funds. ‘ D) All of the above are part of the basic financial statements. Feedback: Management's discussion and analysis is required supplementary information, but it is not part of the basic financial statements. 3 Which of the following is a basic fund financial statement? INCORRECT ' A) Statement of revenues, expenditures, and changes in fund balances. B) Statement of fiduciary net position. C) Statement of cash flows. V D) All of the above are correct statements. Feedback: Choices A, B, and C all identify fund financial statements. Therefore, choice D is the only correct answer. 4 Which of the following financial statements is required at the government-wide level? INCORRECT V A) Statement of activities. 3) Statement of revenues, expenditures, and changes in fund balances. ' C) Statement of cash flows. D) All of the above financial statements are required at the government-wide level. Feedback: As shown on Illustration 2-2 and discussed in this chapter, the two required statemens at the government- wide level are a statement of net position and a statement of activities. 5 CORRECT GASB's first accounting and reporting principle requires that the accounting system used by a state or local governments must make it possible: A) To prepare consolidated modified accrual basis statements for the governmental unit as a whole. B) To present fairly and with full disclosure the funds and activities of the governmental unit in conformity with GAAP. C) To demonstrate compliance with finance-related legal and contractual provisions. V ' D) Both Band C. Feedback: Both Choices B and C are included in the GASB's first accounting and financial reporting principle. 6 CORRECT A fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives, is known as a: A) Public corporation. V ' B) Fund. C) Activity. D) Accounting system. Feedback: This statement is essentially the GASB's definition of a fund, as defined in this chapter. 7 CORRECT Which of the following basic financial statements is most useful in assessing fiscal accountability? A) Statement of activities. 3) Statement of cash flows—proprietary funds. V ' C) Balance sheet—governmental funds. http://highered.mheducation.com/sitesl0078110939/student_view0/chapter2/m ultiple_choice_quiz.htm| 1/4 10/30/2016 Multiple Choice Quiz D) Statement of fiscal accountability. Feedback: The governmental fund statements are intended to assist in assessing a government's fiscal accountability. One of those statements is the balance sheet—governmental funds. Choice D may look like an obvious choice; however, there is no such statement. 8 CORRECT The basis of accounting under which revenues are recognized when measurable and available is the: V ' A) Modified accrual basis of accounting. B) Accrual basis of accounting. C) Cash basis of accounting. D) Modified cash basis of accounting. Feedback: In governmental funds, resource inflows must be measurable and available. Available means collectible within the current period or soon enough thereafter to pay liabilities of the current period. This describes the modified accrual basis of accounting, choice A. 9 CORRECT Depreciation expense for depreciable general capital assets should be reported on the: A) Statement of revenues, expenditures, and changes in fund balances. V ' B) Statement of activities. C) Statement of general capital assets. D) All of the above. Feedback: Depreciation expense for depreciable general capital assets should be reported at the governmenthwide level only, in the statement of activities. Choice C is not a financial statement prepared for external financial reporting. 10 Which of the following fund types focuses on the measurement of current financial resources and flows thereof? CORRECT A) General fund. B) Capital projects fund. C) Permanent fund. V ‘ D) All of the above. Feedback: Choices A, B, and C, along with special revenue funds and debt service funds, com prise the governmental funds category. Governmental funds focus on current financial resources. 1 1 The accrual basis of accounting is used in accounting for financial transactions that affect: CORRECT A) Governmental activities at the government-wide level. B) Proprietary funds. C) Fiduciary funds 1.] ' D) All of the above. Feedback: The accrual basis of accounting is used for all fiduciary and proprietary funds, as well as for both governmental and business-type activities at the government-wide level. Thus, choice D is the correct choice. 12 General capital assets, such as buildings and equipment, would be recorded in the accounts of: CORRECT V ' A) Governmental activities at the government-wide level. B) Capital projects funds. C) Permanent funds. D) All of the above. Feedback: Choices B and C are governmental fund types for whlch capltal outlay expendltures are recorded for capital asset acquisitions, rather than recording the asset. The appropriate capital asset account is debited in the governmental activities journal at the government-wide level, as illustrated in Entry 2b of this chapter. 13 If a capital projects fund borrows $500,000 by issuing a 5-year note payable, how does this transaction affect the accounts of the CORRECT capital projects fund? A) Cash is increased by $500,000. B) Fund balance is increased by $500,000. C) Long-term liabilities are increased by $500,000. V ° D) Both A and B are correct. Feedback: As perverse as this may seem, choice D is the correct answer. This transaction illustrates the fact that a capital projecs fund, a governmental fund type, is concerned only with current financial resources and flows thereof. The $500,000 long-term liability would be reported in the governmental activities column of the government-wide statement of net assets. 14 Which of the following is not a fiduciary fund type? CORRECT A) Private-pu rpose trust fund. B) Investment trust fund. V ' C) Permanent fund. D) Pension trust fund. Feedback: Choice C is the correct answer because a permanent fund is a governmental rather than fiduciary fund type. 15 Financial reporting for internal service funds differs from that for enterprise funds in which of the following ways? CORRECT A) Internal service funds use the accrual basis of accounting. V a B) Internal service fund financial information is generally reported in the governmental activities column of the government- wide financial statements. C) Major fund reporting is used for internal service funds. D) Both B and C are ways in which financial reporting for internal service funds differ from that for enterprise funds. Feedback: Choice B is a correct statement of how financial reporting for internal service funds typically differs from that for enterprise funds. Choice A is incorrect since all proprietary funds use the accrual basis of accounting. Choice C is stated backwards in that major fund reporting applies to enterprise funds but not to internal service funds. http://higheredmheducation.com/sitesl0078110939/student_view0/chapter2/m ultiple_choice_quiz.html 2/4 10/30/2016 Multiple Choice Quiz 16 The establishment of a fiduciary fund is warranted when: INCORRECT ‘ A) Any trust or agency relationship exists. B) The government needs to segregate resources for future construction purposes. V C) A trust or agency relationship exists in which the beneficiary is a private party (individuals, organizations, or other governments). D) All of the above. Feedback: Choice C is correct. For an agency or trust relationship to be reported in a fiduciary fund requires that the beneficiary of the trust or agency he a private party, rather than the public at large or a program of the primary government. 17 Capital assets, including depreciation on those assets, would appropriately be reported in which of the following funds? INCORRECT A) Capital projects. ' B) Enterprise. C) Pension Trust. V D) Both B and c. Feedback: Governmental fund types, of which capital projects is one type, use the current financial resources measurement focus and the modified accrual basis of accounting. Thus, neither capital assets nor depreciation is reported in those funds. All proprietary and fiduciary funds, however, use the economic resources measurement focus and full accrual, similar to commercial accounting. Those fund types report capital assets and depreciation. 18 Financial information for fiduciary funds is reported in which of the following basic financial statements? CORRECT Go vernment—wide Fund Financial Statements Financial Statements A) .Yes N o B) Yes Yes C) No Yes D) No No A) A B) B V ' C) c D) D Feedback: As discussed in this chapter, the resources of fiduciary funds are held for the benefit of private parties and therefore cannot be used for the benefit of the general public or the government's own programs. Consequently, these activities are reported only in the fund financial statements and not in the government-wide financial statements. 19 Which of the following is always reported in a separate column of a governmental fund financial statement? INCORRECT V A) The General Fund. B) Special revenue funds. C) Permanent funds. ' D) All of the above. Feedback: Choice A is correct since the General Fund is always considered a major fund. Choices B and C would be correct only if particular special revenue or permanent funds were treated as major funds. 20 A certain city had several special revenue funds. Fund X had total revenues that exceeded 10 percent of total revenues for all CORRECT governmental funds and exceeded 5 percent of total revenues for governmental and enterprise funds combined. Fund Y had total assets that exceeded 10 percent of total assets for all governmental funds and total revenues that exceeded 5 percent of total revenues for governmental and enterprise funds combined. Based on this information, which of these funds would be classified as a major fund? A) Both funds X and Y. V ' 3) Fund X only. C) Fund Y only. D) Insufficient information to determine which would be a major fund. Feedback: The answer to this question may not be obvious, but the point is worth making. The same element (e.g., assets, liabilities, revenues, expenditures/expenses) must meet both the 10 percent and the 5 percent rule before a fund must be classified as a major fund. Fund Y does not meet this requirement. Management of a governmental unit has discretion, however, to classify any fund as a major fund, even if it does not meet the quantitative criteria. E-mail Your Results Date: Sun Oct 30 2016 13:33:43 GMT-0400 (Eastern Daylight Time) My name: Section ID: E-mail these results to: E-mail address: Format: Me: HTML V My Instructor: HTML V My TA: HTML V Other: HTML V E-mail The Results http://highered.mheducation.com/sitesl0078110939/student_view0/chapter2/m ultiple_choice_quiz.html 3/4 10/30/2016 Multiple Choice Quiz To learn more about the book this website supports, please visit its Information Center. Copyright © 2016 MeGraw-Hill Global Education Holding; LLC. All rights reserved. Any use is subject to the Terms of Use and Privacy Center | R_egort Piracy http://higheredmheducation.com/sitesl0078110939/student_view0/chapter2/m ultiple_choice_quiz.html 4/4 ...
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