Ives_SM_ch10 - Chapter 10 End of Chapter Materials...

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Chapter 10 End of Chapter Materials Solutions REVIEW QUESTIONS Q10-1 The basic principles for preparing government-wide financial statements are: a. Information should be reported about the overall government, without showing individual funds or fund types. b. Assets, liabilities, revenues and expenses should be reported using the economic resources measurement focus and accrual basis of accounting for all activities, regardless of the type of funds used to account for them. c. Financial statements should be formatted so as to distinguish between the primary government and its discretely presented component units. For the primary government, the formatting should distinguish between governmental and business-type activities. d. Information about fiduciary activities should be excluded from the statements. Q10-2 Normally, the government-wide statement of net assets will have columns for the primary government’s governmental activities, the primary government’s business-type activities, a total of the two, and a fourth column for the aggregate of the component units. Q10-3 The three components of net assets in the government-wide statement of net assets are: (a) invested in net assets, net of related debt; (b) restricted, and (c) unrestricted. Q10-4 The purpose of a classified statement of net assets is to provide information on the relative liquidity of assets and liabilities. Assets and liabilities are each separated as between those that are current and those that are non-current. Current assets are cash and other assets that the entity expects to convert to cash within a year or to be consumed in operations in a year. Current liabilities are those that the entity expects to liquidate within a year. Q10-5 The three categories of revenues that must be deducted from expenses to report net expenses or revenues for each program or function are a. Charges for services. b. Program-specific operating grants and contributions c. Program-specific capital grants and contributions Q10-6 Interfund activities and balances should be eliminated in government-wide financial statements. When aggregating the governmental-type funds for the government-wide statements, due-to’s and from’s and transfers in and out should be eliminated against each other. The same should occur among the proprietary-type funds. The remaining internal balances (such as transfers from a governmental fund to a proprietary fund) are eliminated against each other in the total columns of the government-wide statements. Q10-7 Internal service funds are eliminated in the government-wide financial statements. Because internal service funds generally provide most of their services to governmental-type activities, the balance sheet accounts of the internal service funds should be aggregated with the balance sheet accounts of the governmental-type activities. Internal service fund “profits or losses” should be eliminated by decreasing or increasing the expenses of the functions billed by the internal service fund. Q10-8
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This note was uploaded on 11/20/2011 for the course ACCOUNTING 2302 taught by Professor Adams during the Spring '11 term at University of Houston.

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Ives_SM_ch10 - Chapter 10 End of Chapter Materials...

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