Chapter 13 Flashcards
Which of the following must always be presented as a basic financial statement for governmental funds?
A. Statement of revenues, expenditures, and changes in fund balances
B. Statement of revenues, expenditures, and changes in fund balances – budget and actual
C. Both A and B
D. Neither A nor B
Authoritative standards presume that mandated budgetary comparisons will be presented as RSI. Governments have the option of presenting them instead as a basic financial statement. [Correct response = A
Which of the following is a consideration in determining whether to report a given governmental fund as a major fund?
A. Fund type (general fund)
B. Relative size
C. Qualitative factors
D. All of the above
The general fund is automatically classified as a major fund. Otherwise, classification as a major fund may be required based on relative size, or permitted based on qualitative factors. [Correct response = D]
Which of the following governmental funds must be reported as a major fund?
A. Fund 1: 13% of assets/deferred outflows for governmental funds and 6% of the combined total revenues of both governmental and enterprise funds
B. Fund 2: 11% of expenditures for governmental funds and 8% of the combined total expenditures/expense of both governmental and enterprise funds
C. Fund 3: 5% of revenues for governmental funds and 10% of the combined total revenues of both governmental and enterprise funds
D. All of the above
A government can always elect to designate a fund as major; however, if a fund meets the 10% and 5% test, it must be a major fund. The 10 percent test and the 5 percent test must be met for the same grouping of financial statement elements. Fund 2 is the only fund that exceeded 10% and 5% within the same element. [Correct response = B]
How would grant resources most likely be reflected in fund balance?
A. Nonspendable fund balance
B. Restricted fund balance
C. Committed fund balance
D. Assigned fund balance
E. Unassigned fund balance
The use of grant proceeds normally is restricted. [Correct response = B
How would resources earmarked by management most likely be reflected in fund balance?
A. Nonspendable fund balance
B. Restricted fund balance
C. Committed fund balance
D. Assigned fund balance
E. Unassigned fund balance
A self-imposed targeting of resources (earmarking) is an assignment. [Correct response = D
How would foreclosure properties most likely be classified in fund balance?
A. Nonspendable fund balance
B. Restricted fund balance
C. Committed fund balance
D. Assigned fund balance
E. Unassigned fund balance
Foreclosure properties are temporarily in nonspendable form; therefore, they would be classified as nonspendable fund balance, assuming that there was no limitation on how the proceeds of the eventual sale could be spent. [Correct response = A]
How would a portion of a revenue stream that a city council formally set aside for park improvements most likely be classified in fund balance?
A. Nonspendable fund balance
B. Restricted fund balance
C. Committed fund balance
D. Assigned fund balance
E. Unassigned fund balance
One of the features that distinguish a commitment from an assignment is the degree of formality required for the former. [Correct response = C
Which of the following fund types could report negative unassigned fund balance?
A. General fund
B. Special revenue funds
C. Debt service funds
D. All of the above
Since any governmental fund can experience a deficit and deficits are properly reported as unassigned fund balance, any governmental fund can report a negative amount for unassigned fund balance. [Correct response = D]
Which of the following fund types could report positive unassigned fund balance?
A. General fund
B. Special revenue funds
C. Debt service funds
D. All of the above
By definition, resources accounted for in a fund other than the general fund must at least be intended (assigned) for the purpose of that fund. [Correct response = A
What is the minimum level of detail at which expenditures must be reported in the governmental fund statement of revenues, expenditures, and changes in fund balances?
A. Function
B. Program
C. Activity
D. Object
E. Either A or B
At a minimum, expenditures must be presented by either function or program. [Correct response = E]
How should overall negative investment income in the current year be reported?
A. Expenditure
B. Deferred charge
C. Negative revenue
D. Contra-equity account
Investments normally are acquired for the purpose of generating revenue and are evaluated in that context by financial statement users. Accordingly, authoritative standards direct that a negative amount of investment income be treated as a revenue item with a debit balance (“negative revenue “) rather than as an expenditure. [Correct response = C]
Which of the following is an example of a character classification?
A. Police
B. Sanitation
C. Intergovernmental
D. All of the above
The four character classifications for expenditures are (1) current, (2) capital outlay, (3) debt service, and (4) intergovernmental. [Correct response = C
Which of the following may be reported in a budgetary comparison statement presented as a basic financial statement or RSI?
A. Major special revenue fund
B. Nonmajor special revenue fund
C. Major capital projects fund
D. Both A and C
The budgetary comparison that must be presented as either RSI or a basic financial statement may include only the general fund and major special revenue funds. [Correct response = A]
Which of the following is not required in a budgetary comparison statement presented as a basic financial statement or RSI?
A. Original budget
B. Final amended budget
C. Actual (basis of budgeting)
D. Variance (final amended budget v. actual)
There is no requirement to report budgetary variances even though variance reporting is routine in practice. [Correct response = D]
Which of the following is required for the governmental fund balance sheet and statement of revenues, expenditures, and changes in fund balance?
A. Total column
B. Comparative data
C. Reconciliation to the government-wide statement of net position and statement of activities
D. Both A and C
The requirement to report comparative data is limited to MD&A. [Correct response = D
