FAR 71 - Annual Financial Report and Financial Reporting Summary Flashcards Preview

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Flashcards in FAR 71 - Annual Financial Report and Financial Reporting Summary Deck (4):
1

The Excel City School District has a separate elected governing body that administers the public school system. The district's budget must be approved by the city council of Excel City. The school district's financial activity should be reported in the City's financial statements by:
A. Discrete presentation.
B. Blending.
C. Footnote.
D. Not at all.

A. The school district is financially accountable to the city and, therefore, is a component of the city. Component units should be discretely presented in the city's financial statements unless its governing body is substantially the same as the governing body of the primary government, if the component unit provides services almost entirely to the primary government. Since neither exception is met in this case, the school should be discretely presented.

2

For general purpose external financial reporting, discrete component unit information:
A. Is not presented.
B. Is included in the government-wide statements only.
C. Is included in the fund financial statements only.
D. Is included in both the government-wide and the fund financial statements.

B. Discretely presented component units are presented in the Government-Wide Financial Statements only and not in the fund-level statements.

3

If a city government is the primary reporting entity, which of the following is an acceptable method to present component units in its combined financial statements?
A. Consolidation.
B. Cost method.
C. Discrete presentation.
D. Government-wide presentation.

C. Two approaches are used for component units: (1) discrete presentation in a separate column of the Government-Wide Financial Statements and (2) blended with the primary government.

4

T/F: An "other entity" is a component unit if it is fiscally dependent on the primary government, its board is appointed by the primary government, and either the primary government can impose its will on the entity, or significant financial burdens or benefits can be shifted from one entity to the other, or the primary government's financial statements would be misleading without the inclusion of the other entity.

True

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