Fund Based F/S 2

Question 1

First Difference between Fund based Statement of Cash Flows and For profit Cash Flows statement

Answer 1

First, the direct method must be used for operating activities so that the indirect method is not an allowed option.

Question 2

Second Difference between Fund based Statement of Cash Flows and For profit Cash Flows statement

Answer 2

Second, financing activities are divided into two sections (noncapital financing activities and capital financing activities) rather than just one.

Question 3

Third Difference between Fund based Statement of Cash Flows and For profit Cash Flows statement

Answer 3

Third, the investing activities category includes the buying and selling of investments but does not include cash flows from capital assets (which are shown within capital financing activities)

Question 4

For operating activities,

Answer 4

only the direct method is allowed. Thus, cash inflows and outflows of cash that come from operations are reported.

Depreciation and gain on sale are not included

Question 5

Under normal conditions, the construction of a sidewalk by a city

Answer 5

1) is reported in a capital projects fund or,

2) possibly, in the general fund (if the project is fairly small).

Question 6

if the government only facilitates the project but accepts no obligation for it (even as a guarantee), then the transactions are all recorded

Answer 6

in an agency fund (a fiduciary fund) so that no revenues or expenditures appear in the fund-based statements for the governmental funds

Question 7

On fund financial statements,

Answer 7

only current financial resources (monetary assets and claims against those monetary assets) are reported on the balance sheet.

Question 8

Current financial resources are

Answer 8

monetary assets (such as cash, investments in marketable securities, and receivables) available to spend to meet the government’s needs

Question 9

In fund-based financial statements, governmental funds

Answer 9

report the source, use, and amount of current financial resources.

Question 10

Under the consumption method

Answer 10

only the amount of supplies or prepaid expenses that are consumed are reported on fund-based statements as expenditures.

Question 11

Under the purchases method

Answer 11

the entire amount of supplies or prepaid expenses that are purchased are reported on fund-based statements as expenditures.