Government

Question 1

The orientation of accounting and reporting for all proprietary funds of governmental units is
- Income determination.
- Project.
- Flow of funds.
- Program.

Answer 1

Income determination

Proprietary funds are accounted for essentially as if they were private sector, profit-seeking business enterprises. Therefore, the orientation of these funds is income determination.

Question 2

Which event(s) is(are) supportive of interperiod equity as a financial reporting objective of a governmental unit?

• A balanced budget is adopted.
• Residual equity transfers out equals residual transfers in.

Answer 2

A balanced budget is adopted

Interperiod equity is the idea of using the revenues from one period to pay for the expenditures of that same period and that period only. A balanced budget is a plan for this occurrence. Residual equity transfers are between funds, not between periods.

Question 3

Which of the following is not within the scope of the GASB mission for standard-setting?

• Conceptual framework for accounting and reporting standards
• Goals and objectives of state and local governmental services
• External financial reporting
• Assist users in assessing the level of services that can be provided by governmental entities

Answer 3

Goals and objectives of state and local governmental services

Goals and objectives for governmental programs and services should be established by management, elected officials, and the government’s stakeholders, not the GASB. Governmental accounting and reporting standards are a primary objective for GASB. External financial reporting is another primary objective for governmental accounting and reporting standards established by the GASB. Concepts Statement No. 1 suggests that governmental external financial reporting should enable users to assess the level of services that can be provided by governmental entities.

Question 4

Which of the following can be reported in a capital projects fund?

Bond proceeds for sewer treatment plant upgrades

Committed resources to expand water distribution system

Restricted, committed, or assigned resources for governmental capital outlays

Assigned resources for landfill post-closure care

Answer 4

Restricted, committed, or assigned resources for governmental capital outlays

Restricted, committed, or assigned resources for governmental capital outlays are reported in a capital projects fund. Sewer services, water utilities, and landfills are usually reported in an enterprise fund because these services are funded with user fees. Enterprise fund capital assets are not reported in a capital projects fund.

Question 5

The measurement focus of governmental-type funds is on the determination of

Answer 5

flow of financial resources and financial position

The governmental fund measurement focus is on determination of financial position and changes in financial position, rather than on net income determination. In governmental funds, the primary emphasis is on the flow of financial resources