31) Which of the following is identified by the GASB as the “cornerstone” of all financial
reporting in government?
A) Decision usefulness.
B) Stewardship.
C) Accountability.
D) Interperiod equity.
32) Which of the following organizations issue standards that focus on both internal and external
financial reporting?
A) Federal Accounting Standards Advisory Board.
B) Governmental Accounting Standards Board.
C) Financial Accounting Standards Board.
D) American Institute of CPAs.
33) Which of the following is identified by the FASAB as the foundation for federal financial
reporting?
A) Decision usefulness.
B) Accountability.
C) Understandability.
D) Budget integrity.
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34) Which of the following is not an objective of financial reporting by state and local
governments?
A) To assist users in assessing the adequacy of systems and controls.
B) To assist users in assessing financial condition and results of operations.
C) To assist financial report users in comparing actual financial results with the legally adopted
budget.
D) To assist in determining compliance with finance-related laws, rules, and regulations.
35) Which of the following groups is considered a primary user of a state or local government’s
general-purpose external financial statements?
A) Citizens.
B) Managers and administrators.
C) Employees.
D) Special interest groups.
36) One of the minimum requirements for general purpose external financial reporting by
governments is
A) Management’s discussion and analysis (MD&A).
B) Transmittal letter.
C) Combining and individual fund statements.
D) Statistical information.
37) A comprehensive annual financial report (CAFR) prepared in conformity with the GASB
recommendations should include which of the following sections?
A) Letter of transmittal, management’s discussion and analysis (MD&A), and financial.
B) Introductory, financial, and statistical.
C) Introductory, MD&A, and financial.
D) Letter of transmittal, financial, and supplementary.
38) Which of the following would be included in a properly prepared comprehensive annual
financial report (CAFR), but not in the minimum requirements for general purpose financial
reporting specified by GASB standards?
A) Management’s discussion and analysis (MD&A).
B) Government-wide financial statements.
C) Notes to the financial statements.
D) Combining and individual fund financial statements.
39) A statistical section should be included in
A) A comprehensive annual financial report (CAFR).
B) The basic financial statements.
C) The notes to the financial statements.
D) Required supplementary information, other than MD&A.
40) Which of the following would typically not be included in the introductory section of a
comprehensive annual financial report?
A) Title and contents page.
B) Letter of transmittal.
C) A description of the government.
D) Summary of the government’s current financial position and results of financial activities.
41) The section of the comprehensive annual financial report that presents tables and charts
showing social and economic data in addition to financial trends, fiscal capacity, and operating
information of the government is the:
A) Introductory section.
B) Management’s discussion and analysis section.
C) Statistical section.
D) Financial section.
42) Which of the following should be included in the financial section of a comprehensive annual
financial report?
A) Transmittal letter.
B) The basic financial statements, including notes thereto.
C) Tables and charts showing demographic and economic data.
D) A description of the government.
43) On what do the government-wide financial statements report?
A) Operational accountability.
B) Fiscal accountability.
C) The cost of government services.
D) Budgetary compliance.
44) Which of the following standard-setting bodies requires a management’s discussion and
analysis as a part of the financial report?
A) GASB.
B) FASB.
C) FASAB.
D) Both GASB and FASAB.
45) On what should the governmental fund financial statements report?
A) Net position and results of financial operations of the government as a whole.
B) Fiscal accountability.
C) Operational accountability.
D) Cost of government services.
46) Which of the following sections is not considered a part of a federal agency’s performance and
accountability report?
A) Basic financial statements.
B) Annual performance report.
C) Statistical section.
D) Management’s discussion and analysis.
47) Which of the following statements is prepared by all not-for-profit organizations?
A) Statement of financial position.
B) Statement of changes in net position.
C) Statement of revenues, expenses, and changes in net position.
D) Both Statement of financial position and Statement of changes in net position.
48) Recognizing revenues when measurable and available for paying current obligations and
expenditures when incurred describes which basis of accounting?
A) Accrual.
B) Modified accrual.
C) Modified cash.
D) Budgetary.