30) Combining financial statements for nonmajor funds of a government should be included:
A) In the basic financial statements.
B) In the notes to the financial statements.
C) As a part of the financial section of the comprehensive annual financial report (CAFR).
D) As part of the statistical section of the comprehensive annual financial report (CAFR).
31) Which of the following would not be included within the financial section of the
comprehensive annual financial report (CAFR)?
A) Letter of transmittal.
B) Management’s discussion and analysis (MD&A).
C) Independent auditor’s report.
D) Required supplementary information (RSI).
32) Which of the following would not be provided by management’s discussion and analysis
(MD&A)?
A) A narrative explanation of the contents of the CAFR.
B) A description of the government’s financial condition.
C) A forecast of revenues and expenditures for the next three fiscal years.
D) A discussion of economic factors and the budget and tax rates approved for the next year.
33) Which of the following is a required program revenue category in the government-wide
statement of activities?
A) Special assessments.
B) Operating grants and contributions.
C) Sales taxes.
D) Transfers.
34) Which of the following would increase the governmental activities balance in Net
Position—Net Investment in Capital Assets?
A) Use of tax revenues to acquire a police department building.
B) Issuance of long-term debt to be used to acquire equipment for the police department.
C) A gift of land to the city restricted by the donor to be used by the city airport, which is
accounted for as an enterprise fund.
D) Recording annual depreciation on capital assets.
35) Which of the following is evidence of fiscal independence for the purpose of considering
whether one legally separate organization is a component unit of another?
A) The potential component unit is precluded from issuing long-term debt.
B) The potential component unit raises its own taxes without the approval of the primary
government.
C) The potential component unit names its board of directors without the approval of the primary
government.
D) The potential component unit sets user charges with the approval of the primary government.
36) What constitutes the basic financial statements of a government?
A) Financial section of the comprehensive annual financial report (CAFR).
B) Government-wide financial statements plus notes.
C) Government-wide financial statements plus fund financial statements plus notes.
D) Government-wide financial statements plus fund financial statements plus notes plus required
supplementary information (RSI).
37) Which of the following actions is not required to convert data from the governmental fund
financial statements to enable preparation of the government-wide financial statements?
A) Adding annual depreciation expense proportionately to functional expense categories.
B) Eliminating interfund payables and receivables between governmental funds.
C) Aggregating fund information.
D) Eliminating receivables and payables between governmental and enterprise funds.
38) Under GASB standards, if a government only has six governmental funds and two enterprise
funds how many basic financial statements would it prepare?
A) Five.
B) Six.
C) Seven.
D) Nine.
39) Which of the following is one of the three sections of a comprehensive annual financial report?
A) Statistical section.
B) Single audit section.
C) Supplementary section.
D) Investment section.
40) Which of the following statements or schedules is most likely to be prepared by a government
as an interim financial report?
A) A government-wide statement of activities.
B) A governmental funds balance sheet.
C) A schedule of budgeted and actual expenditures.
D) A schedule of cash flows for governmental funds.
41) Which of the following are government-wide financial statements required by GASB
standards?
A) Statement of net position and statement of cash flows.
B) Statement of net position, statement of activities, and statement of cash flows.
C) Statement of net position and statement of activities.
D) Statement of activities and statement of cash flows.
42) Where should infrastructure assets and long-term liabilities issued to finance infrastructure be
reported?
A) Letter of transmittal.
B) Fund financial statements.
C) Management’s discussion and analysis.
D) Government-wide financial statements.
43) Under GASB standards, where are nonmajor funds reported?
A) In the management’s discussion and analysis preceding the financial statements.
B) In aggregate amounts in a single column in the fund financial statements.
C) In a note disclosure following the financial statements.
D) In the government-wide financial statements.
44) GASB standards require that governmental fund financial statements include which of the
following?
A) Balance sheet.
B) Statement of activities.
C) Statement of cash flows.
D) Both Balance sheet and Statement of activities.
45) Balsam City’s library board is appointed by the city council, which has agreed to subsidize the
operating costs of the library at a material amount to be determined each year. In addition, the city
is paying debt service on general obligation bonds issued to construct the library. Based on
generally accepted accounting principles (GAAP) criteria for defining the reporting entity:
A) The library is a component unit.
B) The library is a special purpose government.
C) The library is a joint venture.
D) The library is a jointly governed organization.
46) The comprehensive annual financial report (CAFR) of a government should contain a
statement of revenues, expenses, and changes in net position for:
A) Both proprietary and governmental funds.
B) Governmental but not proprietary funds.
C) Proprietary but not governmental funds.
D) Both proprietary and fiduciary funds.
47) Which of the following items are typically reported differently between the governmental fund
statements and the Governmental Activities column of the government-wide statements?
A) Capital outlays.
B) Cash collected on property taxes receivable.
C) Accounts payable and other accrued expenses.
D) Inventories.
48) Which of the following asset amounts would be classified as restricted fund balance on the
governmental funds balance sheet?
A) Cash related to a federal grant for the Public Works department.
B) Supplies inventory in the General Fund.
C) Cash in the debt service fund that the city has set aside to pay a long-term note.
D) A cash contribution that must be maintained in perpetuity.
49) Some governments provide to their citizens highly condensed financial information, budget
summaries, and narrative descriptions. This report is called a(an)
A) Comprehensive annual financial report.
B) Basic financial statements.
C) Required supplementary information.
D) Popular report.
50) In reconciling the net change in fund balances to the change in net position of governmental
activities which of the following would be added to the change in net position of governmental
activities?
A) Issuance of long-term debt.
B) Construction of capital assets.
C) Accrual of interest expense.
D) Depreciation expense.
51) Which of the following statements concerning the reporting of internal balances by a
government at the end of its fiscal year is true?
A) The internal balances amounts reported in the balance sheet columns represent activity among
governmental funds.
B) The internal balances amounts reported in the statement of net position columns represent
activity between governmental activities and business-type activities.
C) The internal balances amounts are reported in both the asset and liability sections on the
statement of net position.
D) The internal balances amounts reported represent the difference between interfund transfers in
and interfund transfers out.
52) Which of the following would decrease the governmental activities balance in Net
Position—Net Investment in Capital Assets?
A) An increase in accumulated depreciation.
B) Acquisition of a capital lease.
C) Sale of a fully depreciated capital asset.
D) Receipt of a capital grant that has not been expended at fiscal year-end.
53) In reconciling the total fund balances of the governmental funds to the net position of
governmental activities, which of the following would be added to the net position of
governmental activities?
A) Accumulated depreciation.
B) Premium on bonds payable.
C) Construction work in progress.
D) Bond interest payable.