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Exam 2: Overview of Financial Reporting for State and Local Governments

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Question 1

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Level "A" GAAP for Cook County Hospital, a public hospital, would be established by the:

A) Governmental Accounting Standards Board
B) Financial Accounting Standards Board
C) Hospital Financial Management Association
D) American Institute of Certified Public Accountants

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A

Question 2

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What are Enterprise funds used for?

A) To account for pension and employee benefit funds for which the governmental unit is the trustee
B) To report resources that are legally restricted so only earnings, not principal, may be expended and for purposes to benefit the government and its citizenry
C) To account for most of the basic services provided by the governmental units
D) To account for resources provided primarily through the use of sales and service charges to parties external to the government

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Question 3

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Infrastructure may or may not be capitalized by state and local governmental units.

Fiduciary funds include agency, pension trust, investment trust and private-purpose trust.

What basis of accounting would the Enterprise Fund use?

Fund-basis statements are presented for three categories of government activities: general, proprietary and fiduciary.

Identify the accounting standard setting bodies for U.S. commercial, private not-for-profits, public not-for-profits, state and local governments and the federal government.

Under modified accrual accounting, revenues are recognized when measurable and available to finance expenditures of the current period.

Under GASB Statement 34, capital assets:

The Governmental Accounting Standards Board has been given authority to establish accounting and financial reporting standards for:

Fund accounting exists primarily to provide assurance that resources are used according to legal or donor restrictions.

Which of the following are included in the GASB standards budgetary principle:

A city government collects local option sales taxes legally restricted to pay for the hiring of teachers for hearing impaired school children. Which fund should account for the receipt of the sales taxes?

The GASB Concept Statement on Service Efforts and Accomplishments Reporting encourages state and local governments to include inputs of nonmonetary resources in their financial reporting.

According to GASB standards relating to Budgetary Accounting, budgetary comparisons should be included in the appropriate financial statements or schedules for governmental funds for which an annual budget has been adopted.

Common measurement focus and basis of measurement is an important feature of government-wide financial statements.

According to GASB standards relating to Budgetary Accounting, the accounting system should provide the basis for appropriate budgetary control.

Which of the following characteristics would not define an organization as governmental?

General fixed assets of the government are reported both in the government-wide financial statements and the governmental fund financial statements.

Why did governmental accounting practices develop with a focus on the sources and uses of expendable funds rather than on net income?