Appendix 10: Answers to Reinforcement Quiz ñ Section II, Chapter 3
Answers to Reinforcement Quiz ñ Section II, Chapter 3
1.
The government-wide statements and the fund statements have the same
focus. True or false?
Answer: False. Government-wide statements focus on the primary
government and on governmental and business-type activities. Fund
financial statements focus on all funds of the government, including
internal service funds and fiduciary activities.
2.
Describe the types of activities reported in the government-wide financial
statements.
Answer: The government-wide financial statements report on the
governmental activities and business-type activities.
3.
Which of the following is not required on the condensed financial
information in the MD&A?
a. long-term liabilities
b. total expenses
c. cash flows
d. capital contributions
Answer: Condensed information is not required on cash flows (c).
4. Voters pass a special levy two days after the date of the auditorís report.
The government should report the impact in the MD&A. True or false?
Answer: False. The MD&A is supposed to provide information that takes
place up to the date of the auditorís report. The information could,
however, be included in the transmittal letter to the CAFR.
5.
Describe the measurement focus and basis of accounting for the
government-wide financial statements.
Answer: Government-wide financial statements use economic resources
measurement focus and accrual basis of accounting for all activities.
6.
A government purchases a capital asset for $250,000. How should the
capital asset be reported on the government-wide statements?
a. as an expenditure of $250,000 on the statement of activities
b.
as a capital asset of $250,000 on the statement of net position
c.
as an expenditure of $250,000 on the statement of net position
d.
It should not be reported at all.
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AGA Study Guide 2, 2016 Edition

Appendix 10: Answers to Reinforcement Quiz ñ Section II, Chapter 3
Answer: The government should report the capital asset on the statement
of net position (b).
7.
Revenue not received within the availability period is deferred on the
statement of activities. True or false?
Answer: False. Revenue is deferred for lack of availability only on
governmental fund financial statements.
8.
Describe the components of net position on the statement of net position.
Answer: Net assets are reported in three components: invested in capital
assets, net of related debt; restricted; and unrestricted.
9.
A governmentís statement of net position has the following information:
Capital assets $10,500,000
Accumulated depreciation ( 2,700,000)
Long-term debt outstanding 6,800,000
Unspent bond proceeds 1,200,000
What is the amount reported as ìnet investment in capital assets?î
a. $1 million
b. $2.2 million
c. $3.7 million
d. $6.6 million
Answer: The amount reported as capital assets would be $7.8 million net
of depreciation. The amount reported as related debt would be $6.8
million, less unspent proceeds of $1.2 million, which is not included with
unspent bond proceeds, or $5.6 million. Thus, the net investment in
capital assets is $2.2 million (b).
10. Describe the requirements for using the modified approach to
infrastructure.
Answer: To use the modified approach, a government needs an asset
management system that (1) has an up-to-date inventory, (2) performs
condition assessments, and (3) estimates, annually, amounts needed to
maintain and preserve assets based on the established and disclosed
condition level.
11. Which of the following would not be reported as program revenue on the
statement of activities of a local government?
a.
state income taxes distributed to a local government for use in
social service programs
b. fines for speeding
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Appendix 10: Answers to Reinforcement Quiz ñ Section II, Chapter 3
c. building permits
d. property tax levied by the local government earmarked for police
pensions
Answer: Taxes levied by the government are never program revenues
(d). Taxes levied by another government and shared may be program
revenues if they are dedicated to a program. Thus, the income taxes (a)
would be program revenue.
12. A grant that is not restricted for a particular purpose, and is not
reimbursement-based, would be reported as general revenues on the
statement of activities. True or false?
Answer: True. Grants that are not restricted are general revenues.
13. Describe special and extraordinary items.
Answer: Special items are transactions that are either unusual in nature
or infrequent in occurrence and within the control of the management of
the government. Extraordinary items are transactions that are both
unusual in nature and infrequent in occurrence, and may or may not be
within control of management.
14. A government reports the following interfund payables and receivables:
Due to Due from Amount
1. General fund Enterprise 1 ...












































































































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AGA CGFM Study Guide 2: Governmental Accounting, Financial Reporting and Budgeting