Government Accounting Fund Financial Statements Quiz

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Questions and Answers

Who were the forerunners of the FASB before it was formed in 1973?

The Accounting Principles Board and The Committee on Accounting Procedure (correct)

The Securities and Exchange Commission and The International Accounting Standards Board

The Internal Revenue Service and The Governmental Accounting Standards Board

The Financial Accounting Foundation and The American Institute of Certified Public Accountants

Which body is responsible for establishing Generally Accepted Accounting Principles (GAAP) for state and local governments?

GASB (correct)

FASAB

American Institute of Certified Public Accountants

FASB

Who are considered major external users of financial reports according to the text?

Taxpayers, donors, investors, bond-rating agencies, and grant-providing organizations (correct)

Budgeting departments, management consultants, financial regulators, and business owners

Government employees, non-profit organizations, bond investors, and tax authorities

Stockholders, creditors, board members, and financial analysts

Who are classified as internal users of Government & Non-Profit entity accounting information?

Managers and employees Signup and view all the answers

Which body is responsible for establishing Generally Accepted Accounting Principles (GAAP) for business organizations and nongovernmental not-for-profit organizations?

FASB Signup and view all the answers

Which group of users of federal financial reports has the FASAB identified?

Citizens, Congress, executives, and program managers Signup and view all the answers

Which section of the Comprehensive Annual Financial Report (CAFR) contains the basic financial statements?

Financial section Signup and view all the answers

What is the main purpose of government-wide financial statements?

To present a comprehensive view of the government's financial position and results of operations Signup and view all the answers

What does the Statement of Net Position in government-wide financial statements provide information about?

Government's assets, liabilities, and net position Signup and view all the answers

What is included in the Statement of Activities in government-wide financial statements?

Revenues and expenses of the government entity Signup and view all the answers

In what sections does the FASAB focus its standards according to the text?

Cost accounting, service efforts and accomplishment measures, and financial accounting and reporting Signup and view all the answers

Which financial statement reports the assets, liabilities, and net position of fiduciary funds?

Statement of Fiduciary Net Position Signup and view all the answers

What type of funds are used to account for resources held in a trustee or agency capacity?

Fiduciary Funds Signup and view all the answers

What is the focus of Government fund statements?

Inflows and outflows of specific funds Signup and view all the answers

Which financial statement reports the additions, deductions, investment income, and changes in net position of fiduciary funds?

Statement of Changes in Fiduciary Net Position Signup and view all the answers

Which type of financial statements provide a broader perspective on the overall financial health and results of the government entity as a whole?

Government-wide Financial Statements Signup and view all the answers

Why are long-term obligations and noncurrent assets not reported in governmental funds?

They do not contribute to the current budgetary period obligations Signup and view all the answers

What is the main purpose of Fund Financial Statements in government accounting?

To track specific activities or resources within the government entity Signup and view all the answers

Which type of funds in government accounting are used to account for activities related to general government operations?

Governmental funds Signup and view all the answers

What do the fund financial statements for governmental funds include?

Statement of Revenues, Expenditures, and Changes in Fund Balances Signup and view all the answers

Which type of funds in government accounting are used to account for activities similar to those of private businesses?

Enterprise funds Signup and view all the answers

What does the Statement of Net Position in proprietary funds present?

Net position (equity) of the fund Signup and view all the answers

Which statement shows the fund's assets, liabilities, and fund balance for governmental funds?

Balance Sheet Signup and view all the answers

In the government-wide statement of net assets, where are both modified accrual basis revenues and expenses reported?

Governmental Activities column Signup and view all the answers

According to the modified accrual basis of accounting, when are revenues recorded?

When measurable and available for paying current period obligations Signup and view all the answers

How are expenditures generally recognized under the modified accrual basis of accounting?

When incurred Signup and view all the answers

Why are expenses reported in the governmental fund statement of revenues, expenditures, and changes in fund balances, while expenditures are reported in business-type activities?

To better reflect the outflow of current financial resources Signup and view all the answers

For which type of funds do proprietary fund financial statements present financial information?

Enterprise funds and internal service funds Signup and view all the answers

Why do enterprise funds and internal service funds follow accounting and reporting practices similar to those of business organizations?

Because they operate as self-supporting entities Signup and view all the answers

Study Notes

History and Structure of Accounting Bodies

The Financial Accounting Standards Board (FASB) was preceded by the Accounting Principles Board (APB) and the Committee on Accounting Procedure (CAP).
The Governmental Accounting Standards Board (GASB) establishes Generally Accepted Accounting Principles (GAAP) for state and local governments.
External users of financial reports typically include investors, creditors, regulators, and analysts who rely on financial information for decision-making.

Internal Users and Regulatory Bodies

Internal users of accounting information in Government & Non-Profit entities include management, department heads, and executives who utilize data for operational and strategic purposes.
The FASB sets GAAP for business organizations and nongovernmental not-for-profit organizations.
The Federal Accounting Standards Advisory Board (FASAB) identifies various groups of users for federal financial reports, including Congress, executive agencies, and the general public.

Comprehensive Annual Financial Report (CAFR)

The basic financial statements are found in the financial section of the CAFR.
Government-wide financial statements aim to provide a complete view of the government's overall financial position.
The Statement of Net Position offers insights into an entity's assets, liabilities, and net position within government-wide financial statements.

Government-Wide Financial Statements

The Statement of Activities summarizes revenues, expenses, and changes in net position for the government as a whole.
The FASAB emphasizes standards for core areas including federal financial reporting and the accountability of public funds.

Fiduciary and Proprietary Funds

Fiduciary funds report assets, liabilities, and net position while focusing on resources held in trust or agency capacity.
Governmental fund statements focus on current financial resources and operational budgets.
Financial statement reports for fiduciary funds detail additions, deductions, investment income, and changes in net position.

Fund Financials and Accounting Practices

Government fund financial statements report revenues, expenditures, and fund balance changes, differentiating from business-type activities where expenditures are typically categorized differently.
Proprietary fund financial statements are used for business-like activities within government accounting and emphasize an entity's operational profitability.
Enterprise funds and internal service funds have accounting practices reflecting those of private businesses due to their self-sustaining nature.

Accounting Principles and Revenue Recognition

Long-term obligations and noncurrent assets are excluded from governmental funds to maintain a focus on current resources and liabilities.
Fund Financial Statements serve the purpose of detailing the financial status of various funds within a government entity, reflecting their operational flows.
Under the modified accrual basis, revenues are recorded when measurable and available, while expenditures are recognized when liabilities are incurred, aligning closely with budgetary provisions.

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Description

Test your knowledge on fund financial statements in government accounting, which focus on individual funds or categories of funds within the government entity. Learn about the main types of funds, such as governmental funds, used in government accounting practices.