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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.
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55.Discuss how despite significant improvements in the quality of government financial reporting over the years there are still serious, high profile public sector financial crises. How does the quality of financial reporting affect the ability to evaluate financial condition? 56.How do the objectives of evaluating financial condition differ between internal managers.
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64.Answer the following questions relating to the provisions of the Single Audit Act of 1984 and 1996 Amendments. (a)What is a single audit? (b)How do you determine if your government must have a single audit? (c)Where would you find authoritative guidance on conducting a single audit? 65.Describe the importance of materiality for auditors and.
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52.A not-for-profit organization that follows FASB standards must display the changes in all classes of net assets on which of the following statements? A.Statement of activities. B.Statement of financial position. C.Statement of cash flows. D.Statement of functional expenses. 53.When a nongovernmental not-for-profit organization spends money for the purpose for which an external donor intended, then.
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Short Answer Questions 48.Identify the following factors that affect financial condition as environmental factors (E) or financial factors (F). FactorE or F 1.Community needs and resources_____________ 2.Disaster risk_____________ 3.Revenues_____________ 4.Intergovernmental constraints_____________ 5.External economic conditions_____________ 6.Expenditures_____________ 7.Debt Structure_____________ 8.Political culture_____________ 9.Unfunded liabilities_____________ 10.Condition of capital plant_____________ 11.Operating position_____________ 49.Match the following financial ratios that are based on comprehensive annual financial report (CAFR) information with the.
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59.Explain the purpose of the account "undistributed change in fair value of investments" used in a cash and investment pool. 60.Describe the types of pension plans most often found in governmental entities and the differences between them. 61.Briefly describe how GASB Statements 67 and 68 compare to prior pension accounting.
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True / False Questions 1.In order for users of financial statements to have the assurance that the statements have been prepared in conformity with accounting and financial reporting standards established by authoritative bodies, and that all material facts have been disclosed, the statements should be accompanied by the report of an.
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11.Expense amounts by natural classification can be determined from the statement of functional expenses, as can the expense amounts for program services and supporting services categories. 12.The FASB requires not-for-profits to prepare a statement of cash flows. 13.Similarity in the characteristics of nongovernmental not-for-profit (NFP) organizations and governmental NFP organizations can make.
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Multiple Choice Questions 25.Which of the following is not a typical reason for evaluating a government's financial condition? A.Prevent financial crises from developing. B.Hold management accountable for the use of tax revenues. C.Determine if the government can continue to offer the current level of services. D.Determine whether residents will receive dividends. 26.Which of the following terms.
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57."Financial statements are virtually useless in evaluating a city's financial condition." Do you agree with this statement? Why or why not? 58.How do credit analysts assist decision makers in evaluating the credit worthiness of a state or local government? 10-1 .
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59.What are the major types of audits and audit engagements described in the Government Accountability Office’s Government Auditing Standards or generally accepted government auditing standards (GAGAS), and how do they differ? 60."An unmodified opinion on the financial statements of a local government means that all statements in the comprehensive annual financial.
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36.Which of the following statements regarding government budgets is not true? A.A budget should be enacted before the fiscal year begins and be integrated with the financial accounting system so that actual results can be compared to budgets at regular intervals. B.The budget’s role is limited to inclusion in internal financial reports.
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Essay Questions 57.What are clarified auditing standards? Do they apply to audits of governments and not-for-profit organizations? 58.Audit objectives set forth by the United States Comptroller General in Government Auditing Standards (GAS or GAGAS) differ from the AICPA view (GAAS) as discussed in Chapter 11. What are some of the differences? 11-1 .
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Multiple Choice Questions 21.Audits of state and local governments may be performed by all of the following except: A.Independent CPAs. B.State audit agencies. C.Federal grantor agencies. D.The Office of Management and Budget (OMB). 22.Governments and not-for-profit entities may be subject to each of the following levels of audit except: A.Requirements under AICPA generally accepted auditing standards. B.Requirements under.
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Multiple Choice Questions 32.Which of the following characteristics of not-for-profit organizations (NFPs) can be used to distinguish a nongovernmental from a governmental NFP? A.Contributions by resource providers who do not expect a return on investment. B.Ability to impose taxes on citizens. C.Absence of ownership interests. D.All of the above characteristics are generally different for nongovernmental.
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56.Explain what is required to develop an effective total quality management (TQM) program for a government. 57.Under federal guidelines, when is a cost considered reasonable? 58.Describe what is meant by the direct costs of a program (for example, a fire prevention program) and why it is important to distinguish direct costs from.
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Short Answer Questions 51.The following are key terms in Chapter 12 that relate to budgeting of government services: A. Efficiency measures B. Effectiveness measures C. Planning-programming-budgeting system D. Zero-based budgeting E. Program budgeting F. Flexible budgeting G. Incremental budgeting H. Budget calendar For each of the following definitions, indicate the key.
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11.Cash solvency is the government's long-run ability to pay all the costs of doing business. 12.Political culture, one of the environmental factors affecting financial condition, includes such factors as form of government and the entity's economic, political, and social history. 13.Fiscal capacity is the government's ongoing ability and willingness to supply the.
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59.The following transactions relate to the City of Middleton, which has a fiscal year end of December 31. The city adopts budgets for the General Fund and the debt service fund.NOTE: for simplicity, and contrary to GASB standards, assume straight-line amortization for this problem. 1. The City of Middleton sells a.
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11.Total quality management (TQM) seeks to continuously improve an organization's ability to meet or exceed customers' demands, and, as such, is useful in a government setting as well as a business setting. 12.Service efforts and accomplishments measures suffer from the same problem as line-item or object-of-expenditures budgeting; that is, focusing only.
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Short Answer Questions 67.The following are key terms in Chapter 13 that relate to accounting for not-for-profit organizations: A. Nonexchange transactions B. Temporarily restricted net assets C. Collections D. Variance power E. Exchange transactions F. Board-designated net assets G. Permanently restricted net assets H. Promise to give For each of the following definitions,.
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59.Identify and define the three broad categories of service efforts and accomplishments (SEA) measures. 60.The finance officer of a small city has heard that certain items of cost may be allowable under federal grants, even though they were not incurred specifically for the grant. To what source could the finance officer.
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Essay Questions 60."Interim financial reports are needed for state and local governments even though external users of financial reports have no need to assess monthly or quarterly performance of the government." Do you agree? Why or why not? 61.What is meant by the term "reporting entity" in accounting for state and.
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56.The following are key terms in Chapter 11 that relate to single audits: A. Risk-based approach B. Single audit C. Questioned cost D. Material weakness E. Oversight agency F. Major programs G. Cognizant agency H. Significant deficiency For each of the following definitions, indicate the key term from the list above that.
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31.Threats to independence include all of the following except: A.Bias threat. B.Familiarity threat. C.Undue influence threat. D.Management representation threat. 32.Typical objectives of a performance audit include: A.Determining whether financial statements fairly present the entity's operational results. B.Judging the appropriateness of an entity's program goals. C.Determining whether financial statements fairly present in conformity with GAAP. D.Assessing effectiveness and results, economy.
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52.Distinguish and describe key financial performance concepts, such as financial position, financial condition, and economic condition. 53.Explain the relationships among environmental factors, organizational factors, and financial factors in determining government financial condition. 54.Describe how financial performance is related to the operating performance of a government entity. 10-1 .
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Multiple Choice Questions 26.Which of the following statements is not consistent with the GASB's "Budgeting, Budgetary Control, and Budgetary Reporting Principle"? A.An annual budget must be adopted using generally accepted accounting principles. B.The accounting system should provide the basis for appropriate budgetary control. C.Budgetary comparisons should be presented for the General Fund and each.
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21.The FASB requires the statement of financial position prepared by a not-for-profit organization to report net assets in these categories: unrestricted, temporarily restricted, net investment in capital assets, and permanently restricted. 22.To be considered a nongovernmental not-for-profit an organization must be tax-exempt. 23.According to the information provided in the textbook, Beta Alpha.
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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.
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59."Benchmarking is a simple method for comparing one government to another." Do you agree or disagree with this statement? Explain. 60.Describe some ratios that can be calculated using the basic financial statements that will help a decision maker assess the financial position of the government. 10-1 .
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True / False Questions 1.According to the guidance of GASB Concepts Statement 3, financial information can be communicated by recognition in the financial statements, disclosure in the notes to the financial statements, presentation as required supplementary information, or presentation as supplementary information. 2.State and local governments should prepare only those financial.
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42.A not-for-profit (NFP) organization acting as a financial intermediary receives a contribution. Under the FASB Codification the NFP would be most likely to recognize the contribution as a liability under which of the following situations? A.The NFP has variance power. B.The NFP is acting as an agent, receiving the contribution on behalf.
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41.Which of the following is not a required component of the audit report for a single audit? A.A report on internal control over financial reporting and compliance with federal statutes, regulations, and the terms and conditions of the federal award. B.An opinion on the completeness of the schedule of expenditures. C.A report on.
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65.Explain why other comprehensive bases of accounting (OCBOA) may be used by a state or local government instead of GASB standards which are generally accepted accounting principles (GAAP). 66.Describe some items requiring adjustments when modified accrual basis accounting information must be converted to accrual basis accounting in preparation of government-wide.
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11.Other comprehensive bases of accounting (OCBOA) are considered generally accepted accounting principles (GAAP) for state and local governments. 12.In reconciling between the governmental fund and government-wide statements, capital assets acquired by a governmental fund are deducted from fund balance—governmental funds to arrive at net position of governmental activities. 13.A discretely.
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Essay Questions 57.If a city has a responsibility for endowed resources, how would city management decide whether to account for the resources in a permanent fund or a trust fund? How does financial reporting of the funds differ? 58.Why do agency funds have no fund equity? What classes of accounts are.
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Short Answer Questions 57.The following are key terms in Chapter 9 that relate to the reporting entity: A. Component unit B. Financial reporting entity C. Financial accountability D. Joint venture E. Other stand-alone government F. Primary government For each of the following definitions, indicate the key term from the list above that.
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11.In auditing compliance with laws and regulations as part of a single audit, the auditor must render an opinion on the specific requirements applicable to each program for which the entity receives federal financial assistance. 12.The introductory paragraph of the auditor's report should identify the financial statements being audited and, in.
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True / False Questions 1.An effective system of monitoring financial condition may permit management to identify unfavorable financial trends in sufficient time to take preventive action to avoid financial distress. 2.A tax watchdog group is an example of an intermediary that represents citizen interests. 3.The key cause of municipal financial crises is the.
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Multiple Choice Questions 26.Which of the following is a primary objective of financial reporting by state and local governments? A.To provide information that can be used for capital allocation decisions made by external investors. B.To report on the legal requirements imposed on the government by its elected officials. C.To provide information.
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True / False Questions 1.Under current accounting and reporting standards nongovernmental, not-for-profit organizations must utilize the fund accounting structure set forth in the AICPA Audit and Accounting Guide Not-for-ProfitEntities. 2.A voluntary health and welfare organization (VHWO) is a type of not-for-profit that depends primarily on charges for services as a source of.
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50.The following are key terms in Chapter 10 that relate to analysis of governmental financial performance: A. Benchmarking B. Budgetary solvency C. Cash solvency D. Economic condition E. Financial condition F. Financial position G. Fiscal capacity H. Long-run solvency I. Service capacity J. Service-level solvency For each of the following definitions,.
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35.Which of the following is a measure of the extent to which the government's business-type activities are self-supporting? A.Unrestricted net position/total revenues. B.Business-type activities revenues/business-type activities expenses. C.Total net position (governmental activities and business-type activities) less total net position at the beginning of the year. D.Total revenues/total expenses. 36.A measure of whether the government lived.
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True / False Questions 1.Budgeting is an important part of a manager's planning and control responsibilities in both public and private organizations. 2.In governments, the budget has always played a role in external financial reports through the required budget-to-actual comparison schedules or statements for those funds that have a legally approved budget. 3.The.
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Essay Questions 53.Are governments required to report their budgets externally? Explain. 54.Explain how strategic planning, budgeting, and performance measurement can be integrated in a government and why this integration is desirable. 55.What budgeting approach requires justification for the inclusion of every activity each year? Briefly describe this method and how it can be.
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63.Describe what the government-wide statements are intended to convey to readers and contrast with the intent of the fund financial statements. 64.Describe the alternative processes for capturing the financial accounting information required for government-wide financial statements. 9-1 .
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63.On January 1, Forrester County is holding investments for Tinsel Town valued at $500,000 in an investment pool, accounted for in an investment trust fund. On January 1, Valley School District invests $1,500,000 in the pool. Earnings on pooled investments for the six months ended June 30 totaling $300,000 were.
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Short Answer Questions 55.The following are key terms in Chapter 11 that relate to auditing of governmental and not-for-profit organizations: A. Attestation engagement B. Generally accepted auditing standards (GAAS) C. Opinion units D. Materiality E. Financial audit F. Generally accepted government auditing standards (GAGAS) G. Performance audits For each of the following.
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