Fiduciary Funds list the names of the fiduciary funds included in the fund vestment trust fund, pension and other postemployment benefit) trust fund, financial statements. Identify whether each of these isi custodial fundin or private purpose trust fund. Do the financial statements provide evidence as to what basis of accounting these funds use? (Note: If the CAFR has a fiscal year that besan before December 15, 2018, the term agency fund Vores to the Financial Statements. Read the notes to the financial statements se and Local Governmenta rather than custodial fund may be used.) so that you can refer to them as needed in subsequent chapters. What sig nificant accounting policies are discussed in the first note? With regard to revenue recognition, how do the notes define the term available for paying current period obligations? 2-16. Multiple Choice. (LO2-1 through LO2-4) Choose the best answer. 1. Which of the following statements is true regarding the definition of a fund? a. A fund is a fiscal entity that is designed to provide reporting that demonstrates conformance with finance-related legal and contractual provisions. b. A fund is an accounting entity that is designed to enable reporting in conformity with GAAP without being restricted by legal or contractual provisions. c. A fund is a mechanism developed to provide accounting for revenues and expenditures that are subject to certain restrictions separate from revenues and expenditures that are not subject to restrictions. d. A fund exists to assist in carrying on activities and attaining objectives where there are no specific rules or restrictions. 2. Which of the following statements is true regarding the basic financial statements of a state or local government? a. Separate columns should be provided in the government-wide financial statements for governmental activities and business-type activities. b. Governmental fund and proprietary fund financial statements should provide a separate column for each major fund. c. Aggregate information about all nonmajor governmental funds should be reported in a single column of the governmental fund financial state- ments and all nonmajor enterprise funds should be reported in a single column of proprietary fund financial statements. d. All of the above. 3. Which of the following sets of elements are common to both governmental financial statements and for-profit financial statements? a. Assets and net position. b. Deferred outflows of resources and liabilities. c. Assets and liabilities. d. Net position and liabilities. 4. The measurement focus and basis of accounting that should be used for the governmental fund financial statements are Measurement Focus Basis of Accounting a. Current financial resources Modified accrual b. Current financial resources Accrual c. Economic resources Modified accrual d. Economic resources Accrual Accounting for Governmental & Nonprofit Entities, 18th Edition 67 Chapter 2 Protaples of counting Facial porting for State and Local Gover 52 5. Which of the following amounts that are identified at the end of the fiscal year would be classified as a restricted fund balance a Resources the city manager has set aside for a major street repair A federal grant that is to be used for playground equipment c. Significant amounts of inventory. d. Endowment resources that the city must maintain in perpetuity, 6. Separate reporting for major funds is needed because a. Users of government financial statements are usually interested in the details of every fund used by a government h. It is a violation of standards to aggregate funds where the elements of the fund represent at least 5 percent of the corresponding element for all funds of the same type. c. Users of government financial statements need to be able to examine the activities and resources of fiduciary funds. d. Users of government financial statements need to be able to examine funds that represent large dollar amounts of a government's resources and activities. 7. Assets and liabilities of activities for which the government is acting in ei- ther a custodial or trustee capacity for individuals, organizations, or other governments should be reported in a. The fiduciary column of the government-wide financial statements. b. The fiduciary fund financial statements. c. Both government-wide and fiduciary fund statements. d. Neither government-wide nor fiduciary fund statements. 8. Under the modified accrual basis of accounting a. Revenues are recognized at the time an exchange transaction occurs. b. Expenditures are recognized as the cost of an asset expires or is used up in providing government services. c. Revenues are recognized when current financial resources become mea- surable and available to pay current-period obligations. d. Expenses are recognized when an obligation occurs for costs incurred in providing services. 9. Financial information about an internal service fund should be reported in the proprietary fund financial statements and the a. Governmental Activities column of the government-wide financial statements b. Business-type Activities column of the government-wide financial statements. c. Either a or b, depending on whether the internal service fund predomi- nantly serves governmental activities or business-type activities. d. None of the above. 10. A certain city reports the following year-end total assets: General Fund $18,400,000 Library Fund (a special revenue fund) 2,900,000 Debt Service Fund 2,600,000 Total governmental funds 26,300,000 51,250,000 Total governmental and enterprise funds combined Based on this information, which funds should be reported as major funds? a. General Fund only. b. General Fund and Library Fund. General Fund and Debt Service Fund. d. All three funds should be reported as major funds. 11. Which of the following is not an information characteristic that the GASB identifies as important in government financial reports? a. Comparability b. Timeliness c. Reliability d. Conciseness. 12. How should an item of information that helps explain the riskiness of the Investments account reported on the balance sheet be communicated in the financial report? a. Report on the face of the balance sheet. b. Report as a note disclosure. c. Report as required supplementary information. d. Report as other supplementary information. 13. How does the GASB recommend governments report budgetary information? a. As a required financial statement. b. As a note disclosure. c. As required supplementary information. d. As other supplementary information. 14. Where should a deferred inflow of resources be reported on the financial statements? a. The liabilities section on the statement of net position. b. After the liabilities section on the statement of net position. c. After the general revenues on the statement of activities. d. It would be reported as a note disclosure in the financial statements be cause it is deferred 15. Which of the following fund(s) will generally be the only fund(s) that cam report a positive unassigned fund balance? a. General Fund. b. General Fund and special revenue funds. c. All governmental funds. d. Enterprise funds