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ACCT 410 QUIZ 1 # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Page | 1 NAME_______________________ QUESTION The MD& A itself is RSI, which means that it is subject to limited procedures conducted by the auditor. The most significant change in GASB Statement 34 was the addition of two government wide financial statements - a statement of net assets and a statement of activities that cover the entire government using full accrual basis information. The government wide financial statements are required to report amounts for each of three classes of net assets; permanently restricted, temporarily restricted, and unrestricted, and be displayed in a statement of financial position and that the amounts of change in each of those classes of net assets be displayed in a statement of activities. All government funds use accrual basis of accounting. Modified accrual funds include the Special Revenue Fund and the accrual funds include the Debt Service Fund. Grants and property taxes are generally accrued in funds. The state collects a gasoline tax that must be used to support highway construction and maintenance. The gasoline tax revenue should be accounted for in the Internal Service fund. For government funds, increases in spendable resources are reported as revenues or other financing sources and decreases in spendable resources are reported as expenditures or other financing resources. When a government fund pays $100,000 to a contractor after purchasing a building, the fund records the debit as Expenditures-capital projects. However a proprietary fund records a debit to Buildings. Generally speaking, liabilities are not recognized in government fund statements unless they occur within 120 days of the year end. Government wide financial statements include three basic financial statements, a statement of net assets, a statement of activities, and an income statement. The statement of net assets represents assets plus liabilities or fund balance. GASB does not require the entity to report the non-spendable fund balance. In measuring transactions under modified accrual accounting, revenues are recognized in the period they are available to spend and costs are recorded in the period that the obligation to pay them ends. An open order to purchase an asset or service is called an encumbrance. There are six major sections to the CAFR per GASB 34. GASB Statement 34 required all funds that were of the same type to be totaled and reported in a single column. When taxes are levied to finance a subsequent period are collected in the current period, the amount collected should be recorded as unearned revenue. Within governmental funds, equity is reported as fund balance; however proprietary and fiduciary fund equity is reported as net assets. Funds received from the proceeds of bond issues and operating transfers to other funds are considered other financing sources and are not considered revenue. T/F