Problem 5: True or False questions. 1. Basic financial statements consist of government-wide financial statements, the fund financial statements, notes to financial statements, and the combining financial statements of nonmajor funds. 2. When a local government does not report its financial information in a CAFR, the GASB's minimum disclosure requirements for the local government consist of reporting (1) an introductory section, (2) government-wide financial statements, (3) fund financial statements, and (4) notes to the financial statements. 3. Pension trusts for police and firefighters are reported as blended component units of a primary government. 4. If a blended component unit is an enterprise fund, the activities of the enterprise fund are reported in both the government-wide and the fund financial statements. 5. A state has a toll road enterprise fund that is managed by a board appointed by the governor. Toll road fare increases must be approved by the state. In the state's CAFR, the toll road enterprise fund should be reported as a component unit. 6. A special purpose primary government cannot be a component unit of a general-purpose primary government. 7. When a component unit is an integral part of a primary government's financial reporting entity, the financial statements of the component unit should be "blended" with the financial statements of the primary government. 8. An important part of management's discussion and analysis is management's forecast and projections regarding what could occur in the future if certain current unknown, but plausible, events occur. 9. When preparing governmental fund financial statements for a city, the general fund is considered a major fund only if one of the 10%- and 5%-line-item tests is met. 10. Financial statements for fiduciary funds require major fiduciary funds to be reported in separate columns and all nonmajor fiduciary funds to be reported in the aggregate in one column.