Question

Multiple Choice Questions
Identify the best answer for each of the following:
1. The statistical section of a comprehensive annual financial report (CAFR)
a. Is required for fair presentation of a government’s financial position and operating results.
b. Is required in the CAFR.
c. Is composed solely of 10-year historical trend information.
d. Is an optional section of the CAFR.

2. A county transit authority is fiscally dependent upon the county because the transit authority—a legally separate entity—cannot set its fares without the substantive approval of the county commission. Given this scenario, in which of the following situations would the transit authority be deemed financially accountable to and thus a component unit of the county?
1. The appointment authority criterion, but no other additional criteria, are met.
2. The appointment authority and the ability to impose its will criteria are met.
3. The authority has a separately elected governing board, but the financial benefit or burden criteria are met.
a. Situation 1 only
b. Situation 2 only
c. Situation 3 only
d. Two of the situations

3. In which of the following circumstances would a potential component unit always be fiscally dependent upon a city?
a. The city is the sole source of revenue of the potential component unit.
b. The city provides more than 75% of the revenues of the potential component unit.
c. The city provides more than 50% of the revenues of the potential component unit.
d. The city must approve the budget of the potential component unit.

4. In which of the following circumstances would a city be viewed as having appointed members of a potential component unit’s governing body for the purposes of determining if the appointment criterion has been met?
a. The mayor appoints members.
b. The council and mayor jointly appoint members.
c. The city finance director appoints members.
d. All of the above.

5. If a government both created and can abolish a potential component unit, it is financially accountable for that other entity
a. Unless the potential component unit has a separately elected governing body.
b. If it is fiscally dependent on the government.
c. Unless it is unlikely that the government would ever exercise its authority to abolish the potential component unit.
d. If it has the ability to impose its will over the potential component unit or has a financial benefit or burden relationship with it.

6. A state college treats the university foundation as a component unit in accordance with GASB Statement No. 39. The college is a component unit of the state. The foundation would be included in the state reporting entity
a. Only if financially accountable to the state government.
b. Only if fiscally dependent on the state.
c. Under no circumstances.
d. Regardless of other facts.

7. Assuming that a government has some discretely presented component units that have only proprietary activities and others that have only governmental fund activities, a “Component Units” column must be presented in which of the government’s Basic Financial Statements?
a. Governmental funds financial statements
b. Proprietary funds financial statements
c. Government-wide financial statements
d. Governmental funds and proprietary funds financial statements

8. In which of the following situations would blending be required under GAAP?
a. The primary government appoints the voting majority of the component unit governing body, can impose its will on the component unit, and has financial benefit or burden relationships with it.
b. The component unit provides services entirely or almost entirely to the primary government.
c. The component unit provides services entirely or almost entirely to the citizenry of the primary government.
d. The component unit has substantively the same governing body as the primary government.

9. All of the following information would be included in the financial section of a CAFR except the
a. Letter of transmittal.
b. Management’s Discussion and Analysis.
c. Independent auditor’s report.
d. Notes to the financial statements.

10. Which of the following is not a required category of information included in the statistical section of a CAFR?
a. Financial trends information
b. Revenue capacity information
c. Debt capacity information
d. Receivable trends information



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  • CreatedOctober 25, 2014
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