Answer the following multiple-choice questions related to state and local governments:
Required
a. Proprietary funds are a type of funds used by governments. A reasonable definition of proprietary funds would be
1. Funds whose purpose is to maintain the assets through cost reimbursement by users or partial cost recovery from users and periodic infusion of additional assets.
2. Funds whose principal must remain intact.
3. Funds that handle all cash receipts and disbursements not required to be accounted for in another fund.
4. Funds that cash receipts and disbursements related to the payment of interest and principal on long-term debt.
5. None of the above.
b. Government transactions are recorded in one or more funds designed to emphasize control and budgetary limitations. A fund may be established for which of the following specific purposes?
1. Highway maintenance
2. Parks
3. Debt repayment
4. Endowment fund
5. All of the above
c. Which of the following is not a minimum requirement for general-purpose external financial statements—state and local governments?
1. Statement of cash flow
2. Management discussion and analysis
3. Government-wide financial statements
4. Fund financial statements
5. Notes to the financial statements
d. For state and local governments, the MD&A must include all but which of the following?
1. An objective discussion of the basic financial statements and condensed financial information comparing current and prior years
2. An analysis of the overall financial position and results of operations
3. An analysis of balances and transactions of individual funds
4. An analysis of significant variations between the original and final budget and the final budget and actual results for the general fund
5. Known facts, decisions, or conditions expected to have an impact on financial position or results of operations
e. Which of the following statements is not true?
1. The government-wide financial statements are to be prepared on an accrual basis for all of the government’s activities.
2. Under GASB Statement No. 34, the government entity will continue to present fund statements.
3. Under GASB Statement No. 34, government-wide statements are superior to fund statements.
4. Government-wide financial statements are prepared on an accrual basis.
5. Government transactions are recorded in one or more funds designed to emphasize central and budgetary limitations.