2-16. Multiple Choice. LO2-1) through LO2-4) Choose the best answer. 1. Government financial reports should be useful in assessing a government's accountability. Three objectives of government financial reporting identify how financial reporting can be useful in assessing a government's accountability. Which of the following is not related to one of the objectives? a. Providing information on operating results for the current period. b. Providing information on meeting current year service performance goals. c. Providing information related to the provision of services in accordance with legally adopted budgets. d. Providing information on ability of the government to meet obligations as they come due. 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 statements and all nonmajor enterprise funds should be reported in a single column of proprietary fund financial statements. d. All of the above. 3. A member of the city council does not understand why governments need to use funds. He believes it makes reporting too complex and that funds should be eliminated. What explanation would you use to help explain why funds are needed? a. Funds are necessary to allow the government to provide information about governmental activities separate from business-type activities. b. Funds are necessary to allow the city council to have increased budgetary control over the amounts spent by the government. c. Funds are necessary to help increase transparency by showing that legal constraints on spending certain revenues for the specific purpose for which the revenues were intended are being met. d. The city council person is correct: page 65 There is no required reason for fund accounting, it increases difficulty in understanding financial reports, and the city should consider eliminating funds. 4. The measurement focus and basis of accounting that should be used for the government-wide financial statements are Basis of Measurement Focus Accounting Current financial a. Modified accrual resources Current financial b. Accrual resources c. Economic resources Modified accrual d. Economic resources Accrual