CPFO Exam on the following Governmental Accounting, Auditing, and Financial Reporting

CPFO Exam on the following Governmental Accounting, Auditing, and Financial Reporting How should a government classify a pass-through capital grant ultimately intended for use by some other government in the government-wide statement of activities? A. Program revenues - capital grants and contributions B. Program revenues - operating grants and contributions C. General revenues - grants D. Either A or B - Correct Answer-B - Pass through grant to finance capital acquisition by a subrecipient should be treated as operating grants and contributions by the primary recipient How should resources generated by enabling legislation NORMALLY be reflected in net assets? A. Net assets invested in capital assets net of related debt B. Restricted net assets C. Unrestricted net assets D. A or C - Correct Answer-B - Unless there is cause for reconsideration (e.g., the subsequent diversino of resources to some other purpose), it may reasonably be presumed that enabling legislation is tantamount to an implicit contrcat with taxpayers, thereby justifying the reporting of such amounts as restricted net assets. (pages 162-163) (chapter 10)