Governmental Accounting Exam 3 with
verified answers
What are the two primary objectives of financial reporting for governments and nonprofits? -
correct answer ✔✔To provide information that can be used to access accountability and assist
users in making economic, social, and political decisions.
What are some characteristics of useful information? - correct answer ✔✔Understandability,
reliability, relevance, timeliness, consistency, and comparability
What is an element? What are some elements of financial statements? - correct answer ✔✔-an
item that is recognized in the financial statements. Ex) outflow of resource: expenditure or
expense
-Exs) Assets, Liabilities, Deferred resource outflows, Resource outflows, Deferred inflows,
Inflows, and Net Position
Reporting entity: - correct answer ✔✔A primary government (generally a state or general-
purpose local government) and its component units
Component units - correct answer ✔✔Entities for which a primary government is financially
accountable -or- a organization for which the nature and significance of its relationship with the
primary government is such that exclusion would cause the reporting entity's financial
statements to be misleading or incomplete
When is a primary government financially accountable for a component unit? - correct answer
✔✔If it can appoint a majority of the CUs governing board and either (1) impose its will on the
entity, or (2) provide financial benefits to or impose financial burdens upon the entity
, How often is financial reporting done and who uses it? - correct answer ✔✔-Periodic reporting
(at least annually) is used by citizens, legislators, vendors, and other creditors
-Interim reporting is used by internal management as well as (occasionally) legislators
What are the three major sections of the CAFR? - correct answer ✔✔Introductory, financial,
and statistical
What does the introductory section of the CAFR include at a minimum? - correct answer ✔✔A
title page, contents page, and a transmittal letter (from the govt's CFO). It may also contain
other information that the govt chooses to include, such as a list of key elected and appointed
officials, organization chart, etc.
What does the financial section of the CAFR include at a minimum? - correct answer ✔✔The
MD&A, basic financial statements and notes thereto, auditor's report, and required
supplementary information. It may also contain budgetary comparisons and other statements
and schedules
What does the statistical section of the CAFR include at a minimum? - correct answer
✔✔Information such as financial trends, revenue capacity, debt capacity, demographic and
economic information and operating information.
What do 'general purpose' external financial reports include and where are they reported? -
correct answer ✔✔They are contained in the CAFR Financial Section and include MD&A, Basic
financial statements (GW & fund based), Notes to financial statements, and RSI (incl budgetary
comparisons)
What sort of focus and perspective to GWide and FBased financial statements have? - correct
answer ✔✔-GWide financial statements have an entity-wide perspective and a long-term focus
on operational accountability (total economic resources)
-FBased financial statements have a narrow, short-term focus on fiscal accountability (current
financial resources)
verified answers
What are the two primary objectives of financial reporting for governments and nonprofits? -
correct answer ✔✔To provide information that can be used to access accountability and assist
users in making economic, social, and political decisions.
What are some characteristics of useful information? - correct answer ✔✔Understandability,
reliability, relevance, timeliness, consistency, and comparability
What is an element? What are some elements of financial statements? - correct answer ✔✔-an
item that is recognized in the financial statements. Ex) outflow of resource: expenditure or
expense
-Exs) Assets, Liabilities, Deferred resource outflows, Resource outflows, Deferred inflows,
Inflows, and Net Position
Reporting entity: - correct answer ✔✔A primary government (generally a state or general-
purpose local government) and its component units
Component units - correct answer ✔✔Entities for which a primary government is financially
accountable -or- a organization for which the nature and significance of its relationship with the
primary government is such that exclusion would cause the reporting entity's financial
statements to be misleading or incomplete
When is a primary government financially accountable for a component unit? - correct answer
✔✔If it can appoint a majority of the CUs governing board and either (1) impose its will on the
entity, or (2) provide financial benefits to or impose financial burdens upon the entity
, How often is financial reporting done and who uses it? - correct answer ✔✔-Periodic reporting
(at least annually) is used by citizens, legislators, vendors, and other creditors
-Interim reporting is used by internal management as well as (occasionally) legislators
What are the three major sections of the CAFR? - correct answer ✔✔Introductory, financial,
and statistical
What does the introductory section of the CAFR include at a minimum? - correct answer ✔✔A
title page, contents page, and a transmittal letter (from the govt's CFO). It may also contain
other information that the govt chooses to include, such as a list of key elected and appointed
officials, organization chart, etc.
What does the financial section of the CAFR include at a minimum? - correct answer ✔✔The
MD&A, basic financial statements and notes thereto, auditor's report, and required
supplementary information. It may also contain budgetary comparisons and other statements
and schedules
What does the statistical section of the CAFR include at a minimum? - correct answer
✔✔Information such as financial trends, revenue capacity, debt capacity, demographic and
economic information and operating information.
What do 'general purpose' external financial reports include and where are they reported? -
correct answer ✔✔They are contained in the CAFR Financial Section and include MD&A, Basic
financial statements (GW & fund based), Notes to financial statements, and RSI (incl budgetary
comparisons)
What sort of focus and perspective to GWide and FBased financial statements have? - correct
answer ✔✔-GWide financial statements have an entity-wide perspective and a long-term focus
on operational accountability (total economic resources)
-FBased financial statements have a narrow, short-term focus on fiscal accountability (current
financial resources)
