Question

State whether the following statements are true or false

statement

T/F

1.

Fund financial statements for governmental funds are prepared using the modified accrual basis of accounting and a current financial resources measurement focus.

2.

Governments don’t operate in a competitive marketplace, face no threat of liquidation, and do not have equity owners

3.

Fund balance arises from the citizens’ “right to know.” It imposes a duty on public officials to be accountable to citizens for raising public monies and how they are spent.

4.

Proprietary funds include internal service funds, enterprise funds.

5.

The tax levy = Estimated collectible proportion ÷ Revenues required

6.

A net expense or revenue = Program revenues – expenses.

7.

GASB requires that multipurpose grants should be reported as program revenues regardless the amounts restricted to each program are specifically identified in either the grant award or grant application.

8.

All assets, both current and noncurrent, and all liabilities, both current and noncurrent, are reported in the government-wide financial statements.

9.

The permanent fund is one of the several types of governmental funds.

10.

Capital Projects Funds is an account for financial resources segregated to pay principal or interest on long-term general liabilities.

11.

Depreciation expense for infrastructure asset (bridges) should be reported as a direct expense for infrastructure assets (public works).

12.

Budget is estimated numbers and for prepared for future period.

13.

Other Financing Uses represent operating transfers in to other funds.

14.

Budget appropriations are sometimes called estimated Revenue.

15.

General Fund equation: Assets = Liabilities + fund balance.

Answer 1

1) Fund financial statements are prepared to record the governmental funds. It is prepared using modified accrual basis of accounting and resources (economic) management focus. Thus, the given statement is true.

2) Government organizations generally don't have any owner/(s) and don't liquidate. Thus, as per GASB (Governmental accounting standards board) the statement is true.

3) Accountability arises from citizens 'right to know'. Fund balances are used to prepare financial statement for governmental entity. Thus, the statement is false.

4) Proprietory funds is a business type fund in governmental accounting for state or local governments. It includes two types of funds (1)) internal service fund and (2) enterprise funds. Thus, the statement is true.

5) The tax levy = Revenues required ÷ Estimated collectible proportion. Thus, the statement is false.

6) Net expense is difference between the revenue or expenses. Thus, the statement is true.

7) The multipurpose grants that don't provide specific identification are recorded as general revenues. Thus, the statement is false.

8) Government wide financial statements show assets and liabilities. It seprates current assets from noncurrent assets and current liabilities from noncurrent liabilities. Thus, the statement is true.

9) The five types of governmental funds are special revenue funds, permanent funds, debt service funds, general funds and capital project funds. Thus, the statement is true..

10) Debt service fund is the fund which is used to repay the principal amount and interest on general long term debts. Thus, the statement is false.

11) Depreciation on capital assets shall be reported as a direct expense in the governmental statement of activities. Thus, the statement is true.

12) Budgets are prepared for future based on the expected revenues or standards costs. Although, estimation of numbers is part of financial forecasting. Thus, the statement is false.

13) Other financing uses indicate the operating transfers out to other funds. Thus, the statement is false.

14) Budgeted appropriations are sometimes regarded as estimated expenditure. Thus, the statement is false.

15) General fund = Assets - Liabilities - Deferred inflows. Thus, the statement is false.