CGFO Governmental Accounting & Financial Reporting 5

Question 1

Which basis of accounting must be used for proprietary fund statements under GASB?

Accepted Answer

Full accrual basis

Answer

Proprietary funds use the full accrual basis of accounting, recognizing revenues when earned and expenses when incurred regardless of cash flow timing.

Question 2

A government sells a capital asset with a book value of $200,000 for $150,000. How is this reported in the government-wide Statement of Activities?

Accepted Answer

As a $50,000 loss on disposal within the relevant function's expenses

Answer

Gains and losses on disposal of capital assets are reported within the function that used the asset in the government-wide Statement of Activities.

Question 3

What distinguishes a 'special item' from an 'extraordinary item' in governmental financial reporting under GASB 34?

Accepted Answer

Special items are significant transactions within management's control; extraordinary items are both unusual in nature and infrequent in occurrence

Answer

Special items are significant transactions or events within management's control that are either unusual in nature or infrequent, while extraordinary items are both unusual and infrequent and outside management's control.

Question 4

Under the GASB hierarchy, which source has the highest authority for governmental accounting standards?

Accepted Answer

GASB Statements

Answer

GASB Statements are the highest level of authoritative GAAP for state and local governments, followed by GASB Interpretations, then Technical Bulletins and Implementation Guides.

Question 5

A county issues $10 million in revenue bonds backed solely by water utility fees. In which fund should these bonds be reported?

Accepted Answer

Enterprise Fund (Water Utility)

Answer

Revenue bonds backed by enterprise fund revenues are reported as liabilities of the enterprise fund (proprietary fund), not in governmental funds or a separate debt service fund.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Governmental Accounting & Financial Reporting 5