GAC Financial Analysis & Reporting 2

Question 1

Under GASB Statement No. 34, which financial statement presents the government-wide net position at year-end?

Accepted Answer

Statement of Net Position

Answer

GASB 34 requires a Statement of Net Position for government-wide reporting that displays assets, deferred outflows, liabilities, deferred inflows, and net position.

Question 2

A government reports a $2M increase in tax revenue but has a corresponding $2M increase in deferred inflows. What is the net effect on revenues recognized?

Accepted Answer

$0 net effect on revenues

Answer

When revenue is offset entirely by deferred inflows (unavailable revenue), the net recognized revenue is zero because the inflow is deferred to a future period.

Question 3

Which ratio is most commonly used to assess a government's short-term liquidity in governmental fund financial statements?

Accepted Answer

Current ratio

Answer

The current ratio (current assets divided by current liabilities) is the primary measure of a governmental fund's short-term liquidity.

Question 4

In a government's Management Discussion and Analysis (MD&A), which information is REQUIRED by GASB standards?

Accepted Answer

Comparison of current year to prior year financial results

Answer

GASB requires the MD&A to include a comparative analysis of current-year versus prior-year financial results as part of required supplementary information.

Question 5

What does a negative unrestricted net position in a government-wide statement typically indicate?

Accepted Answer

Long-term obligations exceed unrestricted available resources

Answer

A negative unrestricted net position signals that long-term liabilities (such as pension obligations or bonds) exceed the liquid resources not tied to specific purposes.

(GAC) Governmental Accounting Certification Practice Test

(GAC) Governmental Accounting Certification Practice Test

GAC Financial Analysis & Reporting 2