Reference no: EM13979151

Question 1

GAAP require state and local governments to include in their annual financial reports a budget-to-actual comparison showing actual results and original and final appropriated budgets. What are the advantages of requiring both the original and final appropriated budget amounts?

Question 2

Why is information about long-term debt important to financial statement users?

Question 3

What is arbitrage? What are its potential uses and/or abuses? How are potential abuses regulated?

Question 4

In what way will budgetary entries and encumbrances affect amounts reported in year-end GAAP balance sheets and operating statements of state and local governments?

Question 5

In the United States, educational services can be provided by federal government entities, by non-federal government entities, by not-for-profit entities, and by for-profit entities. Are the accounting and financial reporting standards the same for each of these entities? Should they be the same?

Question 6

GASB Statement No. 34 mandates that the government reconcile total governmental fund balances per the fund balance sheet with net assets of governmental activities per the government-wide statements. What are likely to be the two largest reconciling items for most major cities? Why?

Question 7

What are the differences among the various elements of risk: market risk, credit risk, concentrations of credit risk, and interest rate risk? Describe how each of these risks could affect a government's investment in a 20-year Treasury note.

Question 8

Governments may elect to account for their landfill activities in either a governmental or an enterprise fund. Explain the differences that would result if one government elected to account for its landfill activities in its general fund and another government elected to account for its landfill activities in an enterprise fund.

Question 9

Answer the following questions with regard to the preparation of fund financial statements. A city receives three grants from the state. One grant is received in cash but must be used only for the acquisition of two vans specifically equipped to transport physically challenged citizens who use wheelchairs as a means of mobility. The second grant provides for reimbursement of costs incurred in operating a public transit system. The third grant is a distribution of state general fund revenues allocated to each city in the state based on the population of the city. This grant is to be used in general government operations.

Discuss the various methods of revenue recognition for grants and other similar revenues.

What is the appropriate basis for revenue recognition for each of the three state grants?

What is the rationale for each of these methods of revenue recognition?

Question 10

When a government finances the purchase of a capital asset from a governmental fund, the acquisition is treated as an expenditure and reduces net current financial resources during the year of acquisition. During the years that principal and interest payments are being made on the debt incurred to finance the capital asset acquisition, the principal and interest amounts are also treated as expenditures. This appears to reduce the net current financial resources by twice the cost of the capital asset. Discuss these transactions and their overall effect on the net current financial resources of the government.