CPA Financial Accounting and Reporting (FAR) : State and Local Governments
Study concepts, example questions & explanations for CPA Financial Accounting and Reporting (FAR)
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Example Questions
Example Question #21 : State And Local Governments
The town of Harmony has a large public hospital. On its government-wide financial statements, within the statement of activities, the town has reported a net financial burden of $2 million in the past year. How is this amount determined?
It is the hospital's expenses for the year netted with the program revenues generated by that function
It is the amount of cash expenditures for the year
It is the total of expenses for the year
It is an allocation of the town's financial deficit for the year
It is the hospital's expenses for the year netted with the program revenues generated by that function
The net financial burden represents the portion of the hospital's expenses that are not covered by program revenues, directly generated by the hospital. These expenses would need to be covered by some type of general revenue and thus represent a burden to the government.
Example Question #22 : State And Local Governments
Fixed assets donated to a governmental unit should be recorded:
At the lower of donor's carrying amount or estimated fair value when received
As a memorandum entry only
At estimated fair value when received
At the donor's carrying amount
At estimated fair value when received
Donated capital assets to a governmental unit are recorded as if they had been purchased that is at estimated fair value when received.
Example Question #23 : State And Local Governments
ABC City uses an internal service fund for its central motor pool. The assets and liabilities account balances for this fund that are not eliminated normally should be reported in the government wide statement of net position as:
Business type activities
Governmental activities
Note disclosures only
Fiduciary activities
Governmental activities
For the purposes of government wide financial statements, internal service funds are normally reported in the governmental activities column of the government wide statement of net position and statement of activities since they are generally established to service the governmental funds.
Example Question #6 : Encumbrance Accounting
The word most closely associate with "encumbrance" would be:
Assigned
Committed
Dedicated
Stated
Committed
The concept of encumbering is essentially committing funds for use. Committed and encumbered may be used interchangeably.
All CPA Financial Accounting and Reporting (FAR) Resources
