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The City of Francois, Texas, has begun the process of producing its current comprehensive annual financial report (CAFR). Several organizations that operate within the city are related in some way to the primary government. The city’s accountant is attempting to determine how these organizations should be included in the reporting process.
a. What is the major criterion for inclusion in a government’s CAFR?
b. How does an activity or function quality as a special purpose government?
c. How is the legal separation of a special purpose government evaluated?
d. How is the fiscal independence of a special purpose government evaluated?
e. What is a component unit, and how is it normally reported on government-wide financial statements?
f How does a primary government prove that it can impose its will on a component unit?
g. What is meant by the blending of a component unit?
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Chapter 17 Solutions
GEN COMBO ADVANCED ACCOUNTING; CONNECT ACCESS CARD
- Which of the following should not be included in the introductory section of a city's CAFR? A.) Management discussion and analysis B.) Letter of transmittal C.) Government Finance Officer's certificate of achievement for excellence in financial reporting D.) Photos of city officialsarrow_forwardAn unqualified opinion on the financial statements of a local government means that all statements in the comprehensive annual financial report (CAFR) have been audited and conform with GAAP." Do you agree or disagree? Why? Describe the difficulty in comparing the financial performance of a not-for-profit organization to other similar organizations. What benchmarks are available to assist in this task? Describe the treatment of a not-for-profit, nongovernmental foundation that is related to a public university under GASB standards. What are the benefits to a state or local government of establishing an audit committee?arrow_forwardThe body currently responsible for developing local governmental accounting standards is the a. Financial Accounting Standards Board (FASB) b. Governmental Accounting Standards Board (GASB) c. National Council on Governmental Accounting (NCGA) d. Municipal Finance Officers Association (MFOA)arrow_forward
- Identify the types of financial statements issued annually by federal agencies. Compare and contrast them against the financial statements issued by a state government and a for-profit business. Discuss why there is a difference between the three.arrow_forwardForest City has recently implemented GAAP reporting and is attempting to determine which of the following special revenue funds should be classified as “major funds” and, therefore, be reported in separate columns on the balance sheet and statement of revenues, expenditures, and changes in fund balances for the governmental funds. As the city’s external auditor, you have been asked to provide a rationale for either including or excluding each of the following funds as a major fund. Determine which of the following funds should be reported as a major fund.arrow_forwardState and local governments are accountable to much more than private investors. They are accountable to the community as a whole. Communities are required to publish a comprehensive annual financial report (CAFR). Please locate a state or local government’s comprehensive annual financial report (CAFR) and answer the following questions: How does the CAFR compare to a traditional for-profit business? What are the major sources of revenue and expenditures? Do you feel that this entity is healthy and what are some areas of improvement?arrow_forward
- Which of the following items are included in the governmental activities column of the government- wide financial statements through worksheet journal entries? A) General Capital Assets. B) General Long-Term Debt. C) Internal Service Funds servicing governmental departments. D) All of the choices are correct.arrow_forwardA good performance measurement system will align the goals of management with_______. A. the goals of the city manager and the mayoral staff B. the goals of the corporation, and both parties will benefit C. the priorities of the stockholders as listed at the annual meeting D. the Investment departments response to the annual auditarrow_forwardWhich of the following is true about the management’s discussion and analysis (MD&A)? It is an optional addition to the comprehensive annual financial report, but the GASB encourages its inclusion. It adds a verbal explanation for the numbers and trends presented in the financial statements. It appears at the very end of a government’s comprehensive annual financial report. It replaces a portion of the fund financial statements traditionally presented by a state or local government.arrow_forward
- What is the significance of the Certificate of Achievement for Excellence in Financial Reporting awarded to the City of Phoenix by the Government Finance Officers Association?arrow_forwardWhat benefits are derived from including the management’s discussion and analysis in state and local governmental financial reports? What information is required to be included in the MD&A?arrow_forwardWhat is the composition of a state or local government’s comprehensive annual financial report (CAFR)?arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College