Gov't Final Chapter 1

Government-wide financial statements are prepared using the accrual basis of accounting, which focuses on measuring and reporting economic events and transactions when they occur, rather than when cash is received or paid. This measurement focus ensures that the financial statements provide a comprehensive and accurate representation of the government's financial position and performance. Additionally, the common measurement basis ensures consistency and comparability across different government entities, allowing for meaningful analysis and evaluation of financial information. Therefore, it is true that a common measurement focus and basis of measurement is an important feature of government-wide financial statements.

Government-wide financial statements provide a comprehensive view of a government's financial activities. These statements are prepared using the accrual basis of accounting, which recognizes revenues when earned and expenses when incurred. On the other hand, governmental activities fund statements are prepared using the modified accrual basis, which is a cash basis with some accrual elements. Therefore, when preparing government-wide financial statements, the governmental activities fund statements must be adjusted to the accrual basis to ensure consistency and accuracy in reporting. Hence, the statement is true.

Under the modified accrual basis of accounting, revenues should be recognized when they are measurable and available to finance expenditures of the current period. This means that revenues should be recognized when they can be reasonably estimated and when the funds are actually available to be used for current expenses. This ensures that revenues are only recognized when they can be used to finance the current period's expenditures, providing a more accurate representation of the financial position of the entity.

The correct answer is General, special revenue, debt service, capital projects, permanent. These funds are all examples of governmental funds. General funds are used for general government operations, special revenue funds are used for specific programs or activities, debt service funds are used for repayment of debt, capital project funds are used for construction or acquisition of major capital assets, and permanent funds are used to hold and invest resources for the benefit of the government and its citizens in perpetuity.

Notre Dame University, as a private institution, follows level 1 GAAP, which is established by the Financial Accounting Standards Board (FASB). The FASB is responsible for setting accounting standards for private companies and non-profit organizations in the United States. The American Institute of Certified Public Accountants (AICPA) sets accounting standards for private companies as well, but it does not specifically establish level 1 GAAP. The Governmental Accounting Standards Board (GASB) sets accounting standards for state and local governments, while the National Association of College and University Business Officers (NACUBO) provides guidance for higher education institutions, but neither of them establish level 1 GAAP.

The Governmental Accounting Standards Board (GASB) does not set financial reporting standards for the federal government. The Federal Accounting Standards Advisory Board (FASAB) is responsible for setting financial reporting standards for federal government entities. Therefore, the statement that the GASB sets financial reporting standards for all units of government is false.

This statement is false. The current financial resources measurement focus and modified accrual basis of accounting are typically used for governmental funds, not all funds of a governmental unit. Other funds, such as proprietary and fiduciary funds, may use a different measurement focus and basis of accounting, such as the economic resources measurement focus and accrual basis.

Under GASB Statement 34, accrual accounting is used for government-wide, proprietary fund, and fiduciary fund financial statements only. This means that these types of financial statements are prepared using the accrual basis of accounting, which recognizes revenues when earned and expenses when incurred, regardless of when cash is received or paid. Accrual accounting provides a more accurate representation of the financial position and performance of the government entity, as it takes into account all economic events and transactions that have occurred during the reporting period.