Fundamentals of Governmental Accounting and Reporting

Solutions

Chapter 1

Practice question solutions

1. d.
2. b.
3. d.
4. d.
5. c.
6. b.

Knowledge check solutions

1. 1. Correct. The state and local governmental environment is different in a number of ways from that of business; these differences influence financial reporting objectives.
   2. Incorrect. Many governments’ resources come from taxes.
   3. Incorrect. The organizational purpose of a government is different than that of a business.
   4. Incorrect. Governments rarely go out of business because they have the ability to tax.
2. 1. Incorrect. The primary source of revenue for a business is voluntary exchange transactions.
   2. Incorrect. A difference between government and business is how resources are provided.
   3. Correct. Governments are accountable to citizens and taxpayers and must provide them information on how financial resources are used.
   4. Incorrect. Governmental budget controls are achieved through budgets legally adopted by elected officials.
3. 1. Correct. To meet one of the financial reporting objectives, governments must be able to compare actual financial results with the legally adopted budget.
   2. Incorrect. Budgets are often recorded in the accounting system.
   3. Incorrect. Budgets are often reviewed to compare actual financial results with the legally adopted budget.
   4. Incorrect. Budgets are legally binding on governments.

Chapter 2

Practice question solutions

1. d.
2. d.
3. c.
4. d.
5. c.
6. b.
7. c.
8. a.
9. General fund, a special ...