Public Sector Accounting – Lesson 2 Summary Notes

Which of the following accounting standards must a government (including its components) follow in Canada?

A	IFRS
B	PSA Handbook
C	ASPE
D	IFRS or PSA Handbook

PSA Handbook

Which one of the following is true about the statement of financial position for a public sector entity reporting under the PSA Handbook?

A	The net financial resources or net debt of the government must be presented.
B	Current assets are presented separately from non-current assets.
C	Assets must be shown to equal liabilities plus equity.
D	The annual surplus or deficit must be presented

The net financial resources or net debt of the government must be presented.

Which one of the following describes how government financial statements differ from those of for-profit entities?

A	The performance of a government is measured through its ability to generate profit, whereas performance of a for-profit organization is measured through its ability to meet its customers’ needs.
B	The financial statements of public sector entities show the results of their operations, whereas for-profit financial statements do not.
C	Public sector entities do not always receive revenue in exchange for providing services, whereas for-profit organizations do receive revenues.
D	The financial statements of public sector entities describe changes to the entities’ financial position, whereas the financial statements of for-profit organizations do not.

Public sector entities do not always receive revenue in exchange for providing services, whereas for-profit organizations do receive revenues.

Which one of the following lists the required financial statements for public sector entities reporting under the PSA Handbook?

A	Statement of financial position, statement of operations, statement of other comprehensive income, statement of change in net debt/assets, and statement of cash flow
B	Statement of financial position, statement of operations, statement of remeasurement gains and losses, statement of change in net debt/assets, and statement of cash flow
C	Statement of financial position, statement of operations, statement of remeasurement gains and losses, statement of changes in shareholders’ equity, and statement of cash flow
D	Statement of financial position, statement of operations, statement of other comprehensive income, statement of change in shareholders’ equity, and statement of cash flow

Which one of the following statements regarding the governing standards that must be followed by public sector entities in preparing their financial statements is true?

A	Government business enterprises may present their financial statements in accordance with either IFRS or the PSA Handbook.
B	Other government organizations must present their financial statements in accordance with IFRS.
C	Business partnerships with only public sector entity partners must present their financial statements in accordance with the PSA Handbook.
D	Government NPOs must present their financial statements in accordance with the PSA Handbook, though the use of the 4200 series is optional.

Government NPOs must present their financial statements in accordance with the PSA Handbook, though the use of the 4200 series is optional.