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1. Evaluation of government financial performance is important for which of the following reasons?

2. Which of the following terms or concepts focuses primarily on a government’s ability to generate enough cash over a 30- or 60-day period to pay its bills?

3. Why does the GASB prefer to use the term economic condition rather than financial condition?

4. Factors that influence a government’s financial condition include which of the following?

5. Which of the following environmental factors reveals the entity’s underlying philosophies regarding willingness to support higher taxes, issuances of long-term debt, and increased social services?

6. Which of the following would be an effective means of benchmarking?

7. Which of the following conditions could signal decreasing fiscal stress?

8. For each of the following, select plus (+) if a high or increasing value of the item is generally associated with stronger financial condition, a minus (–) if a high or increasing value of the item is generally associated with a weaker financial condition, and NE if the item generally has no effect on the financial condition or the direction of the effect cannot be predicted.


a.	Unfunded pension liability.
b.	Operating deficit.
c.	Revenues over expenditures.
d.	Intergovernmental revenues.
e.	Level of business activity.
f.	Education level of citizens.
g.	Unemployment rate.
h.	Restrictions on revenues.
i.	Personal income per capita.
j.	Debt service.
k.	Percentage of households below the poverty level.
l.	Short-term borrowing.
m.	Property values.
n.	Population growth.
o.	Political party of the mayor.

9. The government-wide financial statements for the City of Arborland for a three-year period are presented.

CITY OF ARBORLAND
Statements of Net Position
As of December 31
(in thousands)
	2020									2019									2018
	Governmental Activities			Business type Activities			Total			Governmental Activities			Business type Activities			Total			Governmental Activities			Business type Activities			Total
Assets
Current assets:
Cash	$	5,540		$	1,800		$	7,340		$	4,531		$	1,663		$	6,194		$	3,452		$	1,487		$	4,939
Investments		733			291			1024			638			181			819			769			179			948
Receivables (net)		2,747			1,809			4,556			2,947			1,608			4,555			1,865			1,472			3,337
Prepaid expenses		253			8			261			251			6			257			171			5			176
Inventories		26			58			84			101			48			149			167			49			216
Total current assets		9,299			3,966			13,265			8,468			3,506			11,974			6,424			3,192			9,616
Capital assets:
Land		2,180			2,101			4,281			2,070			1,804			3,874			1,971			1,604			3,575
Depreciable assets		37,600			14,455			52,055			37,183			17,775			54,958			39,347			14,801			54,148
Accumulated depreciation		(15,039	)		(5,782	)		(20,821	)		(16,732	)		(9,776	)		(26,508	)		(19,680	)		(7,402	)		(27,082	)
Total capital assets (net)		24,741			10,774			35,515			22,521			9,803			32,324			21,638			9,003			30,641
Total assets		34,040			14,740			48,780			30,989			13,309			44,298			28,062			12,195			40,257
Liabilities
Accounts payable		1,580			467			2,047			412			376			788			1,633			295			1,928
Deferred revenue		32						32			30						30			42						42
Other, current		1,754			200			1,954			1,443			190			1,633			1,489			170			1,659
Total current liabilities		3,366			667			4,033			1,885			566			2,451			3,164			465			3,629
Bonds payable		15,900			6,500			22,400			16,900			7,500			24,400			15,900			6,500			22,400
Total liabilities		19,266			7,167			26,433			18,785			8,066			26,851			19,064			6,965			26,029
Net Position
Net investment in capital assets		9,104			4,027			13,131			7,945			3,065			11,010			5,366			2,067			7,433
Restricted for:
Capital projects		140			—			140			151			—			151			130			—			130
Debt service		933			—			933			1,033			—			1,033			818			—			818
Unrestricted (deficit)		4,597			3,546			8,143			3,075			2,178			5,253			2,683			3,163			5,846
Total net position	$	14,774		$	7,573		$	22,347		$	12,204		$	5,243		$	17,447		$	8,997		$	5,230		$	14,227

CITY OF ARBORLAND Statement of Activities For the Year Ended December 31, 2020 (in thousands)
			Program Revenues							Net (Expense) Revenue and Changes in Net Position
Functions/Programs	Expenses			Charges for Services		Operating Grants and Contributions		Capital Grants and Contributions		Governmental Activities			Business-type Activities		Total
Governmental Activities:
General government	$	5,716		$	531		—		—	$	(5,185	)		—	$	(5,185	)
Judicial		1,926			716	$	99		—		(1,111	)		—		(1,111	)
Public safety		7,958			1,530		168		—		(6,260	)		—		(6,260	)
Health and sanitation		2,804			524		—		—		(2,280	)		—		(2,280	)
Culture and recreation		2,166			554		—	$	495		(1,117	)		—		(1,117	)
Road maintenance		2,455			5		1,619		—		(831	)		—		(831	)
Interest on long-term debt		948			—		—		—		(948	)		—		(948	)
Total governmental activities		23,973			3,860		1,886		495		(17,732	)		—		(17,732	)
Business-type activities		2,895			5,218		—		7		—		$	2,330		2,330
Total government	$	26,868		$	9,078	$	1,886	$	502	$	(17,732	)	$	2,330	$	(15,402	)

	General Revenues:
	Property taxes										17,296					17,296
	Grants and contributions not restricted to specific programs										2,190					2,190
	Investment earnings										716					716
	Special item—gain on sale of land										100			—		100
	Total general revenues and special items										20,302					20,302
	Change in net position										2,570			2,330		4,900
	Net position—January 1										12,204			5,243		17,447
	Net position—December 31									$	14,774		$	7,573	$	22,347

CITY OF ARBORLAND Statement of Activities For the Year Ended December 31, 2019 (in thousands)
			Program Revenues								Net (Expense) Revenue and Changes in Net Position
Functions/Programs	Expenses			Charges for Services		Operating Grants and Contributions		Capital Grants and Contributions			Governmental Activities			Business-type Activities		Total
Governmental Activities:
General government	$	4,133		$	148		—		—		$	(3,985	)		—	$	(3,985	)
Judicial		1,737			209	$	17		—			(1,511	)		—		(1,511	)
Public safety		5,239			1,943		30		—			(3,266	)		—		(3,266	)
Health and sanitation		2,129			147		—		—			(1,982	)		—		(1,982	)
Culture and recreation		3,762			322		—	$	350			(3,090	)		—		(3,090	)
Road maintenance		1,055			—		501		—			(554	)		—		(554	)
Interest on long-term debt		804			—		—		—			(804	)		—		(804	)
Total governmental activities		18,859			2,769		548		350			(15,192	)		—		15,192	)
Business-type activities		4,287			4,290		—		10			—		$	13		13
Total government	$	23,146		$	7,059	$	548	$	360		$	(15,192	)	$	13	$	15,179	)

	General Revenues:
	Property taxes											13,619					13,619
	Grants and contributions not restricted to specific programs											3,664					3,664
	Investment earnings											916					916
	Special item—gain on sale of land											200			—		200
	Total general revenues and special items											18,399					18,399
	Change in net position											3,207			13		3,220
	Net position—January 1											8,997			5,230		14,227
	Net position—December 31									$		12,204		$	5,243	$	17,447

CITY OF ARBORLAND Statement of Activities For the Year Ended December 31, 2018 (in thousands)
			Program Revenues							Net (Expense) Revenue and Changes in Net Position
Functions/Programs	Expenses			Charges for Services		Operating Grants and Contributions		Capital Grants and Contributions		Governmental Activities			Business-type Activities		Total
Governmental Activities:
General government	$	3,922		$	109		—		—	$	(3,813	)		—	$	(3,813	)
Judicial		1,601			198	$	57		—		(1,346	)		—		(1,346	)
Public safety		4,113			1,723		10		—		(2,380	)		—		(2,380	)
Health and sanitation		2,096			216		—		—		(1,880	)		—		(1,880	)
Culture and recreation		3,484			364		—	$	320		(2,800	)		—		(2,800	)
Road maintenance		1,438			—		460		—		(978	)		—		(978	)
Interest on long-term debt		948			—		—		—		(948	)		—		(948	)
Total governmental activities		17,602			2,610		527		320		(14,145	)		—		(14,145	)
Business-type activities		2,637			3,708		—		20		—		$	1,091		1,091
Total government	$	20,239		$	6,318	$	527	$	340	$	(14,145	)	$	1,091	$	(13,054	)

	General Revenues:
	Property taxes										13,100					13,100
	Grants and contributions not restricted to specific programs										2,990					2,990
	Investment earnings										681					681
	Special item—gain on sale of land										150			—		150
	Total general revenues and special items										16,921					16,921
	Change in net position										2,776			1,091		3,867
	Net position—January 1										6,221			4,139		10,360
	Net position—December 31									$	8,997		$	5,230	$	14,227

Additional information follows:
Population: Year 2020: 30,420, Year 2019: 28,291, Year 2018: 26,374. Debt limit remained at $20,000,000 for each of the three years. Net cash from operations is generally 80 percent of total revenues each year.

Required

Select X for the financial performance measures in Illustration 10–4 that can be calculated for the City of Arborland based on the information provided.

b. Calculate those ratios identified in part a for FY 2020. Show your computations.

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