Test bank for Accounting for Governmental & Nonprofit Entities 18th Edition by Jacqueline L. Reck, Suzanne Lowensohn, Daniel Neely.Chapter 1: Introduction to Accounting and Financial Reportingfor Government and Not-for-Profit Entities PART ONE: State and Local Governments Chapter 2: Principles of A...
Accounting for Governmental and Nonprofit Entities, 18e (Reck)
Chapter 1 Introduction to Accounting and Financial Reporting for Government and Not-
for-Profit Entities
1) Special purpose governments generally provide a wider range of services to their residents
than do general purpose governments.
Answer: FALSE
Difficulty: 1 Easy
Topic: Distinguishing Government and Not-For-Profit Organizations
Learning Objective: 01-01 Identify and explain the characteristics that distinguish government
M
and not-for-profit entities from for-profit entities.
Bloom's: Remember
AACSB: Knowledge Application
AICPA: BB Industry
E
2) Examples of general purpose governments include cities, towns, and public schools that
receive tax revenue to finance the services they provide.
Answer: TRUE
Difficulty: 1 Easy
D
G
Topic: Distinguishing Government and Not-For-Profit Organizations
Learning Objective: 01-01 Identify and explain the characteristics that distinguish government
and not-for-profit entities from for-profit entities.
Bloom's: Remember
E
AACSB: Knowledge Application
AICPA: BB Industry
E
3) The Governmental Accounting Standards Board (GASB) is the body authorized to establish
accounting principles for all state and local governments, both general purpose and special
purpose.
K
Answer: TRUE
Difficulty: 1 Easy
Topic: Sources of financial reporting standards
Learning Objective: 01-02 Identify the authoritative bodies responsible for setting financial
reporting standards for (1) state and local governments, (2) the federal government, and (3) not-
for-profit organizations.
Bloom's: Remember
AACSB: Knowledge Application
AICPA: BB Industry
,4) The Governmental Accounting Standards Board (GASB) is the body authorized to establish
accounting principles for all government entities.
Answer: FALSE
Difficulty: 1 Easy
Topic: Sources of financial reporting standards
Learning Objective: 01-02 Identify the authoritative bodies responsible for setting financial
reporting standards for (1) state and local governments, (2) the federal government, and (3) not-
for-profit organizations.
Bloom's: Remember
AACSB: Knowledge Application
M
AICPA: BB Industry
5) The Financial Accounting Standards Board (FASB) is the body authorized to establish
accounting principles for all colleges and universities and health care entities.
E
Answer: FALSE
Difficulty: 1 Easy
Topic: Sources of financial reporting standards
D
Learning Objective: 01-02 Identify the authoritative bodies responsible for setting financial
reporting standards for (1) state and local governments, (2) the federal government, and (3) not-
G
for-profit organizations.
Bloom's: Remember
AACSB: Knowledge Application
AICPA: BB Industry
E
6) Neither governments nor not-for-profit entities have residual equity that can be distributed to
owners.
E
Answer: TRUE
Difficulty: 2 Medium
K
Topic: Distinguishing Government and Not-For-Profit Organizations
Learning Objective: 01-01 Identify and explain the characteristics that distinguish government
and not-for-profit entities from for-profit entities.
Bloom's: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
,7) A characteristic common to governments and not-for-profit organizations is that they do not
exist to provide goods or services at a profit or profit equivalent.
Answer: TRUE
Difficulty: 2 Medium
Topic: Distinguishing Government and Not-For-Profit Organizations
Learning Objective: 01-01 Identify and explain the characteristics that distinguish government
and not-for-profit entities from for-profit entities.
Bloom's: Understand
AACSB: Knowledge Application
AICPA: BB Industry
M
8) The needs of users of government financial reports are the same as those of users of business
entity financial reports.
E
Answer: FALSE
Difficulty: 2 Medium
Topic: Distinguishing Government and Not-For-Profit Organizations
and not-for-profit entities from for-profit entities.
Bloom's: Understand
D
Learning Objective: 01-01 Identify and explain the characteristics that distinguish government
G
AACSB: Knowledge Application
AICPA: BB Industry
9) The Federal Accounting Standards Advisory Board (FASAB) recommends accounting
E
principles and standards for the federal government and its agencies and departments.
Answer: TRUE
E
Difficulty: 1 Easy
Topic: Sources of financial reporting standards
Learning Objective: 01-02 Identify the authoritative bodies responsible for setting financial
K
reporting standards for (1) state and local governments, (2) the federal government, and (3) not-
for-profit organizations.
Bloom's: Remember
AACSB: Knowledge Application
AICPA: BB Industry
, 10) The FASB, GASB, and FASAB all focus their standards on both internal and external
financial reporting.
Answer: FALSE
Difficulty: 2 Medium
Topic: Objectives of financial reporting
Learning Objective: 01-03 Contrast and compare the objectives of financial reporting for (1)
state and local governments, (2) the federal government, and (3) not-for-profit organizations.
Bloom's: Understand
AACSB: Knowledge Application
AICPA: BB Industry
M
11) Interperiod equity refers to the concept that current-year revenues are sufficient to pay for
services provided that year, so that future taxpayers will not be required to assume the burden for
services previously provided.
E
Answer: TRUE
Difficulty: 2 Medium
Topic: Objectives of financial reporting
D
Learning Objective: 01-03 Contrast and compare the objectives of financial reporting for (1)
state and local governments, (2) the federal government, and (3) not-for-profit organizations.
G
Bloom's: Understand
AACSB: Knowledge Application
AICPA: FN Reporting
E
12) The minimum requirements for general purpose external financial reporting are (1)
management's discussion and analysis (MD&A), (2) the basic financial statements, including the
notes to the financial statements, and (3) combining and individual fund financial statements.
E
Answer: FALSE
Difficulty: 1 Easy
K
Topic: Financial Reporting of State and Local Governments
Learning Objective: 01-04 Explain the minimum requirements for general purpose external
financial reporting for state and local governments and how they relate to comprehensive annual
financial reports.
Bloom's: Remember
AACSB: Knowledge Application
AICPA: FN Reporting
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