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
and not-for-profit entities from for-profit entities.
Bloom's: Remember
AACSB: Knowledge Application
AICPA: BB Industry
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
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
AACSB: Knowledge Application
AICPA: BB Industry
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.
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
1
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
,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
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.
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
AICPA: BB Industry
6) Neither governments nor not-for-profit entities have residual equity that can be distributed to
owners.
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: FN Reporting
2
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
,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
8) The needs of users of government financial reports are the same as those of users of business
entity financial reports.
Answer: FALSE
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
9) The Federal Accounting Standards Advisory Board (FASAB) recommends accounting
principles and standards for the federal government and its agencies and departments.
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
3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
, 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
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.
Answer: TRUE
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: FN Reporting
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.
Answer: FALSE
Difficulty: 1 Easy
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
4
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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
and not-for-profit entities from for-profit entities.
Bloom's: Remember
AACSB: Knowledge Application
AICPA: BB Industry
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
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
AACSB: Knowledge Application
AICPA: BB Industry
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.
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
1
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
,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
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.
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
AICPA: BB Industry
6) Neither governments nor not-for-profit entities have residual equity that can be distributed to
owners.
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: FN Reporting
2
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
,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
8) The needs of users of government financial reports are the same as those of users of business
entity financial reports.
Answer: FALSE
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
9) The Federal Accounting Standards Advisory Board (FASAB) recommends accounting
principles and standards for the federal government and its agencies and departments.
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
3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
, 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
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.
Answer: TRUE
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: FN Reporting
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.
Answer: FALSE
Difficulty: 1 Easy
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
4
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
