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Accounting for Governmental and Nonprofit Entities 17th Edition By Reck and Lowensohn Test Bank
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Chapter 01 Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Entities True / False Questions 1. Special purpose governments generally provide a wider range of services to their residents than do general purpose governments. True False ...

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  • August 17, 2023
  • 645
  • 2023/2024
  • Exam (elaborations)
  • Questions & answers

Subjects

  • complete chapters
  • accounting for governmental and nonprofit entities
  • test bank

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Chapter 01
Introduction to Accounting and Financial Reporting for
Governmental and Not-for-Profit Entities



True / False Questions

1. Special purpose governments generally provide a wider range of services to their
residents than do general purpose governments.

True False

2. Examples of general purpose governments include cities, towns, and public schools that
receive tax revenue to finance the services they provide.

True False

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.

True False

4. The Governmental Accounting Standards Board (GASB) is the body authorized to
establish accounting principles for all government entities.

True False

5. The Financial Accounting Standards Board (FASB) is the body authorized to establish
accounting principles for all colleges and universities and health care entities.

True False

6. Neither governmental nor not-for-profit entities have residual equity that can be
distributed to owners.

True False

7. A characteristic common to governmental and not-for-profit organizations is that they do
not exist to provide goods or services at a profit or profit equivalent.

True False

8. The needs of users of government financial reports are the same as those of users of
business entity financial reports.

True False

,9. The Federal Accounting Standards Advisory Board (FASAB) recommends accounting
principles and standards for the federal government and its agencies and departments.

True False

10. The FASB, GASB, and FASAB identify primarily external users as the focus of their
financial reports.

True False

11. Interperiod equity refers to the concept that current-year revenues are sufficient to pay for
services provided during the year, so that future taxpayers will not be required to assume the
burden for services previously provided.

True False

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.

True False

13. The Financial Accounting Foundation has oversight over both FASB and GASB.

True False

14. In addition to financial statements and notes, GASB requires governments to provide
information on service efforts and accomplishments (SEA) in their reports to the public.

True False

15. Providing information on accountability is the primary financial reporting objective for
both governmental and not-for-profit entities.

True False

16. A difference in the financial reporting objectives for governmental entities and not-for-
profit entities is that governmental entities report on compliance with laws, regulations, and rules
that impact financial reports.

True False

17. Since neither governmental nor not-for-profit entities have investors, the financial
reporting objectives are the same for both types of entities.

True False

,18. The GASB provides optional guidance for those entities providing service efforts and
accomplishments (SEA) reports to the public.

True False

19. The Office of Management and Budget (OMB) requires major federal departments and
agencies to prepare an annual performance report.

True False

20. The FASB standards require not-for-profit entities to report net assets in three categories:
unrestricted, restricted, and net investment in capital assets.

True False

21. The FASB standards require not-for-profit entities to separately report program expenses
and support expenses.

True False

22. The governmental fund financial statements are intended to report on fiscal
accountability.

True False

23. The governmental fund financial statements are useful in assessing operational
accountability.

True False

24. Government-wide financial statements are prepared using the accrual basis of accounting.

True False

25. Both the GASB and the FASB require entities to include a management discussion and
analysis in the financial reports.

True False




Multiple Choice Questions

, 26. The Governmental Accounting Standards Board is assigned responsibility for setting
accounting and financial reporting standards for

A. Governments such as federal agencies, states, cities, counties, villages, and townships.
B. State and local government entities and governmentally-related units and agencies, such
as utilities, authorities, hospitals, and colleges and universities.
C. Not-for-profit organizations.
D. State and local governments and all not-for-profit organizations.

27. The body that has been established to recommend accounting and financial reporting
standards for the federal government is the

A. Financial Accounting Standards Board (FASB).
B. Governmental Accounting Standards Board (GASB).
C. Federal Accounting Foundation (FAF).
D. Federal Accounting Standards Advisory Board (FASAB).

28. The Financial Accounting Standards Board has the responsibility for setting accounting
and financial reporting standards for

A. All not-for-profit organizations that are nongovernmental and business entities.
B. All not-for-profit organizations and business entities.
C. All not-for-profit organizations.
D. Special purpose governments with a business purpose.

29. You are trying to decide if an entity you are reviewing is a government or a not-for-
profit. Which of the following would indicate it is a government rather than a not-for-profit
entity?

A. Absence of profit motive.
B. A primary source of revenues is taxes.
C. Resource providers do not expect benefits proportional to the resources provided.
D. Absence of a defined ownership interest that can be sold, transferred, or redeemed.

30. Which of the following is identified by the GASB as the "cornerstone" of all financial
reporting in government?

A. Decision usefulness.
B. Stewardship.
C. Accountability.
D. Interperiod equity.

31. Which of the following organizations issue standards that focus on both internal and
external financial reporting?

A. Federal Accounting Standards Advisory Board.
B. Governmental Accounting Standards Board.

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