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Accounting for Governmental & Nonprofit Entities Jacqueline Reck 18th ed
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Accounting for Governmental and Nonprofit Entities, 18e (Reck) Chapter 9 Financial Reporting of State and Local Governments 1) In accordance with GASB standards, both a general purpose government and a special purpose government can be considered primary governments if certain criteria are me...

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  • August 18, 2023
  • 505
  • 2023/2024
  • Exam (elaborations)
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  • complete test bank
  • accounting for governmental nonprofit entities
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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.

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