Exam 1: The Government and Not-For-Profit Environment

Lenders use the financial statements of governments and not-for-profit entities just as they would those of businesses, that is, to help assess the borrower's credit-worthiness.

Which of the following characteristics distinguishes a government or not-for-profit entity from a business?

Under certain circumstances a government might use standards established by which of the following standard-setting bodies?

The Federal Accounting Standards Advisory Board's standards do not apply to the federal Department of the Treasury.

Financial statements, no matter how prepared, do not directly affect the economic worth of an entity.

In the United States, educational services can be provided by federal government entities, by non-federal government entities, by not-for-profit entities, and by for-profit entities.Are the accounting and financial reporting standards the same for each of these entities? Should they be the same?

Which of the following is an objective of financial reporting by nongovernmental not-for-profit entities as established by the FASB? Financial reporting should provide information that is useful to present and potential resource providers and other users in:

A government's internal managers rely on general purpose financial statements for a considerable amount of information about their government.

The Governmental Accounting Standards Board (GASB)stated that an objective of financial reporting is to measure interperiod equity, that is-"Financial reporting should provide information to determine whether current-year revenues were sufficient to pay for current-year services." What is your understanding of interperiod equity? What costs incurred in the current year should be paid for by the taxpayers of the current period? What costs incurred in the current year should be paid for by future taxpayers?

Which of the following is a probable use a donor would make of the external financial statements of a not-for-profit entity?