Question 1

Which of the following is NOT a typical external user of a government or not-for-profit financial statements?

Accepted Answer

A)   Governing boards
B)   Securities and Exchange Commission
C)   Donors and grantors
D)   Taxpayers/citizens or organization members D

Question 2

Which of the following statements is true?

Accepted Answer

A)   Governments may engage in activities like activities engaged in by for-profit entities.
B)   There are a small number of different types of governments.
C)   All governments engage in the same activities.
D)   Managers may have a long-term focus and thereby sacrifice the short-term liquidity of the entity. A

Question 3

What are some of the definitional criteria that distinguish a state or local government from a not-for-profit entity?

Accepted Answer

First, and foremost, state and local governments usually have the power to assess taxes. Not-for-profit entities do not. In addition, governments may issue tax-exempt debt and their governing bodies are either elected by taxpayers or appointed by another government. Less common is the fact that a government can usually be unilaterally dissolved by another government (usually the one that created it) and its assets assumed without compensation. None of these things is true about not-for-profit entities.

Question 4

Governments have no need for an accounting system.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

A primary characteristic that distinguishes governments from businesses is

Accepted Answer

A)   The need to generate revenues equal to or more than expenditures/expenses.
B)   The importance of the budget in the governing process.
C)   The need to provide goods or services.
D)   The correlation between revenues generated and demand for goods or services.

Question 7

The objective of a typical government or not-for-profit entity includes goals that are difficult to quantify

Accepted Answer

A) True 
 B)False

Question 8

A primary characteristic that distinguishes government from not-for-profits is

Accepted Answer

A)   The need to generate revenues equal to or more than expenditures/expenses.
B)   The ability to levy taxes.
C)   The need to provide goods or services.
D)   The correlation between revenues generated and demand for goods or services.

Question 9

How does the FASB influence generally accepted accounting principles for state and local governments?

Accepted Answer

The answer of How does the FASB influence generally accepted...

Question 10

Which of the following is common to both governments and not-for-profit entities but distinguishes these entities from for-profit entities?

Accepted Answer

A)   The budget is a legal, financial document.
B)   Revenues are usually indicative of demand for goods or services.
C)   There is direct matching of revenues and expenses.
D)   There are no defined ownership interests.

Question 11

Which of the following are objectives of financial reporting by state and local governments as established by the GASB? i. Accountability
ii. Evaluation of legislative results
iii. Level of service and ability to meet obligations

Accepted Answer

A)   I only
B)   II only
C)   I and III
D)   I, II and III

Question 12

As used by the GASB, interperiod equity refers to which of the following?

Accepted Answer

A)   Demonstrate compliance with finance-related contractual requirements.
B)   Provide information to determine whether the constituents pay for what they receive.
C)   Demonstrate whether resources were obtained and used in accordance with the government's legally adopted budget.
D)   Provide information to assist users in assessing the government's economy, efficiency, and effectiveness.

Question 13

The most significant financial document provided by a government is the

Accepted Answer

A)   Balance sheet.
B)   Operating statement.
C)   Operating budget.
D)   Cash flow statement.

Question 14

What is the significance-for financial reporting purposes-of the fact that neither not-for-profits nor governments have owners (stockholders)?

Accepted Answer

The answer of What is the significance-for financial reporting purposes-of...

Question 15

Given a specific set of data, the basis of accounting selected by or imposed on a government will impact which of the following the LEAST?

Accepted Answer

A)   Determining whether the government has a balanced budget.
B)   Determining whether the government has the ability to issue debt.
C)   Determining whether certain economic events occurred.
D)   Determining the annual payments to a government-sponsored pension plan.

Question 16

Which of the following entities was a principal in creating the FASAB?

Accepted Answer

A)   U.S. Congress.
B)   Office of Management and Budget.
C)   Governmental Accounting Standards Board.
D)   Securities and Exchange Commission.

Question 17

Which of the following characteristics is unique to governments?

Accepted Answer

A)   The ability to have activities financed with tax-exempt debt.
B)   The power to impose fees.
C)   The ability to issue tax-exempt debt.
D)   The ability to have activities financed by Federal grants.

Question 18

Which of the following objectives is considered the cornerstone of financial reporting by a state or local government?

Accepted Answer

A)   Accountability.
B)   Budgetary compliance.
C)   Interperiod equity.
D)   Service efforts and accomplishments.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A not-for-profit entity raises funds to support specific programs, services, and activities. The recipients of the programs, services, and activities are frequently not the providers of the resources needed to deliver the programs, services, and activities. What information would donors to these not-for-profit entities be interested in seeing? What information would program beneficiaries be interested in seeing? Identify other users of the financial statements of a not-for-profit and the types of information in which they would be interested.

Accepted Answer

The answer of A not-for-profit entity raises funds to support...

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

Which of the following is NOT a typical external user of a government or not-for-profit financial statements?

Which of the following statements is true?

What are some of the definitional criteria that distinguish a state or local government from a not-for-profit entity?

Governments have no need for an accounting system.

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

A primary characteristic that distinguishes governments from businesses is

The objective of a typical government or not-for-profit entity includes goals that are difficult to quantify

A primary characteristic that distinguishes government from not-for-profits is

How does the FASB influence generally accepted accounting principles for state and local governments?

Which of the following is common to both governments and not-for-profit entities but distinguishes these entities from for-profit entities?

Which of the following are objectives of financial reporting by state and local governments as established by the GASB? i. Accountability ii. Evaluation of legislative results iii. Level of service and ability to meet obligations

As used by the GASB, interperiod equity refers to which of the following?

The most significant financial document provided by a government is the

What is the significance-for financial reporting purposes-of the fact that neither not-for-profits nor governments have owners (stockholders)?

Given a specific set of data, the basis of accounting selected by or imposed on a government will impact which of the following the LEAST?

Which of the following entities was a principal in creating the FASAB?

Which of the following characteristics is unique to governments?

Which of the following objectives is considered the cornerstone of financial reporting by a state or local government?

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