Question 1

Why should persons interested in reading financial reports of governmental and not-for-profit entities be familiar with standards set by the GASB and FASB?

Accepted Answer

The answer of Why should persons interested in reading financial...

Question 2

GASB and FASB standards are concerned only with external financial reporting; whereas,FASAB standards are concerned with both internal and external financial reporting.Do you agree with this statement? Why or why not?

Accepted Answer

The answer of GASB and FASB standards are concerned only...

Question 3

On what should the government-wide financial statements report?
A) Net position and results of financial operations of the government as a whole.
B) Fiscal accountability.
C) The cost of government services.
D) Budgetary compliance.

Accepted Answer

Government-wide financial statements should report on the net position and results of financial operations of the government as a whole. This provides a comprehensive view of the government's financial position and performance, which is important for accountability and decision-making. Reporting on fiscal accountability, the cost of government services, and budgetary compliance are also important, but they are not the primary focus of government-wide financial statements.

Question 4

Which of the following types of organizations may be subject to FASB jurisdiction?
A) A state hospital.
B) A college or university.
C) A public school district.
D) A public sanitation district.

Accepted Answer

Colleges and universities may be subject to FASB jurisdiction if they are considered to be business-type activities. State hospitals, public school districts, and public sanitation districts are typically government entities subject to GASB jurisdiction.

Question 5

Which of the following groups is considered a primary user of a state or local government's general-purpose external financial statements?
A) Citizens.
B) Managers and administrators.
C) Employees.
D) Special interest groups.

Accepted Answer

Citizens are considered the primary users of a state or local government's general-purpose external financial statements. The financial statements are intended to provide transparency and accountability to the public regarding the government's financial activities, so citizens have a right to access this information. While managers and administrators, employees, and special interest groups may also use the financial statements, they are not the primary intended audience.

Question 6

One of the minimum requirements for general purpose external financial reporting is:
A) Management's discussion and analysis (MD&A).
B) Consolidated financial statements.
C) Other supplementary information,such as combining and individual fund statements.
D) Statistical information.

Accepted Answer

The answer of One of the minimum requirements for general...

Question 7

A comprehensive annual financial report (CAFR)prepared in conformity with GASB recommendations should include which of the following sections?
A) Letter of transmittal,management's discussion and analysis (MD&A),and financial.
B) Introductory,financial,and statistical.
C) Introductory,MD&A,and financial.
D) Letter of transmittal,financial,and supplementary.

Accepted Answer

The answer of A comprehensive annual financial report (CAFR)prepared in...

Question 8

Which of the following standard-setting bodies requires a management's discussion and analysis as a part of the financial report?
A) GASB.
B) FASB.
C) FASAB.
D) Both A and C.

Accepted Answer

The Governmental Accounting Standards Board (GASB) and the Federal Accounting Standards Advisory Board (FASAB) both require a management's discussion and analysis (MD&A) as part of the financial reporting for governmental entities.

Question 9

Identify and explain the characteristics that distinguish governmental and not-for-profit entities from business entities.

Accepted Answer

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Question 10

Which of the following would be included in a properly prepared comprehensive annual financial report (CAFR),but not in the minimum requirements for general purpose financial reporting specified by GASB standards?
A) Management's discussion and analysis (MD&A).
B) Government-wide financial statements.
C) Notes to the financial statements.
D) Combining and individual fund financial statements.

Accepted Answer

Combining and individual fund financial statements are included in a CAFR but are not part of the minimum requirements for general purpose financial reporting as specified by GASB standards. The other options (MD&A, government-wide financial statements, and notes to the financial statements) are part of the minimum requirements.

Question 11

Which of the following should be included in the financial section of a comprehensive annual financial report?
A) Transmittal letter.
B) The basic financial statements,including notes thereto.
C) Tables and charts showing demographic and economic data.
D) A description of the government.

Accepted Answer

The financial section of a comprehensive annual financial report should include the basic financial statements, including notes thereto, as they provide a detailed overview of the government's financial position, operating results, and cash flow. While a transmittal letter and a description of the government may be included in the report, they would fall under different sections such as introductory and statistical sections respectively. Tables and charts showing demographic and economic data may also be included in the report under the statistical section but would not be part of the financial section.

Question 12

Explain in your own words why accountability is the cornerstone of all financial reporting in government.

Accepted Answer

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Question 13

On what should the governmental fund financial statements report?
A) Net position and results of financial operations of the government as a whole.
B) Fiscal accountability.
C) Operational accountability.
D) Cost of government services.

Accepted Answer

Governmental fund financial statements should report on fiscal accountability, meaning they should provide information on how the government raised and spent money in accordance with legal requirements and budgetary constraints. This includes information on the sources and uses of funds, as well as balances and changes in fund balances. The other choices may be important for other financial statements or reports, but are not specifically required for governmental fund financial statements.

Question 14

Which of the following sections is not considered a part of a federal agency's performance and accountability report?
A) Basic financial statements.
B) Annual performance report.
C) Statistical section.
D) Management's discussion and analysis.

Accepted Answer

The statistical section is not considered a part of a federal agency's performance and accountability report. The other sections typically included are basic financial statements, annual performance report, and management's discussion and analysis.

Question 15

Recognizing revenues when measurable and available for paying current obligations and expenditures when incurred describes which basis of accounting?
A) Accrual.
B) Modified accrual.
C) Modified cash.
D) Budgetary.

Accepted Answer

The basis of accounting described is modified accrual, which is commonly used by governments and recognizes revenues when they are measurable and available for paying current obligations, and expenditures when they are incurred. This basis of accounting focuses on current assets and current liabilities, and is different from the accrual basis used in the private sector which recognizes revenues when earned and expenses when incurred, regardless of when cash is received or paid. The term "modified" refers to the fact that some exceptions are made to the accrual basis to better suit governmental accounting. The budgetary basis, on the other hand, is a method of accounting based on funds or budgets, and is not necessarily related to the recognition of revenues and expenditures. The modified cash basis is not a commonly used basis of accounting.

Question 16

Explain the essential differences between general purpose and special purpose governments and give several examples of each.

Accepted Answer

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Question 17

The section of the comprehensive annual financial report that presents tables and charts showing social and economic data in addition to financial trends,fiscal capacity,and operating information of the government is the:
A) Introductory section.
B) Management's discussion and analysis section.
C) Statistical section.
D) Financial section.

Accepted Answer

The statistical section is the section of the comprehensive annual financial report that presents tables and charts showing social and economic data in addition to financial trends, fiscal capacity, and operating information of the government.

Question 18

Which of the following statements is prepared by all not-for-profit organizations?
A) Statement of financial position.
B) Statement of functional expenses.
C) Statement of revenues,expenses,and changes in net position.
D) Both A and B.

Accepted Answer

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Question 19

Which of the following would typically not be included in the introductory section of a comprehensive annual financial report?
A) Title and contents page.
B) Letter of transmittal.
C) A description of the government.
D) Summary of the government's current financial position and results of financial activities.

Accepted Answer

The introductory section of a comprehensive annual financial report typically includes the title and contents page, letter of transmittal, and a description of the government, but not a summary of the government's current financial position and results of financial activities. This type of summary is usually found in the financial section of the report.

Question 20

A statistical section should be included in
A) A comprehensive annual financial report (CAFR).
B) The basic financial statements.
C) The notes to the financial statements.
D) Required supplementary information,other than MD&A.

Accepted Answer

A statistical section is a required part of a Comprehensive Annual Financial Report (CAFR) under Governmental Accounting Standards Board (GASB) standards. It includes a range of statistical data related to the government's financial activities, social and economic environment, and operating information. It provides additional context to the basic financial statements and can help users understand the financial health and performance of the government entity.

Quiz 1: Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Entities

Why should persons interested in reading financial reports of governmental and not-for-profit entities be familiar with standards set by the GASB and FASB?

GASB and FASB standards are concerned only with external financial reporting; whereas,FASAB standards are concerned with both internal and external financial reporting.Do you agree with this statement? Why or why not?

On what should the government-wide financial statements report?

Which of the following types of organizations may be subject to FASB jurisdiction?

Which of the following groups is considered a primary user of a state or local government's general-purpose external financial statements?

One of the minimum requirements for general purpose external financial reporting is:

A comprehensive annual financial report (CAFR) prepared in conformity with GASB recommendations should include which of the following sections?

Which of the following standard-setting bodies requires a management's discussion and analysis as a part of the financial report?

Identify and explain the characteristics that distinguish governmental and not-for-profit entities from business entities.

Which of the following would be included in a properly prepared comprehensive annual financial report (CAFR) ,but not in the minimum requirements for general purpose financial reporting specified by GASB standards?

Which of the following should be included in the financial section of a comprehensive annual financial report?

Explain in your own words why accountability is the cornerstone of all financial reporting in government.

On what should the governmental fund financial statements report?

Which of the following sections is not considered a part of a federal agency's performance and accountability report?

Recognizing revenues when measurable and available for paying current obligations and expenditures when incurred describes which basis of accounting?

Explain the essential differences between general purpose and special purpose governments and give several examples of each.

The section of the comprehensive annual financial report that presents tables and charts showing social and economic data in addition to financial trends,fiscal capacity,and operating information of the government is the:

Which of the following statements is prepared by all not-for-profit organizations?

Which of the following would typically not be included in the introductory section of a comprehensive annual financial report?

A statistical section should be included in