Quiz 1: Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Entities
Business
Q 1Q 1
Special purpose governments generally provide a wider range of services to their residents than do general purpose governments.
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True False
False
Q 2Q 2
Examples of general purpose governments include cities,towns,and public schools that receive tax revenue to finance the services they provide.
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True False
True
Q 3Q 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.
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True False
True
Q 4Q 4
The Governmental Accounting Standards Board (GASB)is the body authorized to establish accounting principles for all government entities.
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True False
Q 5Q 5
The Financial Accounting Standards Board (FASB)is the body authorized to establish accounting principles for all colleges and universities and health care entities.
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True False
Q 6Q 6
Neither governmental nor not-for-profit entities have residual equity that can be distributed to owners.
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True False
Q 7Q 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.
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True False
Q 8Q 8
The needs of users of government financial reports are the same as those of users of business entity financial reports.
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True False
Q 9Q 9
The Federal Accounting Standards Advisory Board (FASAB)recommends accounting principles and standards for the federal government and its agencies and departments.
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True False
Q 10Q 10
The FASB,GASB,and FASAB all focus their standards on both internal and external financial reporting.
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True False
Q 11Q 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.
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True False
Q 12Q 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.
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True False
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True False
Q 14Q 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.
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True False
Q 15Q 15
Providing information on accountability is the primary financial reporting objective for both governmental and not-for-profit entities.
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True False
Q 16Q 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.
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True False
Q 17Q 17
Since neither governmental nor not-for-profit entities have investors,the financial reporting objectives are the same for both types of entities.
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True False
Q 18Q 18
The GASB provides optional guidance for those entities providing service efforts and accomplishments (SEA)reports to the public.
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True False
Q 19Q 19
The Office of Management and Budget (OMB)requires major federal departments and agencies to prepare an annual performance report.
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True False
Q 20Q 20
The FASB standards require not-for-profit entities to report net assets in three categories: unrestricted,restricted,and net investment in capital assets.
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True False
Q 21Q 21
The FASB standards require not-for-profit entities to separately report program expenses and support expenses.
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True False
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True False
Q 23Q 23
The governmental fund financial statements are useful in assessing operational accountability.
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True False
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True False
Q 25Q 25
Both the GASB and the FASB require entities to include a management discussion and analysis in the financial reports.
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True False
Q 26Q 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.
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Multiple Choice
Q 27Q 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).
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Multiple Choice
Q 28Q 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.
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Multiple Choice
Q 29Q 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.
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Multiple Choice
Q 30Q 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.
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Multiple Choice
Q 31Q 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.
C) Financial Accounting Standards Board.
D) American Institute of CPAs.
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Multiple Choice
Q 32Q 32
Which of the following is identified by the FASAB as the foundation for federal financial reporting?
A) Decision usefulness.
B) Accountability.
C) Understandability.
D) Budget integrity.
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Multiple Choice
Q 33Q 33
Which of the following is not an objective of financial reporting by state and local governments?
A) To assist users in assessing the adequacy of systems and controls.
B) To assist users in assessing financial condition and results of operations.
C) To assist financial report users in comparing actual financial results with the legally adopted budget.
D) To assist in determining compliance with finance-related laws, rules, and regulations.
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Multiple Choice
Q 34Q 34
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.
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Multiple Choice
Q 35Q 35
One of the minimum requirements for general purpose external financial reporting by governments is:
A) Management's discussion and analysis (MD&A).
B) Transmittal letter.
C) Combining and individual fund statements.
D) Statistical information.
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Multiple Choice
Q 36Q 36
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.
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Multiple Choice
Q 37Q 37
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.
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Multiple Choice
Q 38Q 38
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.
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Multiple Choice
Q 39Q 39
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.
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Multiple Choice
Q 40Q 40
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.
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Multiple Choice
Q 41Q 41
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.
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Multiple Choice
Q 42Q 42
On what do the government-wide financial statements report?
A) Operational accountability.
B) Fiscal accountability.
C) The cost of government services.
D) Budgetary compliance.
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Multiple Choice
Q 43Q 43
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)
C) FASAB.
D) Both A and
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Multiple Choice
Q 44Q 44
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.
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Multiple Choice
Q 45Q 45
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.
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Multiple Choice
Q 46Q 46
Which of the following statements is prepared by all not-for-profit organizations?
A) Statement of financial position.
B)
B) Statement of functional expenses.
C) Statement of revenues, expenses, and changes in net position.
D) Both A and
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Multiple Choice
Q 47Q 47
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.
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Multiple Choice
Q 48Q 48
The FASB requires that a statement of functional expenses be prepared by which of the following entities?
A) Colleges and universities.
B) Health care entities.
C) Voluntary health and welfare entities.
D) Religious entities.
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Multiple Choice
Q 49Q 49
Which of the following is not a net asset category reported by not-for-profit entities?
A) Unrestricted net assets.
B) Temporarily restricted net assets.
C) Restricted net assets.
D) Permanently restricted net assets.
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Multiple Choice
Q 50Q 50
Which of the following is not an example of a support expense reported by not-for-profit entities?
A) Fund-raising expenses.
B) Program expenses.
C) Management expenses.
D) General expenses of operating the not-for-profit entity.
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Multiple Choice
Q 51Q 51
Explain the essential differences between general purpose and special purpose governments and give several examples of each.
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Essay
Q 52Q 52
Identify and explain the characteristics that distinguish government and not-for-profit entities from business entities.
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Essay
Q 53Q 53
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?
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Essay
Q 54Q 54
Why should persons interested in reading financial reports of government and not-for-profit entities be familiar with standards set by the GASB and FASB?
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Essay
Q 55Q 55
Explain in your own words why accountability is the cornerstone of all financial reporting in government.
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Essay
Q 56Q 56
In your own words state the primary uses the GASB believes external users have for financial reports of state and local governments.For contrast,state the uses the FASB believes external users have for the financial reports of not-for-profit organizations.
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Essay
Q 57Q 57
Describe the difference between a comprehensive annual financial report (CAFR)and GASB general purpose external financial reporting for state and local governments.
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Essay
Q 58Q 58
Identify and briefly explain the four sections of the performance and accountability report (PAR)that the Office of Management and Budget requires major federal departments and agencies to prepare.
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Essay
Q 59Q 59
Describe the comprehensive annual financial report (CAFR).What are the sections of the report and which components of the organization should it include? Is a CAFR required?
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Essay