Question 1

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.

Accepted Answer

This statement is true. The GASB is a private, non-profit organization that sets accounting standards for state and local governments in the United States. These standards ensure that financial reporting is transparent and consistent across all government entities.

Question 2

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.

Accepted Answer

Interperiod equity is the principle of ensuring that current revenues are sufficient to pay for current services, thereby avoiding the need for future taxpayers to pay for services that were provided in the past. This principle helps to ensure fairness and sustainability in government financing.

Question 3

Special purpose governments generally provide a wider range of services to their residents than do general purpose governments.

Accepted Answer

Special purpose governments are designed to provide specific services, such as education, fire protection, or transportation, whereas general purpose governments, like cities or counties, offer a broad array of services to meet the general needs of their residents.

Question 4

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.

Accepted Answer

Governmental and not-for-profit organizations exist to serve a public or social purpose, rather than to generate profit. They may generate revenue, but any excess funds are typically reinvested into the organization's mission, rather than distributed to shareholders or investors.

Question 5

The needs of users of government financial reports are the same as those of users of business entity financial reports.

Accepted Answer

While both types of financial reports provide information on the financial performance and position of an entity, government financial reports have different requirements and regulations compared to business entity financial reports. Government financial reports must provide information on how public funds are being managed and allocated, which is not necessarily a concern for users of business entity financial reports. Additionally, users of government financial reports may include citizens and taxpayers who have a vested interest in how their government is handling financial resources, while users of business entity financial reports are typically investors and creditors interested in the financial health of the organization.

Question 6

The Financial Accounting Standards Board (FASB)is the body authorized to establish accounting principles for all colleges and universities and health care entities.

Accepted Answer

The Financial Accounting Standards Board (FASB) is responsible for setting accounting standards for public and private companies in the United States, not for colleges and universities or healthcare entities. These industries fall under different regulatory bodies for accounting principles. For example, colleges and universities generally follow the guidelines set forth by the National Association of College and University Business Officers (NACUBO) and the American Institute of Certified Public Accountants (AICPA). Healthcare entities typically follow guidelines from the Healthcare Financial Management Association (HFMA) and the Governmental Accounting Standards Board (GASB).

Question 7

The Financial Accounting Foundation has oversight over both FASB and GASB.

Accepted Answer

The Financial Accounting Foundation (FAF) oversees both the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB).

Question 8

The Office of Management and Budget (OMB)requires major federal departments and agencies to prepare an annual performance report.

Accepted Answer

The OMB does require major federal departments and agencies to prepare an annual performance report as part of the Government Performance and Results Act (GPRA).

Question 9

The FASB,GASB,and FASAB all focus their standards on both internal and external financial reporting.

Accepted Answer

The FASB (Financial Accounting Standards Board) and GASB (Governmental Accounting Standards Board) focus on external financial reporting, while FASAB (Federal Accounting Standards Advisory Board) focuses on accounting standards for federal entities, which can include both internal and external aspects, but the statement inaccurately generalizes their focus.

Question 10

Providing information on accountability is the primary financial reporting objective for both governmental and not-for-profit entities.

Accepted Answer

The answer of Providing information on accountability is the primary...

Question 11

The Governmental Accounting Standards Board (GASB)is the body authorized to establish accounting principles for all government entities.

Accepted Answer

The answer of The Governmental Accounting Standards Board (GASB)is the...

Question 12

Examples of general purpose governments include cities,towns,and public schools that receive tax revenue to finance the services they provide.

Accepted Answer

General purpose governments, such as cities, towns, and public schools, receive tax revenue to provide services to the community.

Question 13

The Federal Accounting Standards Advisory Board (FASAB)recommends accounting principles and standards for the federal government and its agencies and departments.

Accepted Answer

The Federal Accounting Standards Advisory Board (FASAB) does recommend accounting principles and standards for the federal government and its agencies and departments.

Question 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.

Accepted Answer

The Governmental Accounting Standards Board (GASB) encourages but does not require governments to report on service efforts and accomplishments (SEA).

Question 15

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.

Accepted Answer

The minimum requirements for general purpose external financial reporting include management's discussion and analysis (MD&A), the basic financial statements, and required supplementary information other than MD&A. Combining and individual fund financial statements are not a minimum requirement; they may be included as supplementary information.

Question 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.

Accepted Answer

This statement is true. Governmental entities are required to report on their compliance with various laws, regulations, and rules that impact their financial reports, such as Generally Accepted Accounting Principles (GAAP), internal control procedures, and legal restrictions on how public funds can be used. Not-for-profit entities, on the other hand, are typically focused on reporting on their activities and accomplishments related to their charitable or social missions, rather than compliance with specific regulations.

Question 17

Since neither governmental nor not-for-profit entities have investors,the financial reporting objectives are the same for both types of entities.

Accepted Answer

While there may be some overlap in financial reporting objectives for governmental and not-for-profit entities, there are also some significant differences. Not-for-profit entities often focus on demonstrating accountability to donors and other stakeholders, while governmental entities are accountable to taxpayers and may have reporting requirements mandated by legislation. Additionally, not-for-profit entities may have different revenue recognition and expense allocation standards than governmental entities.

Question 18

Neither governmental nor not-for-profit entities have residual equity that can be distributed to owners.

Accepted Answer

Both governmental and not-for-profit entities are designed to operate for a public or social purpose and do not have owners who hold residual equity shares in the organization. Any surplus funds generated by these entities are typically reinvested into the organization's mission and goals.

Question 19

The FASB standards require not-for-profit entities to report net assets in three categories: unrestricted,restricted,and net investment in capital assets.

Accepted Answer

The FASB standards require not-for-profit entities to report net assets in two categories: net assets without donor restrictions and net assets with donor restrictions, as updated by the FASB Accounting Standards Update No. 2016-14.

Question 20

The GASB provides optional guidance for those entities providing service efforts and accomplishments (SEA)reports to the public.

Accepted Answer

The GASB does provide optional guidance for entities providing service efforts and accomplishments (SEA) reports to the public.

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