TEST BANK
FOR
INTRODUCTION TO FUND
ACCOUNTING 4TH EDITION
NORVELLE
Chapter i1
The iGovernment iand iNot-For-Profit iEnvironment
TRUE/FALSE i(CHAPTER i1)
1. F iThe imain iobjective iof ia itypical igovernmental ior inot-for-profit ientity iis ito iearn
ia iprofit.
2. TA igovernment’s ibudget imay ibe ibacked iby ithe iforce iof ilaw.
3. FGovernmental ientities ihave ino ineed ifor ian iaccounting isystem.
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,4. TA igovernment’s iinternal imanagers irely ion igeneral ipurpose
ifinancial istatements ifor iaiconsiderable iamount iof iinformation
iabout itheir igovernment.
5. FGovernments iand inot-for-profits imay inever iengage iin ibusiness-type iactivities.
6. TLenders iuse ithe ifinancial istatements iof igovernments iand inot-for
iprofits ijust ias ithey iwouldithose iof ibusinesses, ithat iis, ito ihelp iassess ithe
iborrower’s icredit-worthiness.
7. TFinancial istatements, ino imatter ihow iprepared, ido inot idirectly iaffect
ithe ieconomic iworth iofian ientity.
8. FThe iFinancial iAccounting iStandards iAdvisory iBoard’s istandards
ido inot iapply ito itheifederal iDepartment iof iTreasury.
9. TGovernments imay ibe isubject ito ithe isame ipressures ithat iled ito
iaccounting iscandals ilikeiEnron.
10. FThe iGovernmental iAccounting iStandards iBoard iestablishes igenerally
iaccepted iaccountingiprinciples ifor iall istate iand ilocal igovernment
ientities, ias iwell ias iall inot-for-profit ientities.
MULTIPLE iCHOICE i(CHAPTER i1)
1. A iprimary icharacteristic ithat idistinguishes igovernmental ientities ifrom ibusiness
ientities iis
a) The ineed ito igenerate irevenues iequal ito ior iin iexcess iof iexpenditures/expenses.
b) The iimportance iof ithe ibudget iin ithe igoverning iprocess.
c) The ineed ito iprovide igoods ior iservices.
d) The icorrelation ibetween irevenues igenerated iand idemand ifor igoods ior iservices.
2. A iprimary icharacteristic ithat idistinguishes inot-for-profit ientities ifrom ibusiness
ientities iis
a) The ineed ito igenerate irevenues iequal ito ior iin iexcess iof
iexpenditures/expenses.
b) The iimportance iof ithe ibudget iin ithe igoverning iprocess.
c) The ineed ito iprovide igoods ior iservices.
d) The icorrelation ibetween irevenues igenerated iand idemand ifor igoods ior
iservices.
Granof iTest iBank iChapter i1 Page i1
,3. Which iof ithe ifollowing icharacteristics idistinguishes ia igovernmental ior
inot-for-profit ientityifrom ia ibusiness ientity?
a) There iis ialways ia idirect ilink ibetween irevenues
igenerated iandiexpenditures/expenses iincurred.
b) Capital iassets iare iused ito iproduce irevenues iand isave icosts.
c) Revenues iare ialways iindicative iof idemand ifor igoods iand iservices.
d) The imission iof ithe ientity iwill idetermine ithe igoods ior iservices iprovided.
4. The imost isignificant ifinancial idocument iprovided iby ia igovernmental ientity iis ithe
a) The ibalance isheet.
b) The ioperating istatement.
c) The ioperating ibudget.
d) The icash iflow istatement.
5. Which iof ithe ifollowing istatements iis itrue?
a) Governments imay iengage iin iactivities isimilar ito iactivities
iengaged iin iby iforprofitientities.
b) There iare ia ilimited inumber iof idifferent itypes iof igovernments.
c) All igovernmental ientities iengage iin ithe isame iactivities.
d) Managers imay ihave ia ilong-term ifocus iand ithereby isacrifice ithe
ishort-term iliquidity iofithe ientity.
6. Which iof ithe ifollowing iactivities iis iNOT ian iactivity iin iwhich ia
igovernmental ientity imightiengage?
a) Selling ielectric ipower.
b) Operating ia igolf icourse.
c) Operating ia ibookstore.
d) All iof ithe iabove iare iactivities ithat imight ibe icarried iout iby ia igovernment.
7. In iwhich iof ithe ifollowing iactivities iis ia inot-for-profit ientity ileast ilikely ito
iengage?
a) Providing ieducational iservices.
b) Providing ihealth-care iservices.
c) Providing ifor iterrorism idefense.
d) Retail isales iof icookies.
8. Which iof ithe ifollowing ican ibe iaffected iby iGAAP?
a) Legal iability ito iissue ibonds.
b) Ability ito ibalance ithe ibudget.
c) Amount ireported ias iemployee ipension iplan icontributions.
d) Claims iand ijudgments isettled.
9. Which iof ithe ifollowing icharacteristics iis iunique ito ia igovernmental ientity?
a) The iability ito ihave iactivities ifinanced iwith itax-exempt idebt.
b) The ipower ito iimpose ifees.
c) The iability ito iissue itax-exempt idebt.
, d) The iability ito ihave iactivities ifinanced iby iFederal igrants.
Granof iTest iBank iChapter i1 Page i2
10. To iobtain ia icomprehensive iunderstanding iof ia igovernment’s ifiscal
ihealth, ia ifinancial ianalystishould iobtain ian iunderstanding iof iwhich iof
ithe ifollowing?
a) All iof ithe iresources iowned iby ithe igovernmental ientity.
b) All iof ithe iresources iwhich imay ibe isummoned iby ia igovernmental ientity.
c) Demographic idata iabout ithe iresidents iserved iby ithe igovernmental
ientity.
d) All iof ithe iabove.
11. Which iof ithe ifollowing iis icommon ito iboth igovernments iand inot-
for-profit ientities ibutidistinguishes ithese ientities ifrom ifor-profit
ientities?
a) The ibudget iis ia ilegal, ifinancial idocument.
b) Revenues iare iusually iindicative iof idemand ifor igoods ior iservices.
c) There iis idirect imatching iof irevenues iand iexpenses.
d) There iare ino idefined iownership iinterests.
12. Which iof ithe ifollowing iis iNOT ia ipurpose iof iexternal ifinancial ireporting iby
igovernments?
External ifinancial ireports ishould iallow iusers ito
a) Assess ifinancial icondition.
b) Compare iactual iresults iwith ithe ibudget.
c) Assess ithe iability iof ielected iofficials ito ieffectively imanage ipeople.
d) Evaluate iefficiency iand ieffectiveness.
13. Which iof ithe ifollowing iis iNOT ia ireason iwhy iusers ineed
igovernmental iand inot-for-profitiexternal ifinancial istatements?
a) To idetermine ithe iability iof ithe ientity ito imeet iits iobligations.
b) To idetermine ithe iability iof ithe ientity ito icontinue ito iprovide iservices.
c) To ipredict ifuture ifiscal isolvency.
d) To ievaluate ithe ioverall iprofitability iof ithe ientity.
14. Users iof igovernment ifinancial istatements ishould ibe iinterested iin
iinformation iabouticompliance iwith ilaws iand iregulations ifor
iwhich iof ithe ifollowing ireasons?
FOR
INTRODUCTION TO FUND
ACCOUNTING 4TH EDITION
NORVELLE
Chapter i1
The iGovernment iand iNot-For-Profit iEnvironment
TRUE/FALSE i(CHAPTER i1)
1. F iThe imain iobjective iof ia itypical igovernmental ior inot-for-profit ientity iis ito iearn
ia iprofit.
2. TA igovernment’s ibudget imay ibe ibacked iby ithe iforce iof ilaw.
3. FGovernmental ientities ihave ino ineed ifor ian iaccounting isystem.
Downloaded by: Ariah |
Distribution of this document is illegal
,4. TA igovernment’s iinternal imanagers irely ion igeneral ipurpose
ifinancial istatements ifor iaiconsiderable iamount iof iinformation
iabout itheir igovernment.
5. FGovernments iand inot-for-profits imay inever iengage iin ibusiness-type iactivities.
6. TLenders iuse ithe ifinancial istatements iof igovernments iand inot-for
iprofits ijust ias ithey iwouldithose iof ibusinesses, ithat iis, ito ihelp iassess ithe
iborrower’s icredit-worthiness.
7. TFinancial istatements, ino imatter ihow iprepared, ido inot idirectly iaffect
ithe ieconomic iworth iofian ientity.
8. FThe iFinancial iAccounting iStandards iAdvisory iBoard’s istandards
ido inot iapply ito itheifederal iDepartment iof iTreasury.
9. TGovernments imay ibe isubject ito ithe isame ipressures ithat iled ito
iaccounting iscandals ilikeiEnron.
10. FThe iGovernmental iAccounting iStandards iBoard iestablishes igenerally
iaccepted iaccountingiprinciples ifor iall istate iand ilocal igovernment
ientities, ias iwell ias iall inot-for-profit ientities.
MULTIPLE iCHOICE i(CHAPTER i1)
1. A iprimary icharacteristic ithat idistinguishes igovernmental ientities ifrom ibusiness
ientities iis
a) The ineed ito igenerate irevenues iequal ito ior iin iexcess iof iexpenditures/expenses.
b) The iimportance iof ithe ibudget iin ithe igoverning iprocess.
c) The ineed ito iprovide igoods ior iservices.
d) The icorrelation ibetween irevenues igenerated iand idemand ifor igoods ior iservices.
2. A iprimary icharacteristic ithat idistinguishes inot-for-profit ientities ifrom ibusiness
ientities iis
a) The ineed ito igenerate irevenues iequal ito ior iin iexcess iof
iexpenditures/expenses.
b) The iimportance iof ithe ibudget iin ithe igoverning iprocess.
c) The ineed ito iprovide igoods ior iservices.
d) The icorrelation ibetween irevenues igenerated iand idemand ifor igoods ior
iservices.
Granof iTest iBank iChapter i1 Page i1
,3. Which iof ithe ifollowing icharacteristics idistinguishes ia igovernmental ior
inot-for-profit ientityifrom ia ibusiness ientity?
a) There iis ialways ia idirect ilink ibetween irevenues
igenerated iandiexpenditures/expenses iincurred.
b) Capital iassets iare iused ito iproduce irevenues iand isave icosts.
c) Revenues iare ialways iindicative iof idemand ifor igoods iand iservices.
d) The imission iof ithe ientity iwill idetermine ithe igoods ior iservices iprovided.
4. The imost isignificant ifinancial idocument iprovided iby ia igovernmental ientity iis ithe
a) The ibalance isheet.
b) The ioperating istatement.
c) The ioperating ibudget.
d) The icash iflow istatement.
5. Which iof ithe ifollowing istatements iis itrue?
a) Governments imay iengage iin iactivities isimilar ito iactivities
iengaged iin iby iforprofitientities.
b) There iare ia ilimited inumber iof idifferent itypes iof igovernments.
c) All igovernmental ientities iengage iin ithe isame iactivities.
d) Managers imay ihave ia ilong-term ifocus iand ithereby isacrifice ithe
ishort-term iliquidity iofithe ientity.
6. Which iof ithe ifollowing iactivities iis iNOT ian iactivity iin iwhich ia
igovernmental ientity imightiengage?
a) Selling ielectric ipower.
b) Operating ia igolf icourse.
c) Operating ia ibookstore.
d) All iof ithe iabove iare iactivities ithat imight ibe icarried iout iby ia igovernment.
7. In iwhich iof ithe ifollowing iactivities iis ia inot-for-profit ientity ileast ilikely ito
iengage?
a) Providing ieducational iservices.
b) Providing ihealth-care iservices.
c) Providing ifor iterrorism idefense.
d) Retail isales iof icookies.
8. Which iof ithe ifollowing ican ibe iaffected iby iGAAP?
a) Legal iability ito iissue ibonds.
b) Ability ito ibalance ithe ibudget.
c) Amount ireported ias iemployee ipension iplan icontributions.
d) Claims iand ijudgments isettled.
9. Which iof ithe ifollowing icharacteristics iis iunique ito ia igovernmental ientity?
a) The iability ito ihave iactivities ifinanced iwith itax-exempt idebt.
b) The ipower ito iimpose ifees.
c) The iability ito iissue itax-exempt idebt.
, d) The iability ito ihave iactivities ifinanced iby iFederal igrants.
Granof iTest iBank iChapter i1 Page i2
10. To iobtain ia icomprehensive iunderstanding iof ia igovernment’s ifiscal
ihealth, ia ifinancial ianalystishould iobtain ian iunderstanding iof iwhich iof
ithe ifollowing?
a) All iof ithe iresources iowned iby ithe igovernmental ientity.
b) All iof ithe iresources iwhich imay ibe isummoned iby ia igovernmental ientity.
c) Demographic idata iabout ithe iresidents iserved iby ithe igovernmental
ientity.
d) All iof ithe iabove.
11. Which iof ithe ifollowing iis icommon ito iboth igovernments iand inot-
for-profit ientities ibutidistinguishes ithese ientities ifrom ifor-profit
ientities?
a) The ibudget iis ia ilegal, ifinancial idocument.
b) Revenues iare iusually iindicative iof idemand ifor igoods ior iservices.
c) There iis idirect imatching iof irevenues iand iexpenses.
d) There iare ino idefined iownership iinterests.
12. Which iof ithe ifollowing iis iNOT ia ipurpose iof iexternal ifinancial ireporting iby
igovernments?
External ifinancial ireports ishould iallow iusers ito
a) Assess ifinancial icondition.
b) Compare iactual iresults iwith ithe ibudget.
c) Assess ithe iability iof ielected iofficials ito ieffectively imanage ipeople.
d) Evaluate iefficiency iand ieffectiveness.
13. Which iof ithe ifollowing iis iNOT ia ireason iwhy iusers ineed
igovernmental iand inot-for-profitiexternal ifinancial istatements?
a) To idetermine ithe iability iof ithe ientity ito imeet iits iobligations.
b) To idetermine ithe iability iof ithe ientity ito icontinue ito iprovide iservices.
c) To ipredict ifuture ifiscal isolvency.
d) To ievaluate ithe ioverall iprofitability iof ithe ientity.
14. Users iof igovernment ifinancial istatements ishould ibe iinterested iin
iinformation iabouticompliance iwith ilaws iand iregulations ifor
iwhich iof ithe ifollowing ireasons?
