ESSENTIALS OF ACCOUNTING FOR GOVERNMENTAL AND
NOT FOR PROFIT ORGANIZATIONS ACCOUNTING COURSE
2025 2026 COURSE VERIFIED QUESTIONS AND ANSWERS
GRADED A+ FUNDAMENTAL ACCOUNTING PRINCIPLES &
APPLICATION STUDY GUIDE GUARANTEED SUCCESS
National Association of College and University Business Officers
(NACUBO) - CORRECT ANSWER - -"Association of college and university
financial vice presidents, controllers, budget officials, and other finance
officers that produces and distributes Financial Accounting and Reporting
Manual for Higher Education (q.v.)."
National Council on Governmental Accounting (NCGA) - CORRECT
ANSWER - -Body that established accounting and financial reporting
standards for state and local governments prior to the formation of the
Governmental Accounting Standards Board.
net assets - CORRECT ANSWER - -Difference between total assets and
total liabilities. Used by the FASB and GASB to describe equity accounts.
net assets—invested in capital assets, net of related debt (governmental) -
CORRECT ANSWER - -The portion of net assets of a governmental unit
representing capital assets less accumulated depreciation less debt
associated with the capital assets.
net assets—permanently restricted (not-for-profit) - CORRECT ANSWER - -
Used in accounting for not-for-profit organizations indicating the amount of
net assets whose use is permanently restricted by an external donor.
net assets—restricted (governmental) - CORRECT ANSWER - -That portion
of net assets of a governmental unit or proprietary fund that is restricted.
See restricted (governmental).
,net assets—temporarily restricted (not-for-profit) - CORRECT ANSWER -
"Used in accounting for not-for-profit organizations indicating the amount
of net assets whose use is temporarily restricted by donors or grantors.
Released by program, time, plant acquisition, and term endowments."
net assets—unrestricted (governmental and not-for-profit) - CORRECT
ANSWER - -Used in accounting for governmental and not-for-profit
organizations indicating that portion of net assets that is unrestricted.
net increase/decrease in fair value of investments - CORRECT ANSWER -
Account title used by governments to report realized and unrealized gains
or losses on investments.
net pension obligation (NPO) - CORRECT ANSWER - -"In a pension plan,
the accumulated difference between the employer's required (see
actuarial basis) and actual contributions."
nominal interest rate - CORRECT ANSWER - -"Contractual interest rate
shown on the face and in the body of a bond and representing the amount
of interest to be paid, in contrast to the effective interest rate (q.v.)."
nonaudit services - CORRECT ANSWER - -"Under Government Auditing
Standards (q.v.), gathering, providing, or explaining information requested
by decision makers or providing advice or assistance to management
officials." noncapital financing activities - CORRECT ANSWER - -"Cash
flow statement category required by GASB. Includes cash flows from
financing not related to capital acquisition, including borrowing and
transfers to and from other funds." accounting entity - CORRECT ANSWER
- -Where an entity is established for the purpose of accounting for a certain
activity or activities. See fiscal entity.
,accrual basis - CORRECT ANSWER - -"Basis of accounting under which
revenues are recorded when earned and expenditures (or expenses) are
recorded as soon as they result in liabilities for benefits received,
notwithstanding that the receipt of cash or the payment of cash may take
place, in whole or in part, in another accounting period."
acquisition method - CORRECT ANSWER - -"A method of accounting for
mergers among not-for-profit organizations in which the acquiring entity
records the acquired assets and liabilities at their fair values, not at the
acquired entity's book values."
activity - CORRECT ANSWER - -"Specific and distinguishable line of work
performed by one or more organizational components of a governmental
unit for the purpose of accomplishing a function for which the
governmental unit is responsible. For example, "Food Inspection" is an
activity performed in the discharge of the "Health" function. See also
Function. "
actuarial basis - CORRECT ANSWER - -Basis used in computing the
amount of contributions to be made periodically to a fund so that the total
contributions plus the compounded earnings thereon will equal the
required payments to be made out of the fund. The factors taken into
account in arriving at the amount of these contributions include the length
of time over which each contribution is to be held and the rate of return
compounded on such a contribution over its life. Commonly used to
compute annual required contributions (q.v.) to pension and other
postemployment benefit plans.1
additions - CORRECT ANSWER - -"GASB term for fiduciary fund financial
reporting, replacing the term revenues. Additions are reported on the
accrual basis."
ad valorem - CORRECT ANSWER - -In proportion to value. Basis for levy of
taxes on property.
, advance refunding - CORRECT ANSWER - -"A bond refunding (q.v.) in which
the proceeds are placed in an escrow account pending the call date or the
maturity date of the existing debt. In this case, the debt is said to be
defeased (q.v.) for accounting purposes."
advances interfund - CORRECT ANSWER - -Long-term loans between
funds. A long-term loan to another fund would be represented in the
account.
adverse opinion - CORRECT ANSWER - -Audit report in which the auditor
states that the financial report "does not present fairly" due to major
departures from generally accepted accounting principles (q.v.).
agency fund - CORRECT ANSWER - -"Fiduciary fund consisting of
resources received and held by the governmental agent for others; for
example, taxes collected and held by a municipality for a school district."
agent multiple-employer defined benefit pension plan - CORRECT
ANSWER - -Statewide pension plan in which separate account balances
are maintained for each participating employer; expected to fund any
deficits. Contrast with costsharing multiple-employer defined benefit
pension plan.
American Institute of Certified Public Accountants (AICPA) - CORRECT
ANSWER - -"Organization of Certified Public Accountants that provides
auditing guidance, including the GAAP Hierarchy (q.v.) and accounting and
auditing guidance, in the case of Audit and Accounting Guides, when
approved by the FASB (q.v.) and/or the GASB (q.v.)."
annual required contributions (ARC) - CORRECT ANSWER - -"Term used by
GASB to determine the amount required by a retirement fund (including
other postemployment benefit plans) to be contributed, including normal
NOT FOR PROFIT ORGANIZATIONS ACCOUNTING COURSE
2025 2026 COURSE VERIFIED QUESTIONS AND ANSWERS
GRADED A+ FUNDAMENTAL ACCOUNTING PRINCIPLES &
APPLICATION STUDY GUIDE GUARANTEED SUCCESS
National Association of College and University Business Officers
(NACUBO) - CORRECT ANSWER - -"Association of college and university
financial vice presidents, controllers, budget officials, and other finance
officers that produces and distributes Financial Accounting and Reporting
Manual for Higher Education (q.v.)."
National Council on Governmental Accounting (NCGA) - CORRECT
ANSWER - -Body that established accounting and financial reporting
standards for state and local governments prior to the formation of the
Governmental Accounting Standards Board.
net assets - CORRECT ANSWER - -Difference between total assets and
total liabilities. Used by the FASB and GASB to describe equity accounts.
net assets—invested in capital assets, net of related debt (governmental) -
CORRECT ANSWER - -The portion of net assets of a governmental unit
representing capital assets less accumulated depreciation less debt
associated with the capital assets.
net assets—permanently restricted (not-for-profit) - CORRECT ANSWER - -
Used in accounting for not-for-profit organizations indicating the amount of
net assets whose use is permanently restricted by an external donor.
net assets—restricted (governmental) - CORRECT ANSWER - -That portion
of net assets of a governmental unit or proprietary fund that is restricted.
See restricted (governmental).
,net assets—temporarily restricted (not-for-profit) - CORRECT ANSWER -
"Used in accounting for not-for-profit organizations indicating the amount
of net assets whose use is temporarily restricted by donors or grantors.
Released by program, time, plant acquisition, and term endowments."
net assets—unrestricted (governmental and not-for-profit) - CORRECT
ANSWER - -Used in accounting for governmental and not-for-profit
organizations indicating that portion of net assets that is unrestricted.
net increase/decrease in fair value of investments - CORRECT ANSWER -
Account title used by governments to report realized and unrealized gains
or losses on investments.
net pension obligation (NPO) - CORRECT ANSWER - -"In a pension plan,
the accumulated difference between the employer's required (see
actuarial basis) and actual contributions."
nominal interest rate - CORRECT ANSWER - -"Contractual interest rate
shown on the face and in the body of a bond and representing the amount
of interest to be paid, in contrast to the effective interest rate (q.v.)."
nonaudit services - CORRECT ANSWER - -"Under Government Auditing
Standards (q.v.), gathering, providing, or explaining information requested
by decision makers or providing advice or assistance to management
officials." noncapital financing activities - CORRECT ANSWER - -"Cash
flow statement category required by GASB. Includes cash flows from
financing not related to capital acquisition, including borrowing and
transfers to and from other funds." accounting entity - CORRECT ANSWER
- -Where an entity is established for the purpose of accounting for a certain
activity or activities. See fiscal entity.
,accrual basis - CORRECT ANSWER - -"Basis of accounting under which
revenues are recorded when earned and expenditures (or expenses) are
recorded as soon as they result in liabilities for benefits received,
notwithstanding that the receipt of cash or the payment of cash may take
place, in whole or in part, in another accounting period."
acquisition method - CORRECT ANSWER - -"A method of accounting for
mergers among not-for-profit organizations in which the acquiring entity
records the acquired assets and liabilities at their fair values, not at the
acquired entity's book values."
activity - CORRECT ANSWER - -"Specific and distinguishable line of work
performed by one or more organizational components of a governmental
unit for the purpose of accomplishing a function for which the
governmental unit is responsible. For example, "Food Inspection" is an
activity performed in the discharge of the "Health" function. See also
Function. "
actuarial basis - CORRECT ANSWER - -Basis used in computing the
amount of contributions to be made periodically to a fund so that the total
contributions plus the compounded earnings thereon will equal the
required payments to be made out of the fund. The factors taken into
account in arriving at the amount of these contributions include the length
of time over which each contribution is to be held and the rate of return
compounded on such a contribution over its life. Commonly used to
compute annual required contributions (q.v.) to pension and other
postemployment benefit plans.1
additions - CORRECT ANSWER - -"GASB term for fiduciary fund financial
reporting, replacing the term revenues. Additions are reported on the
accrual basis."
ad valorem - CORRECT ANSWER - -In proportion to value. Basis for levy of
taxes on property.
, advance refunding - CORRECT ANSWER - -"A bond refunding (q.v.) in which
the proceeds are placed in an escrow account pending the call date or the
maturity date of the existing debt. In this case, the debt is said to be
defeased (q.v.) for accounting purposes."
advances interfund - CORRECT ANSWER - -Long-term loans between
funds. A long-term loan to another fund would be represented in the
account.
adverse opinion - CORRECT ANSWER - -Audit report in which the auditor
states that the financial report "does not present fairly" due to major
departures from generally accepted accounting principles (q.v.).
agency fund - CORRECT ANSWER - -"Fiduciary fund consisting of
resources received and held by the governmental agent for others; for
example, taxes collected and held by a municipality for a school district."
agent multiple-employer defined benefit pension plan - CORRECT
ANSWER - -Statewide pension plan in which separate account balances
are maintained for each participating employer; expected to fund any
deficits. Contrast with costsharing multiple-employer defined benefit
pension plan.
American Institute of Certified Public Accountants (AICPA) - CORRECT
ANSWER - -"Organization of Certified Public Accountants that provides
auditing guidance, including the GAAP Hierarchy (q.v.) and accounting and
auditing guidance, in the case of Audit and Accounting Guides, when
approved by the FASB (q.v.) and/or the GASB (q.v.)."
annual required contributions (ARC) - CORRECT ANSWER - -"Term used by
GASB to determine the amount required by a retirement fund (including
other postemployment benefit plans) to be contributed, including normal
