Test Bank For Accounting for Governmental and Nonprofit Entities 19th edition by Jacqueline L Reck, Daniel Neely, Suzanne Lowensohn

Test Bank For Accounting for Governmental and Nonprofit Entities 19th edition by Jacqueline L Reck, Daniel Neely, Suzanne Lowensohn 1) Explain the essential differences between general purpose and special purpose governments and give several examples of each. 2) Identify and explain the characteristics that distinguish governments and not-for-profit entities from business entities. 3) 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? 4) Why should persons interested in reading financial reports of governments and not-for-profit entities be familiar with standards set by the GASB and the FASB? Version 1 2 5) Explain in your own words why accountability is the cornerstone of all financial reporting in government. 6) In your own words state the primary needs 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. 7) Describe the difference between a comprehensive annual financial report (CAFR) and GASB general purpose external financial reporting for state and local governments. 8) 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. Version 1 3 9) Explain the concepts of fiscal and operational accountability and the basis of accounting used to capture each concept. 10) 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? 11) The Governmental Accounting Standards Board is assigned responsibility for setting accounting and financial reporting standards for which of the following? 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. Version 1 4 12) Which of the following bodies has been established to recommend accounting and financial reporting standards for the federal government? A) Financial Accounting Standards Board (FASB). B) Governmental Accounting Standards Board (GASB). C) Federal Accounting Foundation (FAF). D) Federal Accounting Standards Advisory Board (FASAB). 13) The Financial Accounting Standards Board has the responsibility for setting accounting and financial reporting standards for which of the following? 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. 14) 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. 15) 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. Version 1 5 16) 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. 17) 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. 18) 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. 19) Which of the following groups is considered a primary user of a state or local government's general-purpose external financial statements? Version 1 6 A) Citizens. B) Managers and administrators. C) Employees. D) Special interest groups. 20) 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. 21) A comprehensive annual financial report (CAFR) prepared in conformity with the 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. 22) 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. Version 1 7 23) 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. 24) 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. 25) 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. 26) Which of the following should be included in the financial section of a comprehensive annual financial report? Version 1 8 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. 27) On what do the government-wide financial statements primarily report? A) Operational accountability. B) Fiscal accountability. C) The cost of government services. D) Budgetary compliance. 28) 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 GASB and FASAB. 29) 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. 30) Which of the following sections is not considered a part of a federal agency’s performance and accountability report?