TEST BANK FOR ACCOUNTING FOR
GOVERNMENTAL & NONPROFIT
ENTITIES 18TH EDITION
JACQUELINE RECK, SUZANNE
LOWENSOHN, DANIEL NEELY DUE
MID OCTOBER(CORRECTLY
ANSWERED)
,Accounting for Governmental and Nonprofit Entities, 18e (Reck)
Chapter 1 Introduction to Accounting and Financial Reporting for Government and
Not-for-Profit Entities
1) Special purpose governments generally provide a wider range of services to their residents
than do general purpose governments.
2) Examples of general purpose governments include cities, towns, and public schools that
receive tax revenue to finance the services they provide.
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.
4) The Governmental Accounting Standards Board (GASB) is the body authorized to establish
accounting principles for all government entities.
5) The Financial Accounting Standards Board (FASB) is the body authorized to establish
accounting principles for all colleges and universities and health care entities.
6) Neither governments nor not-for-profit entities have residual equity that can be distributed to
owners.
7) A characteristic common to governments and not-for-profit organizations is that they do not
exist to provide goods or services at a profit or profit equivalent.
8) The needs of users of government financial reports are the same as those of users of business
entity financial reports.
9) The Federal Accounting Standards Advisory Board (FASAB) recommends accounting
principles and standards for the federal government and its agencies and departments.
10) The FASB, GASB, and FASAB all focus their standards on both internal and external
financial reporting.
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.
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.
13) The Financial Accounting Foundation has oversight over both the FASB and the GASB.
14) In addition to financial statements and notes, the GASB requires governments to provide
information on service efforts and accomplishments (SEA) in their reports to the public.
1
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
,15) Providing information on accountability is the primary financial reporting objective for both
governments and not-for-profit entities.
16) A difference in the financial reporting objectives for government entities and not-for-profit
entities is that government entities report on compliance with laws, regulations, and rules that
impact financial reports.
17) Since neither governments nor not-for-profit entities have investors, the financial reporting
objectives are the same for both types of entities.
18) The GASB provides optional guidance for those entities providing service efforts and
accomplishments (SEA) reports to the public.
19) The Office of Management and Budget (OMB) requires major federal departments and
agencies to prepare an annual performance report.
20) The FASB standards require not-for-profit entities to report net assets in three categories:
unrestricted, restricted, and net investment in capital assets.
21) The FASB standards require not-for-profit entities to separately report program expenses and
support expenses.
22) The governmental fund financial statements are intended to report on fiscal accountability.
23) The governmental fund financial statements are useful in assessing operational
accountability.
24) Government-wide financial statements are prepared using the accrual basis of accounting.
25) Both the GASB and the FASB require entities to include a management discussion and
analysis in the financial reports.
26) Similar to for-profit entities, net income serves as a good measure of a government's
performance.
27) 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.
2
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
, 28) 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).
29) 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.
30) 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.
31) 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.
32) 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.
33) 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.
3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
GOVERNMENTAL & NONPROFIT
ENTITIES 18TH EDITION
JACQUELINE RECK, SUZANNE
LOWENSOHN, DANIEL NEELY DUE
MID OCTOBER(CORRECTLY
ANSWERED)
,Accounting for Governmental and Nonprofit Entities, 18e (Reck)
Chapter 1 Introduction to Accounting and Financial Reporting for Government and
Not-for-Profit Entities
1) Special purpose governments generally provide a wider range of services to their residents
than do general purpose governments.
2) Examples of general purpose governments include cities, towns, and public schools that
receive tax revenue to finance the services they provide.
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.
4) The Governmental Accounting Standards Board (GASB) is the body authorized to establish
accounting principles for all government entities.
5) The Financial Accounting Standards Board (FASB) is the body authorized to establish
accounting principles for all colleges and universities and health care entities.
6) Neither governments nor not-for-profit entities have residual equity that can be distributed to
owners.
7) A characteristic common to governments and not-for-profit organizations is that they do not
exist to provide goods or services at a profit or profit equivalent.
8) The needs of users of government financial reports are the same as those of users of business
entity financial reports.
9) The Federal Accounting Standards Advisory Board (FASAB) recommends accounting
principles and standards for the federal government and its agencies and departments.
10) The FASB, GASB, and FASAB all focus their standards on both internal and external
financial reporting.
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.
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.
13) The Financial Accounting Foundation has oversight over both the FASB and the GASB.
14) In addition to financial statements and notes, the GASB requires governments to provide
information on service efforts and accomplishments (SEA) in their reports to the public.
1
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
,15) Providing information on accountability is the primary financial reporting objective for both
governments and not-for-profit entities.
16) A difference in the financial reporting objectives for government entities and not-for-profit
entities is that government entities report on compliance with laws, regulations, and rules that
impact financial reports.
17) Since neither governments nor not-for-profit entities have investors, the financial reporting
objectives are the same for both types of entities.
18) The GASB provides optional guidance for those entities providing service efforts and
accomplishments (SEA) reports to the public.
19) The Office of Management and Budget (OMB) requires major federal departments and
agencies to prepare an annual performance report.
20) The FASB standards require not-for-profit entities to report net assets in three categories:
unrestricted, restricted, and net investment in capital assets.
21) The FASB standards require not-for-profit entities to separately report program expenses and
support expenses.
22) The governmental fund financial statements are intended to report on fiscal accountability.
23) The governmental fund financial statements are useful in assessing operational
accountability.
24) Government-wide financial statements are prepared using the accrual basis of accounting.
25) Both the GASB and the FASB require entities to include a management discussion and
analysis in the financial reports.
26) Similar to for-profit entities, net income serves as a good measure of a government's
performance.
27) 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.
2
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
, 28) 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).
29) 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.
30) 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.
31) 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.
32) 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.
33) 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.
3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
