30 Free Test Bank for Government and Not-for-Profit Accounting Concepts and Practices 4th Edition by Granof

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Which of the following is NOT generally considered a main user of government and not-for-profit entity external financial statements?

•  a) Investors and creditors.
•  b) Taxpayers.
•  c) Donors.
•  d) Internal managers.

Which of the following can be affected by GAAP?

•  a) Legal ability to issue bonds.
•  b) Ability to balance the budget.
•  c) Amount reported as employee pension plan contributions.
•  d) Claims and judgments settled.

Which of the following activities is NOT an activity in which a governmental entity might engage?

•  a) Selling electric power.
•  b) Operating a golf course.
•  c) Operating a bookstore.
•  d) All of the above are activities that might be carried out by a government.

Under certain circumstances a governmental entity might use standards established by which of the following standard-setting bodies?

•  a) GASB.
•  b) FASB.
•  c) AICPA.
•  d) All of the above.

Which of the following is an objective of financial reporting for not-for-profit entities as established by FASB? Financial reporting should provide information that is useful to present and potential resource providers and other users in:

•  a) Assessing the types of services provided and the need for those services.
•  b) Assessing the services provided and the entity’s ability to earn a profit.
•  c) Making rational decisions about the allocation of resources to those organizations.
•  d) Assessing how managers have managed personnel.

Which of the following is common to both governments and not-for-profit entities but distinguishes these entities from for-profit entities?

•  a) The budget is a legal, financial document.
•  b) Revenues are usually indicative of demand for goods or services.
•  c) There is direct matching of revenues and expenses.
•  d) There are no defined ownership interests.

Which of the following is NOT a purpose of external financial reporting by governments? External financial reports should allow users to

•  a) Assess financial condition.
•  b) Compare actual results with the budget.
•  c) Assess the ability of elected officials to effectively manage people.
•  d) Evaluate efficiency and effectiveness.

Which of the following constituency groups would be most likely to evaluate government financial statements to determine likely areas in which to achieve cost-savings?

•  a) Creditors.
•  b) Union officials representing the government’s employees.
•  c) Federal agencies that provide purpose-restricted grants.
•  d) Students of governmental accounting.

A primary characteristic that distinguishes not-for-profit entities from business entities is

•  a) The need to generate revenues equal to or in excess of expenditures/expenses.
•  b) The importance of the budget in the governing process.
•  c) The need to provide goods or services.
•  d) The correlation between revenues generated and demand for goods or services.

Users of government financial statements should be interested in information about compliance with laws and regulations for which of the following reasons?

•  a) To determine if the entity has complied with bond covenants.
•  b) To determine if the entity has complied with taxing limitations.
•  c) To determine if the entity has complied with donor restrictions on the use of funds.
•  d) To determine all of the above.

In which of the following activities is a not-for-profit entity least likely to engage?

•  a) Providing educational services.
•  b) Providing health-care services.
•  c) Providing for terrorism defense.
•  d) Retail sales of cookies.

A regulatory agency would use the external financial statements of a local government for which of the following purposes?

•  a) To assure that the entity is spending and receiving resources in accordance with laws, regulations or policies.
•  b) To determine how resources should be allocated.
•  c) To exercise general oversight responsibility.
•  d) To do all of the above.

Which of the following is NOT a reason why users need governmental and not-for-profit external financial statements?

•  a) To determine the ability of the entity to meet its obligations.
•  b) To determine the ability of the entity to continue to provide services.
•  c) To predict future fiscal solvency.
•  d) To evaluate the overall profitability of the entity.

Which of the following statements is true?

•  a) Governments may engage in activities similar to activities engaged in by for-profit entities.
•  b) There are a limited number of different types of governments.
•  c) All governmental entities engage in the same activities.
•  d) Managers may have a long-term focus and thereby sacrifice the short-term liquidity of the entity.

The purpose of the FASAB is to:

•  a) Establish accounting standards for not-for-profit entities.
•  b) Establish accounting standards for federal entities.
•  c) Establish accounting standards for all governmental entities.
•  d) Establish accounting standards for non-federal governmental entities.

Which of the following characteristics is unique to a governmental entity?

•  a) The ability to have activities financed with tax-exempt debt.
•  b) The power to impose fees.
•  c) The ability to issue tax-exempt debt.
•  d) The ability to have activities financed by Federal grants.

Given a specific set of data, the basis of accounting selected by or imposed on a governmental entity will least affect which of the following?

•  a) Determining whether or not the governmental entity has a balanced budget.
•  b) Determining whether or not the governmental entity has the ability to issue debt.
•  c) Determining whether or not certain economic events occurred.
•  d) Determining the annual payments to a government-sponsored pension plan.

The basis of accounting selected by or imposed on a governmental entity can influence which of the following?

•  a) A decision to contract-out a specific service rather than provide that service itself.
•  b) The amount of salary increases proposed by union negotiators.
•  c) The amount that is available to spend on a donor-specified project or service.
•  d) All of the above.

Which of the following is a probable use a donor would make of the external financial statements of a not-for-profit entity?

•  a) To determine the proportion of entity resources directed to programs as opposed to fund-raising.
•  b) To determine the creditworthiness of the entity for investment purposes.
•  c) To determine the salaries paid to all employees of the entity.
•  d) To determine the budget of the entity.

As used by GASB, interperiod equity refers to which of the following? Financial reporting should:

•  a) Demonstrate compliance with finance-related contractual requirements.
•  b) Provide information to determine whether current-year revenues were sufficient to pay for current-year services.
•  c) Demonstrate whether resources were obtained and used in accordance with the entity’s legally adopted budget.
•  d) Provide information to assist users in assessing the government’s economy, efficiency, and effectiveness.

The most significant financial document provided by a governmental entity is the

•  a) The balance sheet.
•  b) The operating statement.
•  c) The operating budget.
•  d) The cash flow statement.

In descending order, the hierarchy of GAAP applicable to a church-owned college may be:

•  a) FASB Statements and Interpretations, FASB Technical Bulletins, AICPA Industry Audit Guides, FASB Implementation Guides, other accounting literature—including GASB Standards.
•  b) FASB Statements and Interpretations, FASB Technical Bulletins, FASB Implementation Guides, AICPA Practice Bulletins (if cleared by FASB).
•  c) GASB Statements and Interpretations, AICPA Industry Audit Guides, GASB Implementation Guides, other accounting literature—including FASB Standards.
•  d) GASB Statements and Interpretations, GASB Technical Bulletins, AICPA Industry Audit Guides, AICPA Practice Bulletins (if cleared by GASB), GASB Implementation Guides, other accounting literature—including FASB standards.

Which of the following entities was a principal in creating the FASAB?

•  a) U.S. Congress.
•  b) Office of Management and Budget.
•  c) Governmental Accounting Standards Board.
•  d) Securities and Exchange Commission.