29 Test Bank for Governmental and Nonprofit Accounting 10th Edition by Freeman

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What best describes the relationship of the FASB and the GASB?

•  A. They are co-equal bodies with different areas of responsibility for standards setting.
•  B. The FASB standards are authoritative for governments. However, the FASB asks the GASB to establish guidelines for many unique transactions of government that the FASB does not have time to consider.
•  C. GASB standards are authoritative for governments unless they have been overruled by the FASB.
•  D. Governments are not permitted to apply any FASB standard under any circumstances for any government operations.

Which of the following is considered a health and welfare organization?

•  A. Secondary schools.
•  B. Young Men’s Christian Association (YMCA).
•  C. Child protection agencies.
•  D. United Way.

Expenses in a proprietary (nonexpendable) fund would not potentially include

•  A. Salaries and wages.
•  B. Long-term debt interest payments.
•  C. Long-term debt principal retirement.
•  D. Depreciation.

Expenditures in a governmental (expendable) fund would not potentially include

•  A. Salaries and wages.
•  B. Capital outlay.
•  C. Long-term debt principal retirement.
•  D. Depreciation.

Which organization has the highest level of authority for a setting GAAP for nongovernment, not-for-profit organizations?

•  A. Financial Accounting Standards Board (FASB).
•  B. Governmental Accounting Standards Board (GASB).
•  C. American Institute of Certified Public Accountants (AICPA).
•  D. National Council on Governmental Accounting (NCGA).

All not-for-profit organizations that do not meet the definition of governments must apply

•  A. FASB standards.
•  B. GASB standards.
•  C. FASAB standards.
•  D. AICPA Audit and Accounting Guide, Not-for-Profit Organizations.

Which of the following characteristics best distinguishes a government entity from a business entity?

•  A. Governments operate in a very small section of the economy while businesses operate globally.
•  B. Cost analysis and other control and evaluation techniques are essential to ensure that resources are used economically and efficiently.
•  C. Those contributing resources to the entity do not necessarily receive a direct or proportionate share the services.
•  D. Businesses must acquire and convert scarce resources while governments can demand whatever they need.

Which of the following is not an operational accountability measure for a government?

•  A. Economic cost of providing services.
•  B. Net income.
•  C. Assessment whether a government raised sufficient revenues each period to cover the cost of providing services.
•  D. Assessment whether services are being provided economically and efficiently.

Which of the following is not a primary financial reporting objective of state and local government (SLG) reporting?

•  A. Provide information necessary to assess the level of LG services and its ability to continue to finance its activities and meet its obligations.
•  B. Provide information necessary for investment and credit decisions.
•  C. Provide a means of demonstrating the SLG’s accountability that enables users to assess that accountability.
•  D. Provide information necessary to evaluate the SLG’s operating results for the period.

The governmental GAAP hierarchy was established by

•  A. The Governmental Accounting Standards Board (GASB).
•  B. The Financial Accounting Standards Board (FASB).
•  C. The American Institute of Certified Public Accountants (AICPA).
•  D. The Government Accountability Office (GAO).

Which of the following has the highest level of authority for a government in the governmental GAAP hierarchy?

•  A. GASB Codification of Governmental Accounting and Financial Reporting Standards.
•  B. GASB Concepts Statement.
•  C. GASB Technical Bulletin.
•  D. AICPA Industry Audit and Accounting Guide.

Which source of financial resources is unique to governments?

•  A. Borrowings.
•  B. Gifts and grants.
•  C. Charges for services provided.
•  D. Taxation.

Which of the following has the highest level of authority for a government in the governmental GAAP hierarchy?

•  A. A FASB standard on pension accounting.
•  B. A GASB standard on pension accounting.
•  C. AICPA state and local government audit guide coverage of pensions.
•  D. The coverage of pensions in a Journal of Accountancy article.

Expenses and expenditures are least likely to differ in amount for which type of transaction?

•  A. Salaries.
•  B. Capital asset purchases.
•  C. Debt principal retirements.
•  D. Depreciation on capital assets.

Which of the following organizations has had the least - impact on the development of GAAP for state and local governments?

•  A. American Hospital Association.
•  B. Federal Accounting Standards Advisory Board
•  C. National Association of College and University Business Officers.
•  D. National Committee on Governmental Accounting.

Which of the following activities would most likely be accounted for as a business-type activity?

•  A. Fire protection.
•  B. Recreation.
•  C. Water operations.
•  D. Street maintenance.

Rank the following documents in the proper order in the governmental GAAP hierarchy: A. GASB Implementation Guide; b. GASB Interpretation; c. GASB Technical Bulletin; d. AICPA Practice Bulletin.

•  A. a; b; c; d.
•  B. b; a; c; d.
•  C. b; c; d; a.
•  D. c; d; b; a.

The primary users of external financial reports, as identified by the GASB, include all of the following except

•  A. Investors and creditors.
•  B. Other governments.
•  C. Citizens.
•  D. Legislative and oversight bodies.

Which of the following has the highest level of authority for a government under GAAP?

•  A. A FASB standard.
•  B. A GASB Implementation Guide.
•  C. AICPA Industry Audit and Accounting Guide for local governments cleared by the GASB.
•  D. An article in the Journal of Accountancy.

Which of the following would not be considered a government or nonprofit organization?

•  A. A software company that sells software exclusively to state and local governments.
•  B. A public elementary school.
•  C. A church.
•  D. A private trust organized for charitable purposes.

Fixed-dollar budgets and appropriations are most often found in

•  A. All funds of a government.
•  B. Expendable funds.
•  C. Nonexpendable funds.
•  D. In not-for-profit organizations, but not governments.