1|P a g e
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, Chapter 1 rr
1) Explain the essential differences between general purpose and special purpose governments and give se
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veral examples of each.
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2) Identify and explain the characteristics that distinguish governments and not-for-
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profit entities from business entities.
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3) GASB and FASB standards are concerned only with external financial reporting; whereas, FASAB st
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andards are concerned with both internal and external financial reporting. Do you agree with this statem
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ent? Why or why not?
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4) Why should persons interested in reading financial reports of governments and not-for-
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profit entities be familiar with standards set by the GASB and the FASB?
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5) Explain in your own words why accountability is the cornerstone of all financial reporting in go
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vernment.
2|P a g e
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,6) In your own words state the primary needs the GASB believes external users have for financial reports of
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state and local governments. For contrast, state the uses the FASB believes external users have for the finan
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cial reports of not-for-profit organizations.
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7) Describe the difference between a comprehensive annual financial report (CAFR) and GASB general pu
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rpose external financial reporting for state and local governments.
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8) Identify and briefly explain the four sections of the performance and accountability report (PAR) that th
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e Office of Management and Budget requires major federal departments and agencies to prepare.
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9) Explain the concepts of fiscal and operational accountability and the basis of accounting used to ca
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pture each concept. rr rr
10) Describe the comprehensive annual financial report (CAFR). What are the sections of the report and wh
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ich components of the organization should it include? Is a CAFR required?
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3|P a g e
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, 11) The Governmental Accounting Standards Board is assigned responsibility for setting accounting and fi
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nancial reporting standards for which of the following?
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A) Governments such as federal agencies, states, cities, counties, villages, and townships.
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B) State and local government entities and governmentally-
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related units and agencies, such as utilities, authorities, hospitals, and colleges and universities.
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C) Not-for-profit organizations. rr
D) State and local governments and all not-for-profit organizations.
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12) Which of the following bodies has been established to recommend accounting and financial reporting sta
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ndards for the federal government?
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A) Financial Accounting Standards Board (FASB).rr rr rr rr
B) Governmental Accounting Standards Board (GASB). rr rr rr rr
C) Federal Accounting Foundation (FAF).
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D) Federal Accounting Standards Advisory Board (FASAB).
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13) The Financial Accounting Standards Board has the responsibility for setting accounting and financial re
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porting standards for which of the following?
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A) All not-for-profit organizations that are nongovernmental and business entities.
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B) All not-for-profit organizations and business entities.
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C) All not-for-profit organizations.
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D) Special purpose governments with a business purpose.
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14) You are trying to decide if an entity you are reviewing is a government or a not-for-
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profit. Which of the following would indicate it is a government rather than a not-for-profit entity?
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A) Absence of profit motive. rr rr rr
B) A primary source of revenues is taxes.
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4|P a g e
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, Chapter 1 rr
1) Explain the essential differences between general purpose and special purpose governments and give se
rr rr rr rr rr rr rr rr rr rr rr rr rr
veral examples of each.
rr rr rr
2) Identify and explain the characteristics that distinguish governments and not-for-
rr rr rr rr rr rr rr rr rr
profit entities from business entities.
rr rr rr rr
3) GASB and FASB standards are concerned only with external financial reporting; whereas, FASAB st
rr rr rr rr rr rr rr rr rr rr rr rr rr
andards are concerned with both internal and external financial reporting. Do you agree with this statem
rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr
ent? Why or why not?
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4) Why should persons interested in reading financial reports of governments and not-for-
rr rr rr rr rr rr rr rr rr rr rr
profit entities be familiar with standards set by the GASB and the FASB?
rr rr rr rr rr rr rr rr rr rr rr rr rr
5) Explain in your own words why accountability is the cornerstone of all financial reporting in go
rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr
vernment.
2|P a g e
rr rr rr rr rr
,6) In your own words state the primary needs the GASB believes external users have for financial reports of
rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr
state and local governments. For contrast, state the uses the FASB believes external users have for the finan
rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr
cial reports of not-for-profit organizations.
rr rr rr rr
7) Describe the difference between a comprehensive annual financial report (CAFR) and GASB general pu
rr rr rr rr rr rr rr rr rr rr rr rr rr
rpose external financial reporting for state and local governments.
rr rr rr rr rr rr rr rr
8) Identify and briefly explain the four sections of the performance and accountability report (PAR) that th
rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr
e Office of Management and Budget requires major federal departments and agencies to prepare.
rr rr rr rr rr rr rr rr rr rr rr rr rr
9) Explain the concepts of fiscal and operational accountability and the basis of accounting used to ca
rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr
pture each concept. rr rr
10) Describe the comprehensive annual financial report (CAFR). What are the sections of the report and wh
rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr
ich components of the organization should it include? Is a CAFR required?
rr rr rr rr rr rr rr rr rr rr rr
3|P a g e
rr rr rr rr rr
, 11) The Governmental Accounting Standards Board is assigned responsibility for setting accounting and fi
rr rr rr rr rr rr rr rr rr rr rr rr
nancial reporting standards for which of the following?
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A) Governments such as federal agencies, states, cities, counties, villages, and townships.
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B) State and local government entities and governmentally-
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related units and agencies, such as utilities, authorities, hospitals, and colleges and universities.
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C) Not-for-profit organizations. rr
D) State and local governments and all not-for-profit organizations.
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12) Which of the following bodies has been established to recommend accounting and financial reporting sta
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ndards for the federal government?
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A) Financial Accounting Standards Board (FASB).rr rr rr rr
B) Governmental Accounting Standards Board (GASB). rr rr rr rr
C) Federal Accounting Foundation (FAF).
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D) Federal Accounting Standards Advisory Board (FASAB).
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13) The Financial Accounting Standards Board has the responsibility for setting accounting and financial re
rr rr rr rr rr rr rr rr rr rr rr rr rr
porting standards for which of the following?
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A) All not-for-profit organizations that are nongovernmental and business entities.
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B) All not-for-profit organizations and business entities.
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C) All not-for-profit organizations.
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D) Special purpose governments with a business purpose.
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14) You are trying to decide if an entity you are reviewing is a government or a not-for-
rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr rr
profit. Which of the following would indicate it is a government rather than a not-for-profit entity?
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A) Absence of profit motive. rr rr rr
B) A primary source of revenues is taxes.
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4|P a g e
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