Government accounting exam 1
questions and complete solutions
General purpose governments - correct answer ✔✔Governments that provide a wide range of
services to their residents (such as police and fire protection, sanitation, construction and
maintenance of streets, roads, and bridges, and culture and recreation). States, counties,
municipalities, and townships are examples.
Special purpose governments - correct answer ✔✔governments that provide only a single
function or a limited number of functions (such as education, drainage and flood control,
irrigation, soil and water conservation, fire protection, and water supply). Have the power to
levy and collect taxes and to raise revenues from other sources as provided by state laws to
finance the services they provide. Independent school districts, public colleges and universities,
and special districts are examples.
General purpose vs Special purpose governments - correct answer ✔✔General purpose
provides a wide range of services, while Special purpose only provides a single or limited
amount of functions to their residents.
Financial Accounting Standards Board (FASB) - correct answer ✔✔Noted the following
characteristics that it felt distinguished governmental and nfp entities from business org.: a.
Receipts of significant amounts of resources from resource providers who do not expect to
receive either repayment or economic benefits proportionate to the resources provided. b.
Operating purposes that are other than to provide goods or services at a profit or profit
equivalent. c. Absence of defined ownership interests that can be sold, transferred, or
redeemed or that convey entitlement to a share of a residual distribution of resources in the
event of liquidation of the organization.
Governmental Accounting Standards Board (GASB) - correct answer ✔✔distinguishes
government entities in the US from both nfp and business entities by stressing that
, governments exist in an environment in which the power ultimately rests in the hands of the
people. Voters delegate that power to public officials through the election process.
Accountability - correct answer ✔✔GASB states that Accountability is the cornerstone of all
financial reporting in government. Requires governments to answer to the citizenry to justify
the raising of public resources and the purposes for which they are used. Based on the belief
that the citizenry has a "right to know," a right to receive a openly declared facts that may lead
to public debate by the citizens and their elected representatives.
Interperiod equity - correct answer ✔✔The board believes that interperiod equity is a
significant part of accountability and is fundamental to public administration. It therefore needs
to be considered when establishing financial reporting objectives. In short, financial reporting
should help users assess whether current year revenues are sufficient to pay for services
provided that year and whether future taxpayers will be required to assume burdens for
services previously provided.
Federal Accounting Standards Advisory Board (FASAB) - correct answer ✔✔It was made to
recommend accounting principles and standards for the federal gov and its agencies. It is
understood that, to the maximum extent possible, federal accounting and financial reporting
standards should be consistent with those established by the GASB and, where applicable, by
the FASB. Created by the three officials the Comptroller General, the Director of the Office of
Management and Budget, and the Secretary of the Treasury.
Management's discussion and analysis (MD&A) - correct answer ✔✔required supplementary
information (RSI) designed to communicate in narrative, easily readable form the purpose of the
basic financial statements and the governments current financial position and results of
financial activities compared with those of the prior year. Central to the model of the minimum
requirements for general purpose external financial reporting.
Government wide financial statements - correct answer ✔✔are intended to provide an
aggregated overview of an government's net position and changes in net position.
questions and complete solutions
General purpose governments - correct answer ✔✔Governments that provide a wide range of
services to their residents (such as police and fire protection, sanitation, construction and
maintenance of streets, roads, and bridges, and culture and recreation). States, counties,
municipalities, and townships are examples.
Special purpose governments - correct answer ✔✔governments that provide only a single
function or a limited number of functions (such as education, drainage and flood control,
irrigation, soil and water conservation, fire protection, and water supply). Have the power to
levy and collect taxes and to raise revenues from other sources as provided by state laws to
finance the services they provide. Independent school districts, public colleges and universities,
and special districts are examples.
General purpose vs Special purpose governments - correct answer ✔✔General purpose
provides a wide range of services, while Special purpose only provides a single or limited
amount of functions to their residents.
Financial Accounting Standards Board (FASB) - correct answer ✔✔Noted the following
characteristics that it felt distinguished governmental and nfp entities from business org.: a.
Receipts of significant amounts of resources from resource providers who do not expect to
receive either repayment or economic benefits proportionate to the resources provided. b.
Operating purposes that are other than to provide goods or services at a profit or profit
equivalent. c. Absence of defined ownership interests that can be sold, transferred, or
redeemed or that convey entitlement to a share of a residual distribution of resources in the
event of liquidation of the organization.
Governmental Accounting Standards Board (GASB) - correct answer ✔✔distinguishes
government entities in the US from both nfp and business entities by stressing that
, governments exist in an environment in which the power ultimately rests in the hands of the
people. Voters delegate that power to public officials through the election process.
Accountability - correct answer ✔✔GASB states that Accountability is the cornerstone of all
financial reporting in government. Requires governments to answer to the citizenry to justify
the raising of public resources and the purposes for which they are used. Based on the belief
that the citizenry has a "right to know," a right to receive a openly declared facts that may lead
to public debate by the citizens and their elected representatives.
Interperiod equity - correct answer ✔✔The board believes that interperiod equity is a
significant part of accountability and is fundamental to public administration. It therefore needs
to be considered when establishing financial reporting objectives. In short, financial reporting
should help users assess whether current year revenues are sufficient to pay for services
provided that year and whether future taxpayers will be required to assume burdens for
services previously provided.
Federal Accounting Standards Advisory Board (FASAB) - correct answer ✔✔It was made to
recommend accounting principles and standards for the federal gov and its agencies. It is
understood that, to the maximum extent possible, federal accounting and financial reporting
standards should be consistent with those established by the GASB and, where applicable, by
the FASB. Created by the three officials the Comptroller General, the Director of the Office of
Management and Budget, and the Secretary of the Treasury.
Management's discussion and analysis (MD&A) - correct answer ✔✔required supplementary
information (RSI) designed to communicate in narrative, easily readable form the purpose of the
basic financial statements and the governments current financial position and results of
financial activities compared with those of the prior year. Central to the model of the minimum
requirements for general purpose external financial reporting.
Government wide financial statements - correct answer ✔✔are intended to provide an
aggregated overview of an government's net position and changes in net position.
