KJHGFDSA
TEST BANK
Government and Not-for-Profit Accounting: Concepts and Practices 9th Edition
by Michael H. Granof, Saleha B. Khumawala, Thad D. Calabrese
N
U
R
SE
TE
ST
KJHGFDSA
, KJHGFDSA
Chapter 1
The Government and Not-For-Profit Environment
TRUE/FALSE (CHAPTER 1)
1. The objectives of a typical government or not-for-profit entity include abstract
goals that are more difficult to quantify than profit.
2. A government’s budget may be backed by the force of law.
3. Governments have no need for an accounting system.
N
4. A government’s constituents rely on general purpose financial statements for
a considerable amount of information about their government.
U
5. Governments and not-for-profit entities may never engage in business-type
activities.
R
6. Lenders use the financial statements of governments and not-for-profit
entities just as they would those of businesses, that is, to help assess the
borrower’s credit-worthiness.
SE
7. Financial statements, no matter how prepared, do not directly affect the
economic worth of an entity.
8. The Federal Accounting Standards Advisory Board’s standards do not apply
to the federal Department of the Treasury.
TE
9. Sarbanes-Oxley was passed in 2002 with the sole purpose of enhancing the
independence of the GASB.
10. The Governmental Accounting Standards Board establishes generally
accepted accounting principles for all state and local governments and all
ST
not-for-profit entities.
KJHGFDSA
, KJHGFDSA
ANSWERS TO TRUE/FALSE QUESTIONS (CHAPTER 1)
1. True
2. True
3. False
4. True
5. False
6. True
7. True
8. False
9. False
N
10. False
U
R
SE
TE
ST
KJHGFDSA
, KJHGFDSA
MULTIPLE CHOICE (CHAPTER 1)
1. A primary characteristic that distinguishes governments from businesses is
a. The need to generate revenues equal to or more than
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.
2. A primary characteristic that distinguishes government from not-for-profits is
N
a. The need to generate revenues equal to or more than
expenditures/expenses.
b. The ability to levy taxes.
c. The need to provide goods or services.
U
d. The correlation between revenues generated and demand for goods or
services.
R
3. Which of the following characteristics distinguishes a government or not-for-
profit entity from a business?
a. There is always a direct link between revenues generated and
SE
expenditures/expenses incurred.
b. Capital assets are used to produce revenues and save costs.
c. Revenues are always indicative of demand for goods and services.
d. The mission of the entity may include goals other than maximizing
profit.
4. The most significant financial document provided by a government is the
TE
a. Balance sheet.
b. Operating statement.
c. Operating budget.
d. Cash flow statement.
ST
5. Which of the following statements is true?
a. Governments may engage in activities like activities engaged in by for-
profit entities.
b. There are a small number of different types of governments.
c. All governments engage in the same activities.
d. Managers may have a long-term focus and thereby sacrifice the short-
term liquidity of the entity.
KJHGFDSA
TEST BANK
Government and Not-for-Profit Accounting: Concepts and Practices 9th Edition
by Michael H. Granof, Saleha B. Khumawala, Thad D. Calabrese
N
U
R
SE
TE
ST
KJHGFDSA
, KJHGFDSA
Chapter 1
The Government and Not-For-Profit Environment
TRUE/FALSE (CHAPTER 1)
1. The objectives of a typical government or not-for-profit entity include abstract
goals that are more difficult to quantify than profit.
2. A government’s budget may be backed by the force of law.
3. Governments have no need for an accounting system.
N
4. A government’s constituents rely on general purpose financial statements for
a considerable amount of information about their government.
U
5. Governments and not-for-profit entities may never engage in business-type
activities.
R
6. Lenders use the financial statements of governments and not-for-profit
entities just as they would those of businesses, that is, to help assess the
borrower’s credit-worthiness.
SE
7. Financial statements, no matter how prepared, do not directly affect the
economic worth of an entity.
8. The Federal Accounting Standards Advisory Board’s standards do not apply
to the federal Department of the Treasury.
TE
9. Sarbanes-Oxley was passed in 2002 with the sole purpose of enhancing the
independence of the GASB.
10. The Governmental Accounting Standards Board establishes generally
accepted accounting principles for all state and local governments and all
ST
not-for-profit entities.
KJHGFDSA
, KJHGFDSA
ANSWERS TO TRUE/FALSE QUESTIONS (CHAPTER 1)
1. True
2. True
3. False
4. True
5. False
6. True
7. True
8. False
9. False
N
10. False
U
R
SE
TE
ST
KJHGFDSA
, KJHGFDSA
MULTIPLE CHOICE (CHAPTER 1)
1. A primary characteristic that distinguishes governments from businesses is
a. The need to generate revenues equal to or more than
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.
2. A primary characteristic that distinguishes government from not-for-profits is
N
a. The need to generate revenues equal to or more than
expenditures/expenses.
b. The ability to levy taxes.
c. The need to provide goods or services.
U
d. The correlation between revenues generated and demand for goods or
services.
R
3. Which of the following characteristics distinguishes a government or not-for-
profit entity from a business?
a. There is always a direct link between revenues generated and
SE
expenditures/expenses incurred.
b. Capital assets are used to produce revenues and save costs.
c. Revenues are always indicative of demand for goods and services.
d. The mission of the entity may include goals other than maximizing
profit.
4. The most significant financial document provided by a government is the
TE
a. Balance sheet.
b. Operating statement.
c. Operating budget.
d. Cash flow statement.
ST
5. Which of the following statements is true?
a. Governments may engage in activities like activities engaged in by for-
profit entities.
b. There are a small number of different types of governments.
c. All governments engage in the same activities.
d. Managers may have a long-term focus and thereby sacrifice the short-
term liquidity of the entity.
KJHGFDSA
