ESSENTIALS OF ACCOUNTING FOR GOVERNMENTAL AND
NOT FOR PROFIT ORGANIZATIONS ACCOUNTING COURSE
2025/2026 | VERIFIED QUESTIONS AND ANSWERS
GRADED A+ | FUNDAMENTAL ACCOUNTING PRINCIPLES &
APPLICATION STUDY GUIDE | GUARANTEED SUCCESS
Management's Discussion and Analysis (MD&A) - CORRECT ANSWER - -
"Required part of the financial section of a CAFR that provides an opportunity
for management to explain, in plain-English terms, an overview of the
government's financial activities. Considered Required Supplementary
Information (q.v.) by the GASB."
matured bonds payable - CORRECT ANSWER - -Bonds that have reached
their maturity but remain unpaid.
matured interest payable - CORRECT ANSWER - -Bond interest that is due
but remains unpaid.
measurable - CORRECT ANSWER - -One condition that must be met before
a revenue can be recognized under the modified accrual basis of accounting.
The amount must be measurable.
measurement focus - CORRECT ANSWER - -"Nature of the resources, claims
against resources, and flows of resources that are measured and reported by a
fund or other entity. For example, governmental funds measure and report
current financial resources, whereas proprietary and fiduciary funds measure
and report economic resources."
mill - CORRECT ANSWER - -"Tax rate (q.v.) expressed in thousands per net
assessed valuation. For example, a tax rate of $2.50 per $100 net assessed
valuation would be $25.00 per $1,000 net assessed valuation, or 25 mills."
,modified accrual basis of accounting - CORRECT ANSWER - -"Basis of
accounting required for use by governmental funds (q.v.) in which revenues are
recognized in the period in which they become available and measurable, and
expenditures are recognized at the time a liability is incurred except for
principal and interest on long-term debt, which are recorded when due."
modified approach (infrastructure) - CORRECT ANSWER - -"When a
government chooses not to depreciate infrastructure assets (q.v.). Under this
approach, improvements and additions would be capitalized; expenditures that
extend the life would be expenses. When using the modified approach, a
government must provide certain RSI (q.v.) schedules that demonstrate that
infrastructure is maintained at a certain level."
National Association of College and University Business Officers (NACUBO) -
CORRECT ANSWER - -"Association of college and university financial vice
presidents, controllers, budget officials, and other finance officers that produces
and distributes Financial Accounting and Reporting Manual for Higher
Education (q.v.)."
National Council on Governmental Accounting (NCGA) - CORRECT
ANSWER - -Body that established accounting and financial reporting standards
for state and local governments prior to the formation of the Governmental
Accounting Standards Board.
net assets - CORRECT ANSWER - -Difference between total assets and total
liabilities. Used by the FASB and GASB to describe equity accounts.
net assets—invested in capital assets, net of related debt (governmental) -
CORRECT ANSWER - -The portion of net assets of a governmental unit
representing capital assets less accumulated depreciation less debt associated
with the capital assets.
,net assets—permanently restricted (not-for-profit) - CORRECT ANSWER - -
Used in accounting for not-for-profit organizations indicating the amount of net
assets whose use is permanently restricted by an external donor.
net assets—restricted (governmental) - CORRECT ANSWER - -That portion
of net assets of a governmental unit or proprietary fund that is restricted. See
restricted (governmental).
net assets—temporarily restricted (not-for-profit) - CORRECT ANSWER - -
"Used in accounting for not-for-profit organizations indicating the amount of
net assets whose use is temporarily restricted by donors or grantors. Released by
program, time, plant acquisition, and term endowments."
net assets—unrestricted (governmental and not-for-profit) - CORRECT
ANSWER - -Used in accounting for governmental and not-for-profit
organizations indicating that portion of net assets that is unrestricted.
net increase/decrease in fair value of investments - CORRECT ANSWER - -
Account title used by governments to report realized and unrealized gains or
losses on investments.
net pension obligation (NPO) - CORRECT ANSWER - -"In a pension plan,
the accumulated difference between the employer's required (see actuarial basis)
and actual contributions."
nominal interest rate - CORRECT ANSWER - -"Contractual interest rate
shown on the face and in the body of a bond and representing the amount of
interest to be paid, in contrast to the effective interest rate (q.v.)."
nonaudit services - CORRECT ANSWER - -"Under Government Auditing
Standards (q.v.), gathering, providing, or explaining information requested by
decision makers or providing advice or assistance to management officials."
, noncapital financing activities - CORRECT ANSWER - -"Cash flow
statement category required by GASB. Includes cash flows from financing not
related to capital acquisition, including borrowing and transfers to and from
other funds."
accounting entity - CORRECT ANSWER - -Where an entity is established for
the purpose of accounting for a certain activity or activities. See fiscal entity.
accrual basis - CORRECT ANSWER - -"Basis of accounting under which
revenues are recorded when earned and expenditures (or expenses) are recorded
as soon as they result in liabilities for benefits received, notwithstanding that the
receipt of cash or the payment of cash may take place, in whole or in part, in
another accounting period."
acquisition method - CORRECT ANSWER - -"A method of accounting for
mergers among not-for-profit organizations in which the acquiring entity
records the acquired assets and liabilities at their fair values, not at the acquired
entity's book values."
activity - CORRECT ANSWER - -"Specific and distinguishable line of work
performed by one or more organizational components of a governmental unit
for the purpose of accomplishing a function for which the governmental unit is
responsible. For example, "Food Inspection" is an activity performed in the
discharge of the "Health" function. See also Function. "
actuarial basis - CORRECT ANSWER - -Basis used in computing the amount
of contributions to be made periodically to a fund so that the total contributions
plus the compounded earnings thereon will equal the required payments to be
made out of the fund. The factors taken into account in arriving at the amount of
these contributions include the length of time over which each contribution is to
be held and the rate of return compounded on such a contribution over its life.
Commonly used to compute annual required contributions (q.v.) to pension and
other postemployment benefit plans.1
NOT FOR PROFIT ORGANIZATIONS ACCOUNTING COURSE
2025/2026 | VERIFIED QUESTIONS AND ANSWERS
GRADED A+ | FUNDAMENTAL ACCOUNTING PRINCIPLES &
APPLICATION STUDY GUIDE | GUARANTEED SUCCESS
Management's Discussion and Analysis (MD&A) - CORRECT ANSWER - -
"Required part of the financial section of a CAFR that provides an opportunity
for management to explain, in plain-English terms, an overview of the
government's financial activities. Considered Required Supplementary
Information (q.v.) by the GASB."
matured bonds payable - CORRECT ANSWER - -Bonds that have reached
their maturity but remain unpaid.
matured interest payable - CORRECT ANSWER - -Bond interest that is due
but remains unpaid.
measurable - CORRECT ANSWER - -One condition that must be met before
a revenue can be recognized under the modified accrual basis of accounting.
The amount must be measurable.
measurement focus - CORRECT ANSWER - -"Nature of the resources, claims
against resources, and flows of resources that are measured and reported by a
fund or other entity. For example, governmental funds measure and report
current financial resources, whereas proprietary and fiduciary funds measure
and report economic resources."
mill - CORRECT ANSWER - -"Tax rate (q.v.) expressed in thousands per net
assessed valuation. For example, a tax rate of $2.50 per $100 net assessed
valuation would be $25.00 per $1,000 net assessed valuation, or 25 mills."
,modified accrual basis of accounting - CORRECT ANSWER - -"Basis of
accounting required for use by governmental funds (q.v.) in which revenues are
recognized in the period in which they become available and measurable, and
expenditures are recognized at the time a liability is incurred except for
principal and interest on long-term debt, which are recorded when due."
modified approach (infrastructure) - CORRECT ANSWER - -"When a
government chooses not to depreciate infrastructure assets (q.v.). Under this
approach, improvements and additions would be capitalized; expenditures that
extend the life would be expenses. When using the modified approach, a
government must provide certain RSI (q.v.) schedules that demonstrate that
infrastructure is maintained at a certain level."
National Association of College and University Business Officers (NACUBO) -
CORRECT ANSWER - -"Association of college and university financial vice
presidents, controllers, budget officials, and other finance officers that produces
and distributes Financial Accounting and Reporting Manual for Higher
Education (q.v.)."
National Council on Governmental Accounting (NCGA) - CORRECT
ANSWER - -Body that established accounting and financial reporting standards
for state and local governments prior to the formation of the Governmental
Accounting Standards Board.
net assets - CORRECT ANSWER - -Difference between total assets and total
liabilities. Used by the FASB and GASB to describe equity accounts.
net assets—invested in capital assets, net of related debt (governmental) -
CORRECT ANSWER - -The portion of net assets of a governmental unit
representing capital assets less accumulated depreciation less debt associated
with the capital assets.
,net assets—permanently restricted (not-for-profit) - CORRECT ANSWER - -
Used in accounting for not-for-profit organizations indicating the amount of net
assets whose use is permanently restricted by an external donor.
net assets—restricted (governmental) - CORRECT ANSWER - -That portion
of net assets of a governmental unit or proprietary fund that is restricted. See
restricted (governmental).
net assets—temporarily restricted (not-for-profit) - CORRECT ANSWER - -
"Used in accounting for not-for-profit organizations indicating the amount of
net assets whose use is temporarily restricted by donors or grantors. Released by
program, time, plant acquisition, and term endowments."
net assets—unrestricted (governmental and not-for-profit) - CORRECT
ANSWER - -Used in accounting for governmental and not-for-profit
organizations indicating that portion of net assets that is unrestricted.
net increase/decrease in fair value of investments - CORRECT ANSWER - -
Account title used by governments to report realized and unrealized gains or
losses on investments.
net pension obligation (NPO) - CORRECT ANSWER - -"In a pension plan,
the accumulated difference between the employer's required (see actuarial basis)
and actual contributions."
nominal interest rate - CORRECT ANSWER - -"Contractual interest rate
shown on the face and in the body of a bond and representing the amount of
interest to be paid, in contrast to the effective interest rate (q.v.)."
nonaudit services - CORRECT ANSWER - -"Under Government Auditing
Standards (q.v.), gathering, providing, or explaining information requested by
decision makers or providing advice or assistance to management officials."
, noncapital financing activities - CORRECT ANSWER - -"Cash flow
statement category required by GASB. Includes cash flows from financing not
related to capital acquisition, including borrowing and transfers to and from
other funds."
accounting entity - CORRECT ANSWER - -Where an entity is established for
the purpose of accounting for a certain activity or activities. See fiscal entity.
accrual basis - CORRECT ANSWER - -"Basis of accounting under which
revenues are recorded when earned and expenditures (or expenses) are recorded
as soon as they result in liabilities for benefits received, notwithstanding that the
receipt of cash or the payment of cash may take place, in whole or in part, in
another accounting period."
acquisition method - CORRECT ANSWER - -"A method of accounting for
mergers among not-for-profit organizations in which the acquiring entity
records the acquired assets and liabilities at their fair values, not at the acquired
entity's book values."
activity - CORRECT ANSWER - -"Specific and distinguishable line of work
performed by one or more organizational components of a governmental unit
for the purpose of accomplishing a function for which the governmental unit is
responsible. For example, "Food Inspection" is an activity performed in the
discharge of the "Health" function. See also Function. "
actuarial basis - CORRECT ANSWER - -Basis used in computing the amount
of contributions to be made periodically to a fund so that the total contributions
plus the compounded earnings thereon will equal the required payments to be
made out of the fund. The factors taken into account in arriving at the amount of
these contributions include the length of time over which each contribution is to
be held and the rate of return compounded on such a contribution over its life.
Commonly used to compute annual required contributions (q.v.) to pension and
other postemployment benefit plans.1
