Test Bank For Accounting for Governmental and Nonprofit Entities 19th Jacqueline L Reck, Daniel Neely, Suzanne Lowensohn

Student name: b




1) Explain the essential differences between general purpose and special purpose
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governments and give several examples of each.
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2) Identify and explain the characteristics that distinguish governments and not-for-profit
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entities from business entities.
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3) GASB and FASB standards are concerned only with external financial reporting;
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whereas, FASAB standards are concerned with both internal and external financial reporting. Do
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you agree with this statement? 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
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reporting in government.
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6) In your own words state the primary needs the GASB believes external users have for
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financial reports of state and local governments. For contrast, state the uses the FASB believes
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external users have for the financial reports of not-for-profit organizations.
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7) Describe the difference between a comprehensive annual financial report (CAFR) and
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GASB general purpose 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
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(PAR) that the Office of Management and Budget requires major federal departments and
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agencies to prepare.
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,9) Explain the concepts of fiscal and operational accountability and the basis of accounting
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used to capture each concept.
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10) Describe the comprehensive annual financial report (CAFR). What are the sections of the
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report and which components of the organization should it include? Is a CAFR required?
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11) The Governmental Accounting Standards Board is assigned responsibility for setting
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accounting and financial reporting standards for which of the following?
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A) Governments such as federal agencies, states, cities, counties, villages, and
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btownships.
B) State and local government entities and governmentally-related units and agencies,
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bsuch as utilities, authorities, hospitals, and colleges and universities.
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C) Not-for-profit organizations. b


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
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financial reporting standards for the federal government?
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A) Financial Accounting Standards Board (FASB).b b b b



B) Governmental Accounting Standards Board (GASB). b b b b



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
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and financial reporting 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
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entity?
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A) Absence of profit motive. b b b



B) A primary source of revenues is taxes.
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C) Resource providers do not expect benefits proportional to the resources provided.
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D) Absence of a defined ownership interest that can be sold, transferred, or redeemed.
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15) Which of the following is identified by the GASB as the "cornerstone" of all financial
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reporting in government?
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A) Decision usefulness. b



B) Stewardship.
C) Accountability.
D) Interperiod equity. b




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