Government and NFP accounting exam 1
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Characteristics of gov and NFP entities - FASB statement of financial concepts no. 4 -
CORRECT ANSWER - •Receipt of taxes from tax payers that don't expect to receive any
benefits in proportion of their payment
• Not trying to make money
• I can't sell the organization and have no rights to assets if it goes bankrupt
Authoritative bodies for NFP governments and the federal government - CORRECT
ANSWER - •GASB- governmental accounting standards board- sets the standards for state
and local governmental organizations and governmental not-for-profit organizations.
•FASAB- federal accounting standards advisory board- recommend accounting principles and
standards for the federal government and its agencies. Federal accounting and financial reporting
standards should be consistent with those established by GASB and FASB where applicable.
How do you determine if a NFP organization is governmental or not? - CORRECT
ANSWER - •Non-governmental NFP follows FASB
•Governmental NFP follows GASB
Governmental accounting is based on accountability - CORRECT ANSWER - Requires
government to answer to the citizenry. People should have the right to know where their tax
dollars are spent.
GASB 34 - CORRECT ANSWER - full accrual basis for government-wide funds vs.
modified accrual basis for governmental funds. depreciation decreases fund balance
, Government Wide financial statements - CORRECT ANSWER - Full Accrual system
Government Fund financial statements- - CORRECT ANSWER - Modified Accrual
system
full accrual - CORRECT ANSWER - revenues recognized when earned and expenses
recognized when incurred
modified accrual - CORRECT ANSWER - cash basis of accounting for 12 months and
then throw in a handful of receivables and payables at the end of the year
Difference between expense and expenditure - CORRECT ANSWER - •expense - Using
up of an asset in the operations of a business
•Expenditure - Spending money for a particular purpose. We use expenditures in government
because we are not trying to measure income like we are in a business
General fund - CORRECT ANSWER - Primary fund, bulk of activities done here.
Special revenue fund - CORRECT ANSWER - Set up for a specific purpose
Enterprise funds - CORRECT ANSWER - Ran like a business and provides services just
like a private business
Internal service fund - CORRECT ANSWER - Run on full accrual and measuring income.
Fiduciary fund - CORRECT ANSWER - Care for it as if it is your money, give to one
entity and distribute it from there to various bodies
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Characteristics of gov and NFP entities - FASB statement of financial concepts no. 4 -
CORRECT ANSWER - •Receipt of taxes from tax payers that don't expect to receive any
benefits in proportion of their payment
• Not trying to make money
• I can't sell the organization and have no rights to assets if it goes bankrupt
Authoritative bodies for NFP governments and the federal government - CORRECT
ANSWER - •GASB- governmental accounting standards board- sets the standards for state
and local governmental organizations and governmental not-for-profit organizations.
•FASAB- federal accounting standards advisory board- recommend accounting principles and
standards for the federal government and its agencies. Federal accounting and financial reporting
standards should be consistent with those established by GASB and FASB where applicable.
How do you determine if a NFP organization is governmental or not? - CORRECT
ANSWER - •Non-governmental NFP follows FASB
•Governmental NFP follows GASB
Governmental accounting is based on accountability - CORRECT ANSWER - Requires
government to answer to the citizenry. People should have the right to know where their tax
dollars are spent.
GASB 34 - CORRECT ANSWER - full accrual basis for government-wide funds vs.
modified accrual basis for governmental funds. depreciation decreases fund balance
, Government Wide financial statements - CORRECT ANSWER - Full Accrual system
Government Fund financial statements- - CORRECT ANSWER - Modified Accrual
system
full accrual - CORRECT ANSWER - revenues recognized when earned and expenses
recognized when incurred
modified accrual - CORRECT ANSWER - cash basis of accounting for 12 months and
then throw in a handful of receivables and payables at the end of the year
Difference between expense and expenditure - CORRECT ANSWER - •expense - Using
up of an asset in the operations of a business
•Expenditure - Spending money for a particular purpose. We use expenditures in government
because we are not trying to measure income like we are in a business
General fund - CORRECT ANSWER - Primary fund, bulk of activities done here.
Special revenue fund - CORRECT ANSWER - Set up for a specific purpose
Enterprise funds - CORRECT ANSWER - Ran like a business and provides services just
like a private business
Internal service fund - CORRECT ANSWER - Run on full accrual and measuring income.
Fiduciary fund - CORRECT ANSWER - Care for it as if it is your money, give to one
entity and distribute it from there to various bodies
