Governmental & Non Profit Accounting CH 1-3 Exam MC questions with answers.

Governmental & Non Profit Accounting CH 1- |\ |\ |\ |\ |\ |\




3 Exam MC questions with answers
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Governments and nonprofit entities are similar in many ways. |\ |\ |\ |\ |\ |\ |\ |\ |\


Which of the following statements is not true?
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a. Neither governments nor nonprofit entities have a profit
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motive.
b. Both governments and nonprofit entities assess taxes.
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c. Both governments and nonprofit entities often report restricted
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resources.
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d. Both governments and nonprofit entities provide services. -
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CORRECT ANSWERS ✔✔b. Both governments and nonprofit
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entities assess taxes. |\ |\




Why do governments and nonprofit entities use fund accounting?
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Select one: |\




a. To allow managers more flexibility when budgeting.
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b. To better match revenues and expenses.
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c. To help limit errors when posting general journal entries to the
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general ledger. |\




d. To help ensure restricted resources are spent for their intended
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purpose. - CORRECT ANSWERS ✔✔d. To help ensure restricted
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resources are spent for their intended purpose.
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Which of the following is generally the major source of revenues
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for governments?
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, Select one: |\




a. Revenue from exchange transactions.
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b. Taxes.
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c. Revenue from investments.
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d. Voluntary donations. - CORRECT ANSWERS ✔✔b. Taxes
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Successful entities prepare budgets. Which of the following
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entities is generally required by law to prepare a budget?
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Select one: |\




a. Governments.
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b. All of the above are required by law to prepare a budget.
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c. Commercial business enterprises.
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d. Nonprofit entities. - CORRECT ANSWERS ✔✔a. Governments.
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Users of governmental and nonprofit financial reports use
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financial statements to answer a number of questions. Which of
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the following can at least partially be answered by reading a
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government or nonprofit's financial statements? |\ |\ |\ |\




Select one: |\




a. None of the above.
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b. Financial statements can be used to answer all of the
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aforementioned questions. |\




c. What is the likelihood of the entity's ability to pay its short-
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term and long-term financial obligations?
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d. What is the entity's ability to continue to provide a particular
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level of services?
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