ACC 430 Exam 1 Final Test Questions
and Actual Complete Answers 2025-
2026 Edition.
1. The Financial Accounting Standards Board has the responsibility for setting accounting and
financial reporting standards for
A. All not-for-profit organizations that are nongovernmental and business entities.
B. All not-for-profit organizations and business entities.
C. All not-for-profit organizations.
D. Special purpose governments with a business purpose. - Answer A
2. You are trying to decide if an entity you are reviewing is a government or a not-for-profit.
Which of the following would indicate it is a government rather than a not-for-profit entity?
A. Absence of profit motive.
B. A primary source of revenues is taxes.
C. Resource providers do not expect benefits proportional to the resources provided.
D. Absence of a defined ownership interest that can be sold, transferred, or redeemed. - Answer
B
3. Which of the following is identified by the GASB as the "cornerstone" of all financial reporting
in government?
A. Decision usefulness.
B. Stewardship.
C. Accountability.
D. Interperiod equity. - Answer C
4. Which of the following organizations issue standards that focus on both internal and external
financial reporting?
A. Federal Accounting Standards Advisory Board.
B. Governmental Accounting Standards Board.
C. Financial Accounting Standards Board.
D. American Institute of CPAs. - Answer A.
,5. Which of the following is identified by the FASAB as the foundation for federal financial
reporting?
A. Decision usefulness.
B. Accountability.
C. Understandability.
D. Budget integrity. - Answer B
6. Which of the following is not an objective of financial reporting by state and local
governments?
A. To assist users in assessing the adequacy of systems and controls.
B. To assist users in assessing financial condition and results of operations.
C. To assist financial report users in comparing actual financial results with the legally adopted
budget.
D. To assist in determining compliance with finance-related laws, rules, and regulations. -
Answer A. To assist users in assessing the adequacy of systems and controls
7. A comprehensive annual financial report (CAFR) prepared in conformity with GASB
recommendations should include which of the following sections?
A. Letter of transmittal, management's discussion and analysis (MD&A), and Financial
B. Introductory, Financial, and statistical
C. Introductory, MD&A, and Financial
D. Letter of transmittal, financial, and supplementary - Answer B.
8. Which of the following would be included in a properly prepared comprehensive annual
financial report (CAFR), but not in the minimum requirements for general purpose financial
reporting specified by GASB standards?
A. Management's discussion and analysis (MD&A).
B. Government-wide financial statements.
C. Notes to the financial statements.
D. Combining and individual fund financial statements. - Answer D
9. Which of the following would typically not be included in the introductory section of a
comprehensive annual financial report?
A. Title and contents page.
, 10. The section of the comprehensive annual financial report that presents tables and charts
showing social and economic data in addition to financial trends, fiscal capacity, and operating
information of the government is the:
A. Introductory section.
B. Management's discussion and analysis section.
C. Statistical section.
D. Financial section. - Answer C.
11. Which of the following should be included in the financial section of a comprehensive
annual financial report?
A. Transmittal letter.
B. The basic financial statements, including notes thereto.
C. Tables and charts showing demographic and economic data.
D. A description of the government. - Answer B
12. On what should the governmental fund financial statements report?
A. Net position and results of financial operations of the government as a whole.
B. Fiscal accountability.
C. Operational accountability.
D. Cost of government services. - Answer B
13. Which of the following sections is not considered a part of a federal agency performance
and accountability report?
A. Basic financial statements.
B. Annual performance report.
C. Statistical section.
D. Management's discussion and analysis. - Answer C
14. The FASB requires that a statement of functional expenses be prepared by which of the
following entities?
A. Colleges and universities.
B. Health care entities.
and Actual Complete Answers 2025-
2026 Edition.
1. The Financial Accounting Standards Board has the responsibility for setting accounting and
financial reporting standards for
A. All not-for-profit organizations that are nongovernmental and business entities.
B. All not-for-profit organizations and business entities.
C. All not-for-profit organizations.
D. Special purpose governments with a business purpose. - Answer A
2. You are trying to decide if an entity you are reviewing is a government or a not-for-profit.
Which of the following would indicate it is a government rather than a not-for-profit entity?
A. Absence of profit motive.
B. A primary source of revenues is taxes.
C. Resource providers do not expect benefits proportional to the resources provided.
D. Absence of a defined ownership interest that can be sold, transferred, or redeemed. - Answer
B
3. Which of the following is identified by the GASB as the "cornerstone" of all financial reporting
in government?
A. Decision usefulness.
B. Stewardship.
C. Accountability.
D. Interperiod equity. - Answer C
4. Which of the following organizations issue standards that focus on both internal and external
financial reporting?
A. Federal Accounting Standards Advisory Board.
B. Governmental Accounting Standards Board.
C. Financial Accounting Standards Board.
D. American Institute of CPAs. - Answer A.
,5. Which of the following is identified by the FASAB as the foundation for federal financial
reporting?
A. Decision usefulness.
B. Accountability.
C. Understandability.
D. Budget integrity. - Answer B
6. Which of the following is not an objective of financial reporting by state and local
governments?
A. To assist users in assessing the adequacy of systems and controls.
B. To assist users in assessing financial condition and results of operations.
C. To assist financial report users in comparing actual financial results with the legally adopted
budget.
D. To assist in determining compliance with finance-related laws, rules, and regulations. -
Answer A. To assist users in assessing the adequacy of systems and controls
7. A comprehensive annual financial report (CAFR) prepared in conformity with GASB
recommendations should include which of the following sections?
A. Letter of transmittal, management's discussion and analysis (MD&A), and Financial
B. Introductory, Financial, and statistical
C. Introductory, MD&A, and Financial
D. Letter of transmittal, financial, and supplementary - Answer B.
8. Which of the following would be included in a properly prepared comprehensive annual
financial report (CAFR), but not in the minimum requirements for general purpose financial
reporting specified by GASB standards?
A. Management's discussion and analysis (MD&A).
B. Government-wide financial statements.
C. Notes to the financial statements.
D. Combining and individual fund financial statements. - Answer D
9. Which of the following would typically not be included in the introductory section of a
comprehensive annual financial report?
A. Title and contents page.
, 10. The section of the comprehensive annual financial report that presents tables and charts
showing social and economic data in addition to financial trends, fiscal capacity, and operating
information of the government is the:
A. Introductory section.
B. Management's discussion and analysis section.
C. Statistical section.
D. Financial section. - Answer C.
11. Which of the following should be included in the financial section of a comprehensive
annual financial report?
A. Transmittal letter.
B. The basic financial statements, including notes thereto.
C. Tables and charts showing demographic and economic data.
D. A description of the government. - Answer B
12. On what should the governmental fund financial statements report?
A. Net position and results of financial operations of the government as a whole.
B. Fiscal accountability.
C. Operational accountability.
D. Cost of government services. - Answer B
13. Which of the following sections is not considered a part of a federal agency performance
and accountability report?
A. Basic financial statements.
B. Annual performance report.
C. Statistical section.
D. Management's discussion and analysis. - Answer C
14. The FASB requires that a statement of functional expenses be prepared by which of the
following entities?
A. Colleges and universities.
B. Health care entities.
