TEST BANK FOR INTRODUCTION TO FUND ACCOUNTING 5TH EDITION NORVELLE.

TESTBANK g g




FOR
INTRODUCTION TO FUND g g




ACCOUNTING 4TH EDITION NORV g
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ELLE



Chapterg1
ThegGovernmentgandgNot-For-ProfitgEnvironment


TRUE/FALSEg(CHAPTERg1)

1. FgThegmaingobjectivegofgagtypicalggovernmentalgorgnot-for-
profitgentitygisgtogearngagprofit.

2. TAggovernment’sgbudgetgmaygbegbackedgbygthegforcegofglaw.

3. FGovernmentalgentitiesghavegnogneedgforgangaccountinggsystem.

Downloadedgby:gAriahg|
tiongofgthisgdocumentgisgillegal

,4. TAggovernment’sginternalgmanagersgrelygonggeneralgpurposegf
inancialgstatementsgforgaconsiderablegamountgofginformationg
aboutgtheirggovernment.

5. FGovernmentsgandgnot-for-profitsgmaygnevergengagegingbusiness-typegactivities.

6. TLendersgusegthegfinancialgstatementsgofggovernmentsgandgnot-
forgprofitsgjustgasgtheygwouldthosegofgbusinesses,gthatgis,gtoghelpgassessgt
hegborrower’sgcredit-worthiness.

7. TFinancialgstatements,gnogmatterghowgprepared,gdognotgdirectlygaffectg
thegeconomicgworthgofangentity.

8. FThegFinancialgAccountinggStandardsgAdvisorygBoard’sgstandards
gdognotgapplygtogthefederalgDepartmentgofgTreasury.



9. TGovernmentsgmaygbegsubjectgtogthegsamegpressuresgthatgledgtog
accountinggscandalsglikeEnron.

10. FThegGovernmentalgAccountinggStandardsgBoardgestablishesggenerally
gacceptedgaccountingprinciplesgforgallgstategandglocalggovernmentgentiti

es,gasgwellgasgallgnot-for-profitgentities.

MULTIPLEgCHOICEg(CHAPTERg1)

1. Agprimarygcharacteristicgthatgdistinguishesggovernmentalgentitiesgfromgbusinessg
entitiesgis
a) Thegneedgtoggenerategrevenuesgequalgtogorg ingexcessgofg expenditures/expenses.
b) Thegimportancegofgthegbudgetgingtheggoverningg process.
c) Thegneedg togprovideggoodsgorgservices.
d) Thegcorrelationgbetweengrevenuesggeneratedgandgdemandgforggoodsgorgservices.

2. Agprimarygcharacteristicgthatgdistinguishesgnot-for-
profitgentitiesgfromgbusinessgentitiesgis
a) Thegneedgtoggenerategrevenuesgequalgtogorgingexcessgofg
expenditures/expenses.
b) Thegimportancegofgthegbudgetgingtheggoverningg process.
c) Thegneedg togprovideggoodsgorgservices.
d) Thegcorrelationgbetweengrevenuesggeneratedgandgdemandgforggoodsgorg
services.




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,3. Whichgofgthegfollowinggcharacteristicsgdistinguishesgaggovernmentalgorg
not-for-profitgentityfromgagbusinessgentity?
a) Theregisgalwaysgagdirectglinkgbetweengrevenuesg
generatedgandexpenditures/expensesgincurred.
b) Capitalgassetsgaregusedgtogproducegrevenuesgandgsavegcosts.
c) Revenuesgaregalwaysg indicativeg ofgdemandgforggoodsg andgservices.
d) Thegmissiongofgthegentitygwillgdeterminegtheggoodsgorgservicesgprovided.

4. Thegmostgsignificantgfinancialgdocumentgprovidedgbygaggovernmentalg entitygisgthe
a) Thegbalancegsheet.
b) Thegoperatinggstatement.
c) Thegoperatinggbudget.
d) Thegcashgflowgstatement.

5. Whichgofgthegfollowinggstatementsgisgtrue?
a) Governmentsgmaygengagegingactivitiesgsimilargtogactivitiesg
engagedgingbygforprofitentities.
b) Theregaregaglimitedgnumbergofgdifferentgtypesgofggovernments.
c) Allggovernmentalgentitiesgengagegingthegsameg activities.
d) Managersgmayghavegaglong-
termgfocusgandgtherebygsacrificegthegshort-
termgliquiditygofthegentity.

6. WhichgofgthegfollowinggactivitiesgisgNOTgangactivitygingwhichgag
governmentalgentitygmightengage?
a) Sellinggelectricgpower.
b) Operatinggaggolfg course.
c) Operatinggagbookstore.
d) Allgofg thegaboveg aregactivitiesgthatg mightg begcarriedgoutgbygaggovernment.

7. Ingwhichgofgthegfollowinggactivitiesgisgagnot-for-
profitgentitygleastglikelygtogengage?
a) Providinggeducationalgservices.
b) Providingghealth-caregservices.
c) Providinggforgterrorismgdefense.
d) Retailgsalesgofgcookies.
8. WhichgofgthegfollowinggcangbegaffectedgbygGAAP?
a) Legalgabilitygtogissuegbonds.
b) Abilitygtogbalancegthegbudget.
c) Amountgreportedgasgemployeegpensiongplangcontributions.
d) Claimsgandgjudgmentsgsettled.

9. Whichgofgthegfollowinggcharacteristicsgisguniquegtogaggovernmentalgentity?
a) Thegabilitygtoghavegactivitiesgfinancedgwithgtax-exemptgdebt.
b) Thegpowergtogimposeg fees.
c) Thegabilitygtogissuegtax-exemptgdebt.

, d) ThegabilitygtoghavegactivitiesgfinancedgbygFederalggrants.




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10. Togobtaingagcomprehensivegunderstandinggofgaggovernment’sgfiscalghe
alth,gagfinancialganalystishouldgobtaingangunderstandinggofgwhichgofgth
egfollowing?
a) Allgofgthegresourcesgownedgbygtheggovernmentalgentity.
b) Allgofgthegresourcesgwhichgmaygbegsummonedgbygaggovernmentalgentity.
c) Demographicgdatagaboutgthegresidentsgservedgbygtheggovernmental
gentity.

d) Allgofg thegabove.

11. Whichgofgthegfollowinggisgcommongtogbothggovernmentsgandgnot-
gfor-profitgentitiesgbutidistinguishesgthesegentitiesgfromgfor-

profitgentities?
a) Thegbudgetgisgaglegal,gfinancialgdocument.
b) Revenuesgaregusuallygindicativegofgdemandg forg goodsgorgservices.
c) Theregisgdirectgmatchinggofgrevenuesg andgexpenses.
d) Theregaregnogdefinedgownershipginterests.

12. WhichgofgthegfollowinggisgNOTgagpurposegofgexternalgfinancialgreportinggbyg
governments?
Externalgfinancialgreportsgshouldgallowgusersgto
a) Assessgfinancialgcondition.
b) Comparegactualgresultsgwithgthegbudget.
c) Assessgthegabilitygofgelectedgofficialsgtogeffectivelygmanagegpeople.
d) Evaluategefficiencygandgeffectiveness.

13. WhichgofgthegfollowinggisgNOTgagreasongwhygusersgneedggove
rnmentalgandgnot-for-profitexternalgfinancialgstatements?
a) Togdeterminegthegabilitygofgthegentitygtogmeetgitsgobligations.
b) Togdeterminegthegabilitygofgthegentitygtogcontinuegtogprovidegservices.
c) Togpredictgfuturegfiscalgsolvency.
d) Togevaluategthegoverallgprofitabilitygofgthegentity.

14. Usersgofggovernmentgfinancialgstatementsgshouldgbeginterestedging
informationgaboutcompliancegwithglawsgandgregulationsgforgwhic
hgofgthegfollowinggreasons?