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Governmental and Nonprofit Accounting, 11e Freeman, McSwain (Test Bank all Chapters) (Download link at the end of this file)

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Governmental and Nonprofit Accounting: Theory and Practice, 11e (Freeman)

Chapter 1 Governmental and Nonprofit Accounting—Environment and Characteristics

• Which of the following would not be considered a government or nonprofit organization?
• A software company that sells software exclusively to state and local governments.
• A public elementary school.
• A church.
• A private trust organized for charitable purposes.

Answer: A

Objective: LO 1.1 Describe the key unique characteristics and major types of government and nonprofit (G&NP) organizations.

Difficulty Level: Easy

Classification: Application

AACSB Category: Application of knowledge

• Which of the following activities would most likely be accounted for as a business-type activity?
• Fire protection.
• Recreation.
• Water operations.
• Street maintenance.

Answer: C

Objective: LO 1.1 Describe the key unique characteristics and major types of government and nonprofit (G&NP) organizations.

Difficulty Level: Moderate

Classification: Application

AACSB Category: Application of knowledge

• Prior to the creation of the Governmental Accounting Standards Board in 1984, which of the

following organizations had the greatest influence over accounting concepts, principles, and standards for state and local governments?

• The National Council on Governmental Accounting (NCGA)
• The National Association of College and University Business Officers (NACUBO).
• The American Institute of Certified Public Accountants (AICPA).
• The Comptroller General of the United States.

Answer: A

Objective: LO 1.1 Describe the key unique characteristics and major types of government and nonprofit (G&NP) organizations.

Difficulty Level: Moderate

Classification: Application

AACSB Category: Application of knowledge

• Which of the following is considered a health and welfare organization?
• Secondary schools.
• Young Men’s Christian Association (YMCA).
• Nongovernment child protection agencies.
• United Way. 2 / 4

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Answer: C

Objective: LO 1.1 Describe the key unique characteristics and major types of government and nonprofit (G&NP) organizations.

Difficulty Level: Easy

Classification: Application

AACSB Category: Application of knowledge

• Which of the following characteristics best distinguishes a government entity from a business entity?
• Governments operate in a very small section of the economy while businesses operate globally.
• Cost analysis and other control and evaluation techniques are essential to ensure that resources

are used economically and efficiently.

• Those contributing resources to the entity do not necessarily receive a direct or proportionate

share the services.

• Businesses must acquire and convert scarce resources while governments can demand whatever

they need.

Answer: C

Objective: LO 1.1 Describe the key unique characteristics and major types of government and nonprofit (G&NP) organizations.

Difficulty Level: Moderate

Classification: Concept

AACSB Category: Analytical thinking

• Which source of financial resources is unique to governments?
• Borrowings.
• Gifts and grants.
• Charges for services provided.
• Taxation.

Answer: D

Objective: LO 1.1 Describe the key unique characteristics and major types of government and nonprofit (G&NP) organizations.

Difficulty Level: Easy

Classification: Concept

AACSB Category: Analytical thinking

• Which of the following is not an operational accountability measure for a government?
• Economic cost of providing services.
• Net income.
• Assessment whether a government raised sufficient revenues each period to cover the cost of

providing services.

• Assessment whether services are being provided economically and efficiently.

Answer: B

Objective: LO 1.1 Describe the key unique characteristics and major types of government and nonprofit (G&NP) organizations.

Difficulty Level: Moderate

Classification: Application

AACSB Category: Application of knowledge

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• Which of the following is not a primary financial reporting objective of state and local government

(SLG) reporting?

• Provide information necessary to assess the level of SLG services and its ability to continue to

finance its activities and meet its obligations.

• Provide information necessary for investment and credit decisions.
• Provide a means of demonstrating the SLG’s accountability that enables users to assess that

accountability.

• Provide information necessary to evaluate the SLG’s operating results for the period.

Answer: B

Objective: LO 1.4 Summarize the key distinguishing characteristics, concepts, and objectives of G&NP accounting and financial reporting.

Difficulty Level: Difficult

Classification: Concept

AACSB Category: Application of knowledge

• The primary purpose of a fund is
• To provide expenditure authority for a government or not-for-profit organization.
• To segregate an organization's resources according to the purpose(s) for which they are to be

used.

• To keep an organization's constituency from demanding that the organization utilize resources

that it wants to save for a specific future objective.

• To confuse and confound the legislative body as to the use and purpose of government resources.

Answer: B

Objective: LO 1.5 Explain the key characteristics of state and local government financial reporting.

Difficulty Level: Moderate

Classification: Concept

AACSB Category: Application of knowledge

• Which of the following is not a characteristic of a fund?
• Fiscal entity.
• Separate legal entity.
• Accounting entity.
• Contains self-balancing set of accounts.

Answer: B

Objective: LO 1.5 Explain the key characteristics of state and local government financial reporting.

Difficulty Level: Moderate

Classification: Concept

AACSB Category: Application of knowledge

• Fixed-dollar budgets and appropriations are most often found in
• All funds of a government.
• Expendable funds.
• Nonexpendable funds.
• In not-for-profit organizations, but not governments.

Answer: B

Objective: LO 1.5 Explain the key characteristics of state and local government financial reporting.

Difficulty Level: Moderate

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