True False Questions

Chapter 01 Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Entities True / False Questions 1.Special purpose governments generally provide a wider range of services to their residents than do general purpose governments.True False 2.Examples of general purpose governments include cities, towns, and public schools that receive tax revenue to finance the services they provide.True False 3.The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all state and local governments, both general purpose and special purpose.True False 4.The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all government entities.True False 5.The Financial Accounting Standards Board (FASB) is the body authorized to establish accounting principles for all colleges and universities and health care entities.True False 6.Neither governmental nor not-for-profit entities have residual equity that can be distributed to owners.True False 7.A characteristic common to governmental and not-for-profit organizations is that they do not exist to provide goods or services at a profit or profit equivalent.True False 8.The needs of users of government financial reports are the same as those of users of business entity financial reports.Accounting for Governmental & Nonprofit Entities, 17e Jacqueline Reck Suzanne Lowensohn Earl Wilson (Test Bank All Chapters, 100% Original Verified, A+ Grade) Answers At The End Of Each Chapter 1 / 4

True False

• The Federal Accounting Standards Advisory Board (FASAB) recommends accounting

principles and standards for the federal government and its agencies and departments.

True False

• The FASB, GASB, and FASAB identify primarily external users as the focus of their

financial reports.

True False

• Interperiod equity refers to the concept that current-year revenues are sufficient to pay for

services provided during the year, so that future taxpayers will not be required to assume the burden for services previously provided.

True False

• The minimum requirements for general purpose external financial reporting are (1)

management's discussion and analysis (MD&A), (2) the basic financial statements, including the notes to the financial statements, and (3) combining and individual fund financial statements.

True False

• The Financial Accounting Foundation has oversight over both FASB and GASB.

True False

• In addition to financial statements and notes, GASB requires governments to provide

information on service efforts and accomplishments (SEA) in their reports to the public.

True False

• Providing information on accountability is the primary financial reporting objective for

both governmental and not-for-profit entities.

True False

• A difference in the financial reporting objectives for governmental entities and not-for-

profit entities is that governmental entities report on compliance with laws, regulations, and rules that impact financial reports.

True False

• Since neither governmental nor not-for-profit entities have investors, the financial

reporting objectives are the same for both types of entities. 2 / 4

True False

• The GASB provides optional guidance for those entities providing service efforts and

accomplishments (SEA) reports to the public.

True False

• The Office of Management and Budget (OMB) requires major federal departments and

agencies to prepare an annual performance report.

True False

• The FASB standards require not-for-profit entities to report net assets in three categories:

unrestricted, restricted, and net investment in capital assets.

True False

• The FASB standards require not-for-profit entities to separately report program expenses

and support expenses.

True False

• The governmental fund financial statements are intended to report on fiscal

accountability.

True False

• The governmental fund financial statements are useful in assessing operational

accountability.

True False

• Government-wide financial statements are prepared using the accrual basis of accounting.

True False

• Both the GASB and the FASB require entities to include a management discussion and

analysis in the financial reports.

True False

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Multiple Choice Questions

• The Governmental Accounting Standards Board is assigned responsibility for setting

accounting and financial reporting standards for

• Governments such as federal agencies, states, cities, counties, villages, and townships.
• State and local government entities and governmentally-related units and agencies, such

as utilities, authorities, hospitals, and colleges and universities.

• Not-for-profit organizations.
• State and local governments and all not-for-profit organizations.

• The body that has been established to recommend accounting and financial reporting

standards for the federal government is the

• Financial Accounting Standards Board (FASB).
• Governmental Accounting Standards Board (GASB).
• Federal Accounting Foundation (FAF).
• Federal Accounting Standards Advisory Board (FASAB).

• The Financial Accounting Standards Board has the responsibility for setting accounting

and financial reporting standards for

• All not-for-profit organizations that are nongovernmental and business entities.
• All not-for-profit organizations and business entities.
• All not-for-profit organizations.
• Special purpose governments with a business purpose.

• 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?

• Absence of profit motive.
• A primary source of revenues is taxes.
• Resource providers do not expect benefits proportional to the resources provided.
• Absence of a defined ownership interest that can be sold, transferred, or redeemed.

• Which of the following is identified by the GASB as the "cornerstone" of all financial

reporting in government?

• Decision usefulness.
• Stewardship.
• Accountability.
• Interperiod equity.

• Which of the following organizations issue standards that focus on both internal and

external financial reporting?

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