Accounting for Governmental and Nonprofit Entities 17th Edition By Reck and Lowensohn - Test Bank

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. 

True    False

9.         The Federal Accounting Standards Advisory Board (FASAB) recommends accounting principles and standards for the federal government and its agencies and departments. 

True    False

10.       The FASB, GASB, and FASAB identify primarily external users as the focus of their financial reports.

True    False

11.       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

12.       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

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

True    False

14.       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

15.       Providing information on accountability is the primary financial reporting objective for both governmental and not-for-profit entities.

True    False

16.       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

17.       Since neither governmental nor not-for-profit entities have investors, the financial reporting objectives are the same for both types of entities.