Deck 1: Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations

Question 1

The GASB Concept Statement on Service Efforts and Accomplishments Reporting encourages state and local governments to include inputs of nonmonetary resources in their financial reporting.

Answer 1

True
Explanation: Governments have difficulty in meeting the information needs of citizens. Traditional financial statements, which measure events in dollars, are not well designed to evaluate a government's effectiveness in delivering services. Nonfinancial measures are better indicators of performance. GASB's Concept Statements No. 2 and No. 5 address service efforts and accomplishments.

Question 2

FASAB, GASB and FASB standards are set forth primarily in documents called statements.

Answer 2

True
Explanation: GASB standards are set forth in documents called Statements of Financial Accounting Standards.

Question 3

The GASB does not require supplementary information to be reported with its financial statements even if it is essential to establish appropriate context for the financial statements and notes.

Answer 3

False
Explanation: Occasionally, the GASB determines that additional information is necessary to provide context and understanding of information in the statements or notes. In such cases, the GASB requires the presentation of required supplementary information RSI).

Question 4

The FASAB was established to recommend accounting and financial reporting standards for the federal government.

Question 5

The Financial Accounting Standards Board sets financial reporting standards for profit-seeking businesses and nongovernmental, not-for-profit organizations.

Question 6

An organization is presumed to be governmental if it has the ability to issue directly debt that is exempt from federal taxes.

Question 7

The Governmental Accounting Standards Board sets financial reporting standards for all units of government: federal, state, and local.

Question 8

Governments must have as many funds as necessary to fulfill legal requirements and sound financial administration but must have at a minimum a General Fund.

Question 9

Although certain supplementary information may not be required, if presented, it must follow GASB guidance regarding its format and content.

Question 10

The Federal Accounting Standards Advisory Board requires less extensive reports than does the FASB or GASB.

Question 11

A Management's Discussion and Analysis is required for state and local governmental units, and the federal government.

Question 12

Fund accounting exists primarily to provide assurance that resources are used according to legal or donor restrictions.

Question 13

The GASB Concept Statement on Service Efforts and Accomplishments Reporting requires state and local governments to include inputs of nonmonetary resources in their financial reporting.

Question 14

The only objective of the Governmental Accounting Standards Board is to help users determine compliance with finance-related laws, rules, and regulations.

Question 15

The Financial Accounting Standards Board and the Governmental Accounting Standards Board are parallel bodies under the oversight of the Financial Accounting Foundation.

Question 16

FASAB, GASB and FASB standards are set forth primarily in documents called concept statements.

Question 17

The Financial Accounting Standards Board sets financial reporting standards for private not-for-profits and investor-owned businesses.

Question 18

The format and content of supplementary information which is not required by GASB is up to the discretion of the reporting entity

Question 19

The FASAB requires more financial statements than are typically required of state and local governments.

Question 20

GASB and FASB Concept Statements establish accounting standards that must be complied with to receive an unqualified audit opinion.

Question 21

Fiduciary funds include agency, pension trust, investment trust, and permanent funds.

Question 22

Fiduciary funds of a governmental unit use the current financial resources measurement focus and modified accrual basis of accounting

Question 23

Comparison of the legally approved budget with actual results of the General Fund is included as part of required supplementary information in the CAFR.

Question 24

FASB sets the reporting standards for private not-for-for profits.

Question 25

Governmental-type activities fund statements must use accrual basis when preparing government-wide financial statements.

Question 26

Infrastructure is capitalized by state and local governmental units.

Question 27

The government-wide statements and the fund statements for proprietary funds and fiduciary funds use the economic resources measurement focus and the accrual basis of accounting.

Question 28

Fund-basis statements are presented for three categories of government activities: governmental, proprietary, and fiduciary.

Question 29

Businesslike activities fund statements must be changed to the accrual basis from the modified accrual basis when preparing government-wide financial statements.

Question 30

Under the accrual basis of accounting, revenues are recognized when measurable and available to finance expenditures of the current period.

Question 31

Permanent funds can be either a governmental fund or a fiduciary fund where only income on donated assets may be spent.

Question 32

The economic resource measurement focus and accrual basis of measurement is an important feature of government-wide financial statements.

Question 33

State and local governments may use twelve different fund types.

Question 34

Comparison of the legally approved budget with actual results of the General Fund is not part of required supplementary information in the CAFR.

Question 35

General fixed assets of the government are reported both in the government-wide financial statements and the governmental fund financial statements.

Question 36

Long-term debt associated with governmental activities i.e. that is to be paid with tax revenues) is reported in the government-wide statements but not in the governmental fund statements

Question 37

Measurement focus refers to those items, such as current and long-term assets, that are being reported on the financial statements.

Question 38

The Financial Accounting Standards Board has authority to establish accounting and financial reporting standards for both private and state universities.

Question 39

FASAB, GASB and FASB standards are set forth primarily in documents called interpretations.

Question 40

Internal Service funds are treated as governmental activities in the government-wide statements if the principal customers are other departments within the General Fund.

Question 41

Depreciation on capital assets is included as an expense in the Statement of Revenues, Expenses, and Changes in Fund Net Position in the proprietary fund financial statements

Question 42

The GASB and the FASB are parallel bodies under the oversight of the Financial Accounting Foundation FAF)

Question 43

The term "proprietary funds" applies to:

A) all funds that use accrual accounting.
B) enterprise and internal service funds only.
C) enterprise, internal service, and private-purpose trust funds.
D) none of the above answers are correct.

Question 44

According to GASB standards relating to Budgetary Accounting, budgetary comparisons are required for all funds even those for which an annual budget has not been adopted.

Question 45

According to FASB standards relating to Budgetary Accounting, the accounting system should provide the basis for appropriate budgetary control.

Question 46

According to GASB standards relating to Budgetary Accounting, an annual budget should be adopted by every governmental unit.

Question 47

A government may have two or more General Funds.

Question 48

The GASB recently published a white paper which identifies five environmental differences between governments and for-profit enterprises.

Question 49

Which of the following has established a "Hierarchy of GAAP":

A) Financial Accounting Standards Board.
B) Federal Accounting Standards Advisory Board
C) Governmental Accounting Standards Board
D) All of the above have established a hierarchy

Question 50

GASB utilizes two additional elements that do not appear in the balance sheets of nongovernmental organizations: deferred inflows and deferred outflows of resources.

Question 51

For most state and local governments, the budget, when adopted according to procedures specified by state laws, is not binding upon the administrators of a governmental unit.

Question 52

Accounting and financial reporting standards for profit-seeking businesses and for nongovernmental not-for-profit organizations are set by the Financial Accounting Standards Board.

Question 53

The information needs of government creditors are vastly different from their counterparts in the corporate world which necessitates different accounting rules.

Question 54

According to GASB standards relating to Budgetary Accounting, budgetary comparisons should be included in the appropriate financial statements or schedules for governmental funds for which an annual budget has been adopted.

Question 55

Governmental funds include:

A) Special revenue funds
B) Internal service funds
C) Enterprise funds
D) Agency funds

Question 56

Depreciation on capital assets is included as an expense in the Statement of Activities in the governmental fund statements.

Question 57

The FASB sets accounting and financial reporting standards for governmentally related not-for-profit organizations, such as colleges and universities, health care entities, museums, libraries, and performing arts organizations that are owned or controlled by governments.

Question 58

Depreciation on capital assets is not included as an expense in the Statement of Revenues, Expenses, and Changes in Fund Net Position in the proprietary fund financial statements

Question 59

A fund represents part of the activities of an organization which is separated from other activities in the accounting records to more easily demonstrate compliance with legal restrictions or limitations.

Question 60

The Financial Accounting Foundation FAF) has oversight over the GASB but not the FASB.

Question 61

Fiduciary funds use the:

A) economic resources measurement focus and modified accrual basis of accounting.
B) current financial resources measurement focus and accrual basis of accounting.
C) economic resources measurement focus and accrual basis of accounting.
D) none of the above, the fiduciary funds have no revenues.

Question 62

Which of the following best describes how many funds a government should use?

A) One for each revenue source
B) Two at a minimum; the General Fund and one enterprise fund
C) As many as necessary to fulfill legal requirements and sound financial administration
D) None of the above

Question 63

The GASB has the authority to establish accounting and financial reporting standards for:

A) State governments
B) Private not-for-profits
C) Federal government
D) None of the above

Question 64

Which of the following is a proprietary fund?

A) Internal service
B) Investment trust
C) Permanent
D) Special revenue

Question 65

Which of the following would not be included in FASB Statement of Financial Accounting Concepts #4, which identifies the information needs of the users of non-business financial statements?

A) Assessing services provided by a non-business organization and its ability to continue to provide those services
B) Format and content of financial statements
C) Assessing managements' stewardship and performance
D) Evaluation of an organization's resources, obligations and effects of changes in net resources

Question 66

The Governmental Accounting Standards Board has been given authority to establish accounting and financial reporting standards for:

A) all governmental units and agencies.
B) federal, state, and local governments and governmentally related utilities, authorities, hospitals, and colleges and universities..
C) state and local governmental entities, and governmentally related utilities, authorities, hospitals, and colleges and universities.
D) all governmental units and all not-for-profit organizations.

Question 67

Which of the following use current financial resources measurement focus?

A) Fiduciary fund statements
B) Governmental fund statements
C) Proprietary fund statements
D) Internal Service fund statements

Question 68

Level "A" GAAP for The University of Virginia, a public institution, would be established by the:

A) Financial Accounting Standards Board.
B) Governmental Accounting Standards Board.
C) American Institute of Certified Public Accountants.
D) National Association of College and University Business Officers.

Question 69

Which of the following characteristics would not define an organization as governmental?

A) The power to enact and enforce a tax levy.
B) The potential for unilateral dissolution by a government with the net resources reverting to a government.
C) The receipt of grant money from a state or local government for the purpose of providing services to the public.
D) All of the above.

Question 70

In order for a fund to exist, there must be:

A) A fiscal entity; assets set aside for a specific purpose
B) A double-entry accounting entity
C) A & B are optional and not required
D) Both A & B are required

Question 71

Under the modified accrual basis of accounting, expenditures should be recognized when:

A) they are authorized by the budget ordinance.
B) they are paid.
C) they are measurable and can be financed by the revenues of the current period.
D) the fund liability is incurred.

Question 72

The FASAB has the authority to establish accounting and financial reporting standards for:

A) State and local governments
B) Investor owned business
C) Federal government
D) Public not-for-profits

Question 73

Which fund category must change from modified accrual to accrual basis when preparing government-wide financial statements?

A) Governmental
B) Proprietary
C) Fiduciary
D) A & B only

Question 74

The FASB has the authority to establish accounting and financial reporting standards for:

A) Federal government
B) Private not-for-profits
C) Public not-for-profits
D) State and local governments

Question 75

The GASB sets accounting standards for all of the following except:

A) State and local governments
B) Component units owned or controlled by governments
C) Governmentally related not-for-profit universities
D) Nongovernmental not-for-profit hospital

Question 76

The term "fiduciary funds" applies to:

A) enterprise and internal service funds.
B) private-purpose trust, investment trust, pension trust and agency funds
C) pension, investment trust and enterprise funds
D) enterprise, internal service, and private-purpose trust funds.

Question 77

Which of the following is not one of the objectives of Federal Financial Reporting, as outlined in SFFAC 1, which was issued by the FASAB?

A) Financial reporting should enable evaluation of the success rate of programs.
B) Financial reporting should enable evaluation of the service efforts, costs and accomplishments of the reporting entity.
C) Financial reporting should reveal whether financial systems and controls are adequate.
D) Financial reporting should demonstrate accountability with regard to raising and expending money.

Question 78

Which of the following is not a fiduciary fund?

A) Agency
B) Pension trust
C) Permanent
D) Private-purpose trust

Question 79

Which of the following fund types is present in every general-purpose government?

A) Permanent
B) Special revenue
C) General
D) Capital projects

Question 80

Which of the following is a governmental fund?

A) Internal service
B) Agency
C) Enterprise
D) Special revenue