Gov&NFP - Chapter 1
Government and Non-Profit Accounting Quiz
Test your knowledge of accounting principles specifically tailored for governments and not-for-profit organizations. This quiz covers key differences, standards, and objectives that define the unique financial reporting landscape in these sectors.
Prepare yourself to answer questions like:
- What drives financial decisions in governmental units?
- Which standards are applicable to not-for-profit organizations?
- How is interperiod equity maintained in public finance?
The traditional business model of accounting is inadequate for governments and not-for-profit organizations primarily because businesses differ from governments and not-for-profit organizations in that
They have different mission
They have fewer assets
Their assets are intangible
Taxes are a mojor expenditure of businesses
If businesses are "governed by the marketplace", government are governed by
Legislative bodies
Taxes
Budgets
State Constitutions
The primary objective of a not-for-profit organization or a government is to
Maximize revenues
Minimize expenditures
Provide services to constituents
All of the Above
In governments, in contrast to businesses
Expenditures are driven mainly by the ability of the entity to raise revenues
The amount of revenues collected is a signal of the demand for services
There may not be a direct relationship between revenues raised and the demnad for the entity's services
The amount of expenditures is independent of the amount of revenues collected
The organization responsible for setting accounting standards for state and local govenrments is the
FASB
GASB
FASAB
AICPA
Government differ from businesses in that they
Do not raise capital in the financial markets
Do no necessarily engage in transactions in which they "sell" goods or services
Are not required to prepare annual financial reports
Do not issue common stock
Interperiod equity refers to a condition whereby
Total tax revenues are approximately the same from year to year
Taxes are disstributed fairly among all taxpayers, regardless of income level
Current-year revenues are sufficient to pay for current-year services
Current-year revenues cover both operating and capital expenditures
Which of the following is not on of the GASB's financial reporting objectives?
Providing information on the extent to which interperiod equity is achieved
Ensuring that budgeted revenues are equal to or exceed budgeted expenses
Reporting on budgetary compliance
Providing information on service efforts and accomplishments
Which of the following is not one of the FASB's financial reporting objectives?
Providing information on the extent to which interperiod equity is achieved
Ensuring that budgeted revenues are equal to or exceed budgeted expenses
Reporting on budgetary compliance
Providing information on service efforts and accomplishments
Rule 203 of the AICPA's Code of Professional COnduct pertains to
CPA's independence
Authorities designated to establish accounting standards
Standards of competency
Solicitation of new clients by a CPA
Which of the following rule-making authorities would establish accounting standards for Stanford University (a private university)?
AICPA
FASB
GASB
FASAB
Which of the following reul--making authorities would establish accounting standards for the University of WIsconsin (a public university)?
AICPA
FASB
GASB
FASAB
If the GASB has not issued a pronouncement on a specific issure, which of the following is true with respect to FASB pronouncements?
They would automatically govern
They could be taken into account but would have no higher standing than other accounting literature
They are irrelevant
They couldd be taken into account by the reporting entity but only if disclosure is made in noted to the financial statements
The FASB is to the GASB as
A brother is to a sister
A father is to a son
A son is to a father
An aunt is to a niece
Standards promulgated by the FASB are most likley to be adhered to by which of the following governmental units?
A police department
A public school
An electric utility
A department of highways
Which of the following practices is most likely to undermine interperiod equity?
Paying for a new school building out of current operating funds
Paying the administrative staff of a school out of current operating funds
Issuing 20-year bonds to finance construction of a new highway
Recognizing gains and losses on marketable securities as prices increase and decrease
The term "independent secotr" refers to
States that have opted not to receive federal funds
Not-for-profit organizations
Churches that are unaffiliated with a particular denomination
Universities that are not affiliated with a particular athletic conference
Which of the following is not an objective of external financial reporting by either the GASB or the FASB?
To enable the statement users to detect fraud
To disclose legal or contractual restrictions on the use of resources
To provide information about how the organizations meet thier cash requirements
To provide information that would enable a user to assess the service potential of long-lived assets
Which of the following is the least appropriate use of the external financial statements of a government?
To assess the entity's financial condition
To assess whether the compensation of management is reasonable in relation to that of comparable entities
To compare actual results with budget
To evaluare the efficiency and effectiveness of the entity in achieving its objectives
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