ACCT 3050: Chapter 1 Flashcards
(99 cards)
1
Q
True or false: According to FASB, governmental and business organizations share the purpose of providing goods and services at a profit or profit equivalent.
A
False
2
Q
Match the type of entity with the financial reporting objectives.
Financial reporting is used in making economic, social and political decisions and in assessing accountability.
A
State and local governments
3
Q
Match the type of entity with the financial reporting objectives.
Financial reporting should provide information useful in making resource allocation decisions.
A
Not-for-profit organizations
4
Q
Match the type of entity with the financial reporting objectives.
Financial reporting should help achieve accountability and assist report users in evaluating budgetary integrity.
A
Federal government
5
Q
GASB concluded that reporting on operational accountability is best achieved by using essentially the same basis of accounting and measurement focus used by ______ organizations.
A
business
6
Q
Government-wide financial statements are intended to provide an aggregated overview of which of the following?
A
a government’s net position and changes in net position
7
Q
Not-for-profit organizations are required to prepare a set of organization-wide financial statements that include:
A
statement of financial position (balance sheet)
statement of activities (income statement)
statement of cash flows
8
Q
Which of the following is true of not-for-profit organizations?
They are similar to business entities in many ways.
They have different uses for financial reports, depending on the type of organization.
They have reporting objectives that emphasize financial accountability needs over decision usefulness.
A
They are similar to business entities in many ways.
9
Q
Proprietary and fiduciary funds follow account and reporting principles similar to those of ______ organizations.
A
business
10
Q
Which is true of a CAFR?
A
It is not required.
11
Q
Management’s discussion and analysis is found in the ______ section of a CAFR.
A
financial
12
Q
The ______ Codification requires a specific set of statistical tables for inclusion in a CAFR.
A
GASB
13
Q
Donor-imposed restrictions may be ______.
A
temporary or permanent
14
Q
_____ purpose governments are provided the power by state laws to levy and collect taxes and to raise revenues from nontax sources to finance the services they provide.
A
Both general and special
15
Q
Financial reporting for the federal government is intended to assist report users in evaluating:
A
budgetary integrity
operating performance
stewardship
adequacy of systems and controls
16
Q
States, counties, municipalities, and townships are examples of ______ purpose governments. They provide a wide range of services to their residents, such as police and fire protection, sanitation, construction and maintenance of streets, roads, and bridges, and culture and recreation.
A
general
17
Q
Independent school districts, public colleges and universities, and special districts are examples of ______ purpose governments. They provide a single function or limited number of functions to their residents, such as education, drainage and flood control, irrigation, soil and water conservation, fire protection, and water supply.
A
special
18
Q
The ______ distinguishes government entities in the United States from both not-for-profit and business entities by stressing that governments exist in an environment in which power rests in the hands of the people.
A
GASB
Governmental Accounting Standards Board
19
Q
Revenues raised by each level of government come, ultimately, from
A
taxpayers
20
Q
FASB
A
Financial Accounting Standards Board
21
Q
FASAB
A
Federal Accounting Standards Advisory Board
22
Q
Which of the following are true of taxpayers?
A
They are involuntary contributors of revenue to government.
They cannot rely on a net income figure to assess government performance.
They have little choice over the level of service they receive.
23
Q
Accounting and reporting standards for not-for-profit organizations that are independent of governments are set by
A
FASB
24
Q
The ______ was established in 1990 to recommend accounting principles and standards for the federal government and its agencies.
A
FASAB
25
_____ is the cornerstone of all financial reporting in government.
accountability
26
The concept of ______ helps users to assess whether current-year revenues are sufficient to pay for services provided that year.
Ensures the government "lives within its means."
interperiod equity
27
The ______ is required supplementary information designed to be able to communicate in an easy-to-read format the purpose of the basic financial statements.
MD&A
Management's Discussion and Analysis
28
Characteristics that distinguish governmental and not-for-profit business entities from business organizations include
Receipts of significant amounts of resources from resource providers who do not expect to receive either repayment or economic benefits proportionate to the resources provider.
Operating purposes that are other than to provide goods or services at a profit or profit equivalent.
Absence of defined ownership interests that can be sold, transferred, or redeemed or that convey entitlement to a share of a residual distribution of resources in the event of liquidation of the organization.
29
Match the authoritative body with the organization for which it establishes accounting principles.
FASB
Financial Accounting Standards Board
Business (for-profit) organizations
Nongovernmental not-for-profit organizations
30
Match the authoritative body with the organization for which it establishes accounting principles.
GASB
Governmental Accounting Standards Board
State and local government organizations
Government not-for-profit organizations
31
Match the authoritative body with the organization for which it establishes accounting principles.
FASAB
Federal Accounting Standards Advisory Board
Federal government and its agencies and departments
32
Financial reporting for state and local governments is in making economic, social, and political decisions and in assessing accountability primarily by:
comparing actual financial results
assessing financial conditions and results of operations
assisting in determining compliance with finance-related laws, rules, and regulations
assisting in evaluating efficiency and effectiveness
32
The authority to establish accounting principles means
the authority to establish accounting and financial reporting standards.
32
Financial reporting for not-for-profit organizations should provide information useful in:
making resource allocation decisions
assessing services and ability to provide services
assessing management stewardship and performance
assessing economic resources, obligations, net resources, and changes in them
33
The MD&A is considered so important the GASB identifies it as
RSI
Required Supplementary Information
34
Central to the GASB model is the ___, designed to communicate in narrative, easily readable form the purpose of the basic financial statements and the government's current financial position and results of financial activities compared with those of the prior year.
MD&A
35
___ are intended to provide an aggregated overview of a government's net position and changes in net position (net assets).
government-wide financial statements
36
Revenues are recognized in the period they are measurable and available for spending and expenditures are recognized when they create an obligation to be paid from current financial resources under the ______ basis.
*accrual
*modified accrual
*cash
*modified cash
modified accrual
37
Detailed financial information about the government is found in which of the following?
*fund financial statements
*management's discussion and analysis
*government-wide financial statements
fund financial statements
38
The ______, which is included in the introductory section, should cite legal and policy requirements of the report.
*letter of transmittal
*contents pages
*title page
*description of government
letter of transmittal
39
An NFP's statement of ______ reports net assets with and without donor restrictions.
*activities
*cash flows
*functional expenses
*financial position
financial position
40
FASB allows NFPs to prepare the statement of cash flow using which of the following?
*the indirect method only with the reconciliation statement
*the direct method only
*either the direct or indirect method
*the indirect method only without the reconciliation statement
either the direct or indirect method
41
GASB concluded that reporting on operational accountability is best achieved by using essentially the same basis of accounting and measurement focus used by ______ organizations.
*business
*not-for-profit
*other governmental
business
42
Not-for-profit organizations are required to prepare a set of organization-wide financial statements that include which of the following?
*statement of cash flows
*statement of changes in net position
*statement of financial position
*statement of activities
statement of cash flows
statement of financial position
statement of activities
43
Under GASB, the term ______ is substantially the same as the FASB term net assets.
*net position
*net income
*bottom line
net position
44
The financial section of the CAFR includes which of the following?
*required supplementary information
*basic financial statements
*an auditor's report
*a letter of transmittal
required supplementary information
basic financial statements
an auditor's report
45
Characteristics that distinguish governmental and not-for-profit business entities from business organizations include which of the following?
*Absence of defined ownership interests that can be sold, transferred, or redeemed
*Operating purposes to provide only services at a great profit
*Receipts of significant amounts of resources from resource providers who do not expect repayment or other economic benefits
Absence of defined ownership interests that can be sold, transferred, or redeemed
Receipts of significant amounts of resources from resource providers who do not expect repayment or other economic benefits
46
A not-for-profit organization is required to maintain the principal amount of a contribution in perpetuity and may use the earnings on the invested principal when an endowment is ______.
*temporary
*either permanent or temporary
*permanent
permanent
47
Which of the following is true of not-for profit organizations?
*They have different uses for financial reports, depending on the type of organization.
*They are similar to business entities in many ways.
*They have reporting objectives that emphasize financial accountability needs over decision usefulness.
They are similar to business entities in many ways.
48
Funds that account for the business-type and certain trust and custodial activities of the government are referred to as ______ and ______ funds.
*proprietary
*fiduciary
*fiscal
*governmental
proprietary
fiduciary
49
FASB standards require that an NFP's statement of financial position report net assets in two categories: net assets with and net assets without ______.
*government encumbrances
*donor restrictions
*practical use
donor restrictions
50
Which of the following are true of a CAFR?
*It is not required.
*It is a government's comprehensive annual financial report.
*It is only prepared by state and federal governments.
*It is a compilation of the minimum requirements for general purpose external financial reporting.
It is not required.
It is a government's comprehensive annual financial report.
51
Management's discussion and analysis is found in the ______ section of a CAFR.
*financial
*introductory
*statistical
financial
52
Donor-imposed restrictions may be ______.
*permanent only
*neither temporary or permanent
*temporary or permanent
*temporary only
temporary or permanent
53
Proprietary and fiduciary funds follow account and reporting principles similar to those of ______ organizations.
*business
*not-for-profit
*other government
business
54
Which of the following is true of a CAFR?
*It is not required.
*It is required for both state and local governments.
*It is only required for state governments.
It is not required.
55
The ______ Codification requires a specific set of statistical tables for inclusion in a CAFR.
*FASB
*GASB
*FASAB
GASB
56
Governments that provide a wide range of services to their residents are ______ purpose governments.
*special
*general
general
57
Under state law, ______ governments may levy and collect taxes and raise revenues from nontax sources.
*only special purpose
*neither general nor special purpose
*only general purpose
*both general and special purpose
both general and special purpose
58
Which organization emphasizes the notion that governmental entities exist in an environment where power lies with the people rather than shareholders?
*FASB
*IFRS
*GASB
*FASAB
GASB
59
Which of the following statements are correct?
*Governments use a "net income" figure to assess performance.
*Taxpayers are involuntary contributors of revenue to government.
*There is a great need for public accountability in government financial reporting.
Taxpayers are involuntary contributors of revenue to government.
There is a great need for public accountability in government financial reporting.
60
Accounting and reporting standards for not-for-profit organizations that are independent of governments are set by which of the following?
*GASB
*FASB
*FASAB
FASB
61
Federal statutes assign responsibility for establishing and maintaining a sound financial structure for the federal government to which of the following?
*Secretary of Treasury
*Secretary of State
*Director of the Office of Management and Budget
*Financial Accounting Standards Board
*Comptroller General
Secretary of Treasury
Director of the Office of Management and Budget
Comptroller General
62
______ requires governments to justify the raising and use of public resources.
*Accountability
*Objectivity
*Profitability
*Verifiability
Accountability
63
Ensuring the government "lives within its means" is the concept GASB refers to as ______.
*effectiveness
*interperiod quality
*accountability
interperiod quality
64
The ______ is required supplementary information designed to be able to communicate in an easy-to-read format the purpose of the basic financial statements.
*MD&A
*CAFR
*Introductory Section
MD&A
65
Which of the following are true of the modified accrual basis of accounting?
*Expenditures are recognized when they create an obligation to be paid from current financial resources.
*Revenues are recognized in the period they are measurable and available for spending.
*Revenues are recognized in the period they are earned and estimable.
*Expenditures are recognized when they are paid.
Expenditures are recognized when they create an obligation to be paid from current financial resources.
Revenues are recognized in the period they are measurable and available for spending.
66
The FASB ______ require NFP organizations using the indirect method to prepare the reconciliation section of the statement of cash flows.
*does not
*does
does not
67
Government-wide financial statements assist in assessing ______, which is whether the government has used its resources efficiently and effectively in meeting objectives.
*operational accountability
*proprietary accountability
*fiscal responsibility
operational accountability
68
Financial reporting for not-for-profit organizations should provide information useful in making resource allocation decisions and assessing management stewardship and _____.
*regulations
*performance
*obligations
*resources
performance
69
Government-wide financial statements are intended to provide an aggregated overview of which of the following?
*a government's net position and changes in net position
*a government's net earnings and changes in fund balances
*a government's cash flow from operating, investing, and financing activities
a government's net position and changes in net position
70
True or false: The reporting objectives for not-for-profit organizations emphasize financial accountability needs over decision usefulness.
False
71
Tables and charts showing financial trends, fiscal capacity, and demographic and economic data are found in the ______ section of the CAFR.
*financial
*statistical
*introductory
statistical
72
Financial reporting for the federal government is intended to assist report users in which of the following?
*making resource allocation decisions
*evaluating budgetary integrity
*assisting in determining compliance with finance-related laws, rules, and regulations
*evaluating operating performance
evaluating budgetary integrity
evaluating operating performance
73
Standards for state and local governmental organizations and governmental not-for-profit organizations are set by which of the following?
*FASAB
*FASB
*GASB
GASB
74
Standards for the federal government and its agencies and departments are set by which of the following?
*FASAB
*FASB
*GASB
FASAB
75
Most not-for-profit organizations follow ______ accounting and reporting standards.
*FASB
*GASB
FASB
76
The ______ was established in 1990 to recommend accounting principles and standards for the federal government and its agencies.
*AICPA
*FASAB
*GASB
FASAB
77
The concept of ______ helps users to assess whether current-year revenues are sufficient to pay for services provided that year.
*accountability
*interperiod equity
*profitability
*intraperiod equity
interperiod equity
78
Fund financial statements' focus on the short-term flow of current financial resources make it easier for users to assess ______ accountability, which is ensuring compliance with public decisions concerning raising and spending resources.
*fiscal
*reporting
*operational
fiscal
79
States, counties, municipalities, and townships are examples of ______ purpose governments.
*special
*general
general
80
Independent school districts and public colleges and universities are examples of ______ purpose governments.
*general
*special
special
81
True or false: Under the government financial reporting model specified by GASB, the MD&A is required supplementary information (RSI).
True
82
Authority to establish accounting and reporting standards for not-for-profit organizations is split between which of the following?
*FASAB and GASB
*FASB and GASB
*FASB and FASAB
FASB and GASB
83
Which of the following are true of taxpayers?
*They have little choice over the level of service they receive.
*They are voluntary contributors of revenue to government.
*They cannot rely on a net income figure to assess government performance.
They have little choice over the level of service they receive.
They cannot rely on a net income figure to assess government performance.
84
Which of the following is a special purpose government?
The State of Arkansas.
Greene Township.
City of Seattle.
Minneapolis Public Schools.
Minneapolis Public Schools.
85
Which of the following statements is true for both government organizations and for-profit organizations?
Revenues may be earned through exchange transactions.
There is an absence of owners.
There is a lack of profit motive.
Resources are provided by individuals and entities that may not directly benefit from the use of the resources.
Revenues may be earned through exchange transactions.
86
Which of the following statements regarding primary sources of accounting and financial reporting standards is false?
The GASB sets standards for all state and local governments.
The FASB sets standards for all business and governmental not-for-profit entities.
The FASB and GASB are administered by the Financial Accounting Foundation.
The FASAB sets standards for the federal government and its agencies and departments.
The FASB sets standards for all business and governmental not-for-profit entities.
87
A tax watchdog group is interested in ensuring that the city does not spend more than the amount of resources it receives in the current fiscal year. The watchdog group is primarily interested in
Fiscal accountability.
Social accountability.
Political accountability.
Operational accountability.
Fiscal accountability
88
The concept of interperiod equity refers to whether
Revenues equaled or exceeded expenses for the year.
Total assets (current and noncurrent) were sufficient to cover total liabilities (current and noncurrent).
Current-year revenues were sufficient to pay for current-year services.
Future taxpayers can expect to receive the same or a higher level of services as current taxpayers.
Current-year revenues were sufficient to pay for current-year services.
89
What are the components that are included in the minimum requirements for general purpose external financial reporting?
Introductory section, financial section, and statistical section.
MD&A, government-wide financial statements, fund financial statements, notes to the financial statements, and RSI.
Letter from the chief financial officer, government financial statements, notes to the financial statements, and RSI.
MD&A, government-wide financial statements, notes to the financial statements, and RSI.
MD&A, government-wide financial statements, fund financial statements, notes to the financial statements, and RSI.
90
Which of the following financial statements is not a basic financial statement under FASAB standards?
Balance sheet.
Statement of changes in net position.
Statement of cash flows.
Statement of social insurance.
Statement of cash flows.
91
Which of the following is not a required section of a federal agency or department’s performance and accountability report (PAR)?
A performance section, which includes an annual performance report (APRIL).
An MD&A.
A basic financial statements section.
A statement of nonparticipation in political matters.
A statement of nonparticipation in political matters.
92
The basic financial statements of a not-for-profit include all of the following except
Statement of financial position.
Statement of activities.
Statement of changes in functional expenses.
Statement of cash flows.
Statement of changes in functional expenses.
93
The primary reason that not-for-profit (NFP) organizations should report expenses incurred for program purposes separately from those for supporting services such as management and general and fund-raising is that
GASB standards require it.
Program managers need information about the cost of activities for which they are responsible.
Top managers need to know how much they are spending for nonprogrammatic management and general support.
Donors, potential donors, oversight bodies, and others need to know what percentage of total expenses are being incurred for carrying out the NFP’s programs.
Donors, potential donors, oversight bodies, and others need to know what percentage of total expenses are being incurred for carrying out the NFP’s programs.
94
What standards are the following entities governed by?
Homeland Security
Department of the Interior
FASAB
95
What standards are the following entities governed by?
New York City
The county, parish, or borough in which you live
Bay Area Rapid Transit (BART-operated in the San Francisco Bay area)
GASB
96
What standards are the following entities governed by?
American Institute of Certified Public Accountants
American Diabetes Association
Mayo Clinic
The Metropolitan Museum of Art, New York City
FASB
97
