exam 1

Question 1

Which of the following statements regarding primary sources of accounting and financial reporting standards is false?

Answer 1

The FASB sets standards for all business and not-for-profit entities.

Question 2

James Black is reviewing his city’s financial reporting because he wants to run for the city council. He is concerned that the city is not using its resources effectively. James is primarily interested in:

Answer 2

Operational accountability

Question 3

The concept of interperiod equity refers to whether

Answer 3

Current year revenues were sufficient to pay for current year services.

Question 4

What are the components that are included in the minimum requirements for general purpose external financial reporting?

Answer 4

MD&A, government-wide financial statements, fund financial statements, notes to the financial statements, and RSI.

Question 5

Under GASB standards, financial information useful for assessing operational accountability is primarily reported in which financial statements?

Answer 5

Government wide financial statements NOT Fund financial statements.

Question 6

Which of the following is not a required section of a federal agency or department’s performance and accountability report (PAR)?

Answer 6

A statement of non participation in political matters.

Question 7

Department of defense is governed by (Federal government)

Answer 7

FASAB

Question 8

American institute of CPA’s is governed by

Answer 8

FASB

Question 9

The county in which you live in is governed by

Answer 9

GASB

Question 10

IRS is governed by (Federal government)

Answer 10

FASAB

Question 11

Mayo clinic is governed by

Answer 11

FASB

Question 12

New York city is governed by

Answer 12

GASB

Question 13

American cancer society is governed by

Answer 13

FASB

Question 14

Metropolitan Washington airports authority is governed by

Answer 14

GASB

Question 15

The Metropolitan Museum of art, NYC is governed by

Answer 15

FASB

Question 16

General purpose governments

Answer 16

governments that provide many categories of services to their residents, such as states, counties, municipalities and townships. Typical service include public safety, road maintenance and health and welfare.

Question 17

Special purpose governments

Answer 17

governments that provide only a single function or a limited number of functions, such as independent school districts and special districts.

Question 18

What are the characteristics that distinguish government and NFP from business organizations?

Answer 18

1. receipt of significant amounts of resources from resource providers who do not expect to receive either repayment or economic benefits proportionate to the resources provided.
2. Operating purposes that are other than to provide goods or services at a profit or profit equivalent.
3. 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

Question 19

GASB

Answer 19

The independent agency established under the financial accounting foundation in 1984 as the official body designated by AICPA to set accounting and financial reporting standards for state and local governments

Question 20

Federal Accounting Standards Advisory Board(FASAB)

Answer 20

The nine-member standard setting body that recommends federal government accounting and financial reporting standards to the U.S. Comptroller General, Secretary of the treasury, and the Director of the office of Management and budget.

Question 21

Accountability

Answer 21

Obliged to explain ones actions, to justify what one does; the requirement for government to answer its citizenry- to justify the raising of public resources and expenditure of those resources. Also whether resources were used efficiently, economically, and effectively.

Question 22

Inter-period equity

Answer 22

the extent to which the current-period revenues are adequate to pay for current-period services and whether the burden for services previously provided will be shifted to future taxpayers.

Question 23

Managements Discussion and Analysis

Answer 23

management provides a brief, objective, and easily readable analysis of the governments financial performance for the year and its financial position at year end. An MD&A is required for state and local governments and federal agencies.

Question 24

Required supplementary information

Answer 24

information that is required by GAAP to be included with the audited annual financial statements, usually following the notes to the general purpose external financial statements.

Question 25

Basic financial statements

Answer 25

describes required government-wide and fund financial statements.

Question 26

Governmental wide financial statements

Answer 26

provides highly aggregated overview of a governments net position and results of financial activities.

Question 27

Operational accountability

Answer 27

information useful in assessing operating results and short and long term financial position and the cost of providing services from an economic perspective reported in entity-wide financial statements.

Question 28

Fund Financial statements

Answer 28

assists in assessing fiscal accountability and provides more detailed information about the government.

Question 29

Governmental funds

Answer 29

focuses on the short-term flow of current financial resources rather than on the flow of economic resources.

Question 30

Fiscal accountability

Answer 30

ensures the government is complying with the public's decisions concerning the raising and spending of resources generally within a budgetary period of one year.

Question 31

Modified accrual

Answer 31

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.

Question 32

Comprehensive annual report

Answer 32

governments annual report that contains three sections: introductory, financial and statistical. Provides information beyond the general purpose external financial statements and conforms to guidance in the GASB codification.

Question 33

Performance and accountability report

Answer 33

a report required to be prepared by by major federal departments and agencies. It includes an annual performance report, annual financial statements, and a variety of management reports on internal control and other accountability issues.

Question 34

Donor imposed restrictions

Answer 34

restrictions on the use of contributions such as their contribution be used for a specific purpose or time period. May be temporary or permanent

Question 35

Service efforts and accomplishements

Answer 35

conceptualization of resources consumed, tasked performed, goals attained and the relationship among these items in providing services in selected areas.

Question 36

NFP

Answer 36

are defined as entities who serve a purpose other than to provide goods or services at a profit, do not have owners and rely on contributed resources.

Question 37

Charitable solicitaion

Answer 37

Indirect or direct request for money, credit, property, financial assistance or other items of value on the representation that these assets will be used for a charitable purpose.

Question 38

influencing

Answer 38

promote, support, affect, modify, oppose or delay

Question 39

Organizational test

Answer 39

articles of incorporation limit the organizations purpose to those described in IRC Sec 501 and do not empower it to engage in activities that are not in furtherance of those purposes.

Question 40

Quid pro quo

Answer 40

contribution made in exchange for goods and services

Question 41

Federated fund raising organization

Answer 41

an organization composed of independent charitable organizations that have voluntarily joined together to raise and distribute money among themselves.

Question 42

Private foundation

Answer 42

An organization exempt from federal income taxes under IRC Sec. 501(a) that (1) receives its support from a small number of individuals or corporations and investment income rather than from the public at large and (2) exists to make grants to public charities.

Question 43

Public charity

Answer 43

An organization exempt from taxes under IRC Sec. 501(a) that receives its support from the public at large rather than from a limited number of donors. Most often public charities are exempt from federal income taxes under IRC Sec. 501(c)(3).

Question 44

How is the public support test met

Answer 44

is met if NFP receives 1/3 of its total support from investments, contributions made directly or indirectly by the general public or some combination

Question 45

political organization

Answer 45

are political action committees, political parties, and campaign committees for candidates for government office.

Question 46

Propoganda

Answer 46

information that is skewed toward a particular belief with a tendency to have little or no factual basis.

Question 47

unrelated business income

Answer 47

which assesses tax at corporate rates on income that NFPs derive from activities not substantially related to their charitable or tax-exempt mission.

Question 48

Intermediate sanction

Answer 48

are penalties assessed when a transaction confers a substantial benefit on a disqualified person.

Question 49

Disqualified person

Answer 49

a person who has substantial over the affairs of a NFP organization, such as an officer or manager.

Question 50

Debt financed income

Answer 50

income from a property that is subject to debt, such as rental income from a building that has been financed with a mortgage.

Question 51

Feeder organization

Answer 51

organization controlled by NFP and formed to carry on a trade or business for the benefit of an exempt organization and remits its profits to the exempt organization.

Question 52

Liquidity

Answer 52

Can the organization pay its current debts

Question 53

Going Concern

Answer 53

Are revenues sufficient to cover expenses

Question 54

Capital structure

Answer 54

Does the company rely more on debt or equity to finance its operations

Question 55

Program effectiveness

Answer 55

- Is an appropriate amount spent on accomplishing the NFP's goals? - Program expenses/total expenses

Question 56

Efficiency

Answer 56

- Is the cost per achieved output decreasing overtime? | - Program expenses/number of clients served

Question 57

Leverage and debt coverage

Answer 57

is the debt service expense adequately covered by income

Question 58

Fund raising ratio

Answer 58

what percent of contributions remains after adjusting for the cost of raising the contributions

Question 59

Fund raising efficiency

Answer 59

are the costs of raising contributions an appropriately small percentage of the contributions received?

Question 60

Investment performance

Answer 60

Is the rate of total return on investments reasonable?

Question 61

Approval from the IRS of 501 (C)(3) status exempts an organization from which of the following

Answer 61

Federal income taxes

Question 62

an unconditional promise to give is recorded as support in the year:

Answer 62

made

Question 63

T/F The fasb indicates that if unconditional pledges will be received in less than a year, they can be recognized at net realizable value

Answer 63

True

Question 64

Unrelated business income is reported on form?

Answer 64

990T