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Description:Government and Not-for-Profit Accounting Granof

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Description:Government and Not-for-Profit Accounting Granof 4th editionProblem:1.    A primary characteristic that distinguishes governmental entities from business entities is
a) the need to generate revenues equal to or in excess of expenditures/expen ...there is moreshow problem1.    A primary characteristic that distinguishes governmental entities from business entities is
a) the need to generate revenues equal to or in excess of expenditures/expenses.
b) the importance of the budget in the governing process.
c) the need to provide goods or services.
d) the correlation between revenues generated and demand for goods or services.

2.    A primary characteristic that distinguishes not-for-profit entities from business entities is
a) the need to generate revenues equal to or in excess of expenditures/expenses.
b) the importance of the budget in the governing process.
c) the need to provide goods or services.
d) the correlation between revenues generated and demand for goods or services.

3.    Which of the following characteristics is NOT a characteristic that may distinguish a governmental or not-for-profit entity from a business entity?
a) There is often no direct link between revenues generated and expenditures/expenses incurred.
b) Capital assets may neither produce revenues nor save costs.
c) Revenues may not be indicative of demand for goods and services.
d) The mission of the entity will determine the goods or services provided.

4.    The most significant financial document provided by a governmental entity may be
a) the balance sheet.
b) the operating statement.
c) the operating budget.
d) the cash flow statement.

5.    Which of the following statements is NOT true?
a) All governmental entities engage in similar activities.
b) There are many different types of governments.
c) Governments may engage in activities similar to activities engaged in by for-profit entities.
d) Managers may have a short-term focus and thereby sacrifice the long-term viability of the entity.

6.    Which of the following activities is NOT an activity in which a governmental entity might engage?
a) Selling electric power.
b) Operating a golf course.
c) Operating a book store.
d) All of the above are activities that might be carried out by a government.
7.    In which of the following activities is a not-for-profit entity least likely to engage?
a) Providing educational services.
b) Providing health-care services.
c) Providing for the national defense.
d) Retail sales of cookies.

8.    Which of the following can be affected by the selection of one set of accounting principles instead of a different set of accounting principles?    
a) Legal ability to issue bonds.
b) Ability to balance the budget.
c) Required contribution to employee pension plans.
d) All of the above.

9.    Which of the following characteristics distinguishes a governmental entity from a not-for profit entity?
a) The ability to impose or assess fees.
b) The power to issue tax-exempt debt.
c) Elected governing body.
d) Providing services such as constructing roads.

10.   Which of the following characteristics is unique to a governmental entity.
a) The ability to have activities financed with tax-exempt debt.
b) The power to impose or assess fees.
c) Loss of assets to a governmental entity without compensation.
d) An elected governing body.

11. To obtain a comprehensive understanding of a government's fiscal health, a financial analyst should obtain an understanding of which of the following?
a) All of the resources owned by the governmental entity.
b) All of the resources which may be summoned by a governmental entity.
c) Demographic data about the residents served by the governmental entity.
d) All of the above.

12. Which of the following is common to both governments and not-for-profit entities but distinguishes these entities from for-profit entities?
a) The budget is generally the most significant financial document.
b) Revenues are not necessarily indicative of demand for goods or services.
c) There is frequently no direct link between revenues and expenses.
d) All of the above are common to both governments and not-for-profit entities but distinguish them from for-profit entities.

13. Which of the following is NOT a purpose of external financial reporting by governments? External financial reports should allow users to
a) Assess financial condition.
b) Compare actual results with the budget.
c) Assess the ability of elected officials to effectively manage people.
d) Evaluate efficiency and effectiveness.




14. Which of the following is NOT a reason that users of government and not-for-profit external financial statements need to have information to enable them to assess the financial condition of a government?
a) To determine the ability of the entity to meet its obligations.
b) To determine the ability of the entity to continue to provide services.
c) To predict future fiscal developments.
d) To evaluate the overall profitability of the entity.

15. Which of the following is NOT a reason why users of government and not-for-profit external financial statements need to have information to allow them to compare actual results with budgets?
a) Significant variations may signify poor management.
b) Significant variations may signify unforeseen circumstances that require explanation.
c) Significant variations may indicate that fraud has occurred.
d) Significant variations may indicate that management did not use the resources as planned.

16. Users of financial statements should be interested in information about compliance with laws and regulations for which of the following reasons?
a) To determine if the entity has complied with bond covenants.
b) To determine if the entity has complied with taxing limitations.
c) To determine if the entity has complied with donor restrictions on the use of funds.
d) To determine all of the above.

17. Which of the following is NOT generally considered a main user of government and not-for-profit entity external financial statements?
a) Investors and creditors.
b) Taxpayers.
c) Donors.
d) Management.

18. Which of the following is NOT a probable use a donor would make of the external financial statements of a not-for-profit entity?
a) To determine the creditworthiness of the entity for investment purposes.
b) To determine the proportion of entity resources directed to programs as opposed to fund-raising.
c) To determine the salaries paid to the top officials of the entity.
d) To determine the allocation of resources within the entity.

19. A regulatory agency would use the external financial statements of a local government for which of the following purposes?
a) To assure that the entity is spending and receiving resources in accordance with laws, regulations or policies.
b) To help assess management's performance.
c) To exercise general oversight responsibility.
d) To do all of the above.
20. Which of the following constituency groups would be most likely to evaluate government financial statements to determine likely areas in which to achieve cost-savings?
a) Creditors.
b) Union officials.
c) Federal granting agency.
d) Students of governmental accounting.

21. Which of the following objectives is considered to be the cornerstone of financial reporting by a governmental entity?
a) Accountability.
b) Budgetary compliance.
c) Interperiod equity.
d) Service efforts and accomplishments.

22. Which of the following is NOT an objective of financial reporting by governmental entities as established by GASB?
a) Financial reporting should assist users in determining if current period revenues were sufficient to pay for current-period services.
b) Financial reporting should assist users in assessing the management skills of top management.
c) Financial reporting should assist users in evaluating the operating results of the governmental entity for the year.
d) Financial reporting should assist users in assessing the level of services that can be provided by the governmental entity and its ability to meet its obligations as they come due.

23. Which of the following is NOT an objective of financial reporting for not-for-profit entities as established by FASB? Financial reporting should provide information that is useful to present and potential resource providers and other users in:
a) Making rational decisions about the allocation of resources to those organizations.
b) Assessing the services provided and the entity's ability to continue to provide those services.
c) Assessing the types of services provided and the need for those services.
d) Assessing how managers have discharged their stewardship responsibilities.

24. As used by GASB, interperiod equity refers to which of the following? Financial reporting should:
a) Demonstrate compliance with finance-related contractual requirements.
b) Provide information to determine whether current-year revenues were sufficient to pay for current-year services.
c) Demonstrate whether resources were obtained and used in accordance with the entity's legally adopted budget.
d) Provide information to assist users in assessing the government's economy, efficiency, and effectiveness.
25. Given a specific set of data, the basis of accounting selected by or imposed on a governmental entity will least affect which of the following?
a) Determining whether or not the governmental entity has a balanced budget.
b) Determining whether or not the governmental entity has the ability to issue debt.
c) Determining whether or not certain events occurred.
d) Determining the annual payments to a government-sponsored pension plan.

26. The basis of accounting selected by or imposed on a governmental entity can influence which of the following?
a) A decision to contract-out a specific service rather than provide that service itself.
b) The amount of the annual payment to the government-sponsored pension plan.
c) The amount that is available to spend on a donor-specified project or service.
d) All of the above.

27. The Governmental Accounting Standards Board is the primary standard-setting body for:
a) All governments.
b) All state and local governments.
c) All governments and all not-for-profit entities.
d) All state and local governments and all not-for-profit entities.

28. Under certain circumstances a governmental entity might use standards established by which of the following standard-setting bodies?
a) GASB.
b) FASB.
c) AICPA.
d) All of the above.

29. The primary standard-setting body for accounting and financial reporting by a state-supported college or university is:
a) GASB.
b) FASB.
c) AICPA.
d) All of the above.

30. In descending order, the hierarchy of GAAP applicable to a church-owned college may be:
a) FASB Statements, AICPA Industry Audit Guides, FASB Implementation Guides, GASB Standards.
b) FASB Statements, FASB Technical Bulletins, FASB Implementation Guides, AICPA Practice Bulletins (if cleared by FASB).
c) GASB Statements, AICPA Industry Audit Guides, GASB Implementation Guides, FASB Standards.
d) GASB Statements, GASB Technical Bulletins, GASB Implementation Guides, AICPA Practice Bulletins (if cleared by GASB)

31. Which of the following is NOT a principle in creating FASAB?
a) U.S. Department of Treasury.
b) Securities and Exchange Commission.
c) General Accounting Office.
d) Office of Management and Budget.
32. The purpose of the FASAB is to:
a) Establish accounting standards for not-for-profit entities.
b) Establish accounting standards for federal entities.
c) Establish accounting standards for all governmental entities.
d) Establish accounting standards for non-federal governmental entities.

33.   What is the primary reason that governmental entities use fund accounting?
a) Fund accounting is required by law.
b) Fund accounting is required by GAAP.
c) Fund accounting promotes control and accountability over restricted resources.
d) Fund accounting promotes better control over operating activities.

34.   Basis of accounting determines which of the following?
a) When transactions and events are recognized.
b) What transactions and events will be reported.
c) Where transactions and events will be reported.
d) Why transactions and events will be reported.

35. A fund is
a) A separate legal entity.
b) A separate fiscal and accounting entity.
c) A separate self-balancing set of accounts for inventory purposes.
d) None of the above.

36. Which of the following funds is a fiduciary fund?
a) Special Revenue fund.
b) Agency fund.
c) Capital project fund.
d) Debt service fund.

37. When a governmental entity adopts a basis of accounting other than full accrual and a measurement focus that excludes long-lived assets and liabilities in its governmental fund types:
a) It is in violation of the law.
b) It is in violation of GAAP.
c) It has recorded transactions in accordance with standards for presentation in the fund financial statement required by the new GASB reporting model.
d) It has the ability to better measure the results of operations.

38.   A city receives a donation from a citizen who specifies that the principal must be invested and the earnings must be used to support operations of a city-owned recreational facility. The principal of this gift should be accounted for in which of the following funds?
a) Trust fund.
b) Special revenue fund.
c) Permanent fund.
d) Internal service fund.
39.   Which of the following is NOT a governmental fund?
a) City Hall Debt Service Fund.
b) City Utilities Enterprise Fund.
c) Gasoline Tax Special Revenue Fund.
d) City Hall Capital Project Fund.

40. Which of the following accounts would you least expect to see in a debt service fund?
a) Principal payments.
b) Interest charges.
c) Interest earned.
d) Outstanding balance of the debt being serviced.

41.   Which of the following funds is a proprietary fund?
a) Internal service fund.
b) Special revenue fund.
c) Capital project fund.
d) Permanent fund.

42. Which of the following funds is a governmental fund?
a) Enterprise fund.
b) Debt service fund.
c) Internal service fund.
d) Agency fund.

43. Which of the following activities conducted by a city-owned junior college should be accounted for in an agency fund?
a) Receipt of tuition payments.
b) Receipt of revenues belonging to the student accounting club.
c) Receipt of state monies appropriated for general operations.
d) Receipt of donations in support of the university's athletic program.

44. Which of the following activities should the City of Highland account for in a trust fund?
a) General fund contributions received by the City pension plan.
b) Greens fees received from golfers at the City-owned golf course.
c) Grants received from the Federal government to purchase buses to be used for public transit.
d) Proceeds of bonds issued to construct a new city hall building.

45. The state collects a gasoline tax that must be used to support highway construction and maintenance. The gasoline tax should be accounted for in which of the following funds?
a) General fund.
b) Special revenue fund.
c) Debt service fund.
d) Internal service fund.

46. The City of San Jose built a new city hall and financed construction by issuing bonds due in installments over the next 30 years. The bond principal and interest will be paid by a special tax levied on property in the City. The money received from this special tax should be accounted for in which of the following funds?
a) General fund.
b) Special revenue fund.
c) Capital project fund.
d) Debt service fund.

47. Riverside Golf Course is a City-owned golf course that collects greens fees in amounts sufficient to cover its expenses. Riverside Golf Course should be accounted for in which of the following funds?
a) Internal service fund.
b) Enterprise fund.
c) General fund.
d) Special revenue fund.

48. To fulfill the printing needs of its various departments and agencies, the City has established a Central Print Shop which bills the various departments and agencies of the city for printing services rendered. The Central Print Shop should be accounted for in which of the following funds.
a) Internal service fund.
b) Enterprise fund.
c) General fund.
d) Special revenue fund.

49. Which of the following statements is NOT required in the Comprehensive Annual Financial Report of a City?
a) Financial section.
b) Introductory section.
c) Statistical section.
d) Historical section..

50. The Basic Financial Statements of a city do not include which of the following?
a) Government-wide Statement of Net Assets.
b) Government-wide Statement of Activities.
c) Government-wide Statement of Cash Flows.
d) Balance Sheet for each governmental and proprietary fund.

51. Which of the following funds is accounted for on the modified accrual basis of accounting?
a) General fund.
b) Internal service fund.
c) Proprietary fund.
d) Pension trust fund.

52. Which of the following would NOT be found in the business-type activity column of the government-wide Statement of Net Assets of the City of Smithville?
a) Cash.
b) Inventory.
c) Capital assets.
d) Receivable from general fund.

53. Which of the following assets would NOT be found in the fund balance sheet of the General Fund of the City of Harrison?
a) Cash.
b) Capital assets.
c) Receivable from Special Revenue Fund.
d) Receivable from State.

54. Which of the following liabilities would NOT be found in the fund balance sheet of the General Fund of the City of Marmaduke?
a) Accounts payable.
b) Payable to the special revenue fund.
c) Deferred revenue.
d) Bonds payable, due in 5 years.

55. For which of the following entities is fund accounting mandated?
a) American Hospital Association.
b) City of New York.
c) Grace Lutheran Church.
d) United Way.

56. Which of the following would NOT be found in the Statement of Net Assets of Teton City?
a) Cash.
b) Capital assets.
c) Receivable from special revenue fund.
d) Inventories.

57. The financial statements for a private university would more closely resemble the financial statements of which of the following entities?
a) City of San Antonio.
b) General Motors.
c) United States Department of Education.
d) University of Texas.
58. The focus of the Statement of Activities of the city of West Hills is on which of the following?
a) Determining the total expenses by natural classification.
b) Determining the total expenses by function.
c) Determining the total revenues by function.
d) Determining the net cost of functions.

59. Which of the following statements is NOT required in the financial reports of a not-for-profit entity?
a) Statement of Position.
b) Statement of Restricted Funds.
c) Statement of Activities.
d) Statement of Cash Flows.

60. The primary focus of the Statement of Activities of a not-for-profit organization is on determining the net increase/decrease in which of the following?
a) Unrestricted Net Assets.
b) Temporarily Restricted Net Assets.
c) Permanent Net Assets.
d) Net Assets of the entity taken as a whole.

61. Under the new GASB reporting model for governmental entities, which of the following is required?
a) Only one set of financial statements, prepared on the full accrual basis of accounting.
b) Only one set of financial statements, prepared on the modified accrual basis of accounting.
c) Two sets of financial statements, one similar to the pre-GASB #34 reporting requirements using the current financial resources measurement focus and modified accrual basis of accounting and one that combines all governmental activities in one column and all business-type activities in another column using the full accrual basis of accounting for both columns.
d) Two sets of financial statements, one exactly like the pre-GASB #34 reporting requirements using the current financial resources measurement focus and modified accrual basis of accounting and one that combines all governmental activities in one column and all business-type activities in another column using the full accrual basis of accounting for both columns.

62.    Under the new GASB reporting model for governmental entities, the entity-wide balance sheet will display which of the following?
a)    Assets, Liabilities, and Net Assets.
b) Assets, Liabilities, and Fund Balances.
c)    Assets, Liabilities, and Fund Equity.
d) Assets, Liabilities, and Owner's Equity.

63.    Under the new GASB reporting model for governmental entities, The focus of the entity-wide activity/operating statement is on which of the following?
a)    Program revenues and expenditures.
b) Program revenues and expenses.
c)    Net income.
d) Net program revenues/expenses.
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