Purchase Solution

Governmental and Not-for-Profit Accounting Multiple Choice

Not what you're looking for?

Ask Custom Question

1. 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

a. They have different missions
b. They have fewer assets
c. Their assets are intangible
d. Taxes are a major expenditure of businesses

3. The primary objective of a not-for-profit organization or a government is to

a. Maximize revenues
b. Minimize expenditures
c. Provide services to constituents
d. All of the above

4. In governments, in contrast to businesses,

a. Expenditures are driven mainly by the ability of the entity to raise revenues
b. The amount of revenues collected is a signal of the demand for services
c. There may not be a direct relationship between revenues raised and the demand for the entity's services
d. The amount of expenditures is independent of the amount of revenues collected

5. The organization responsible for setting accounting standards for state and local governments is the

a. FASB
b. GASB
c. FASAB
d. AICPA

7. Governments differ from businesses in that they

a. Do not raise capital in the financial markets
b. Do not engage in transactions in which they ''sell'' goods or services
c. Are not required to prepare annual financial reports
d. Do not issue common stock

8. Interperiod equity refers to a condition whereby

a. Total tax revenues are approximately the same from year to year
b. Taxes are distributed fairly among all taxpayers regardless of income level
c. Current-year revenues are sufficient to pay for current-year services
d. Current-year revenues cover both operating and capital expenditures

1. Appropriation budgets are typically concerned with

a. The details of appropriated expenditures
b. Long-term revenues and expenditures
c. Current operating revenues and expenditures
d. Capital outlays

2. Upon receiving supplies that had previously been encumbered a government should

a. Debit reserve for encumbrances and credit encumbrances
b. Debit fund balance and credit reserve for encumbrances
c. Debit fund balance and credit expenditures
d. Debit reserve for encumbrances and credit expenditures

3. Upon closing the books at year-end a government should

a. Debit fund balance and credit reserve for encumbrances
b. Debit encumbrances and credit reserve for encumbrances
c. Debit fund balance and credit encumbrances
d. Debit reserve for encumbrances and credit encumbrances

6. A government places an order for a particular item of equipment and encumbers $5,500. The item arrives accompanied by an invoice for $5,200. The entries that the government should make should include (but not necessarily be limited to):

a. A debit to expenditures for $5,200, a debit to fund balance for $300, and a credit to reserve for encumbrances for $5,500
b. A debit to expenditures for $5,200, a credit to encumbrances for $5,200, and a credit to accounts payable for $5,200
c. A debit to expenditures for $5,200, a credit to encumbrances for $5,500, and a credit to accounts payable for $5,200
d. A debit to expenditures for $5,200, a credit to reserve for encumbrances for $5,200, and a credit to accounts payable for $5,200

8. Per GASB Statement No. 34, governments must

a. Prepare a general fund budget on a cash basis
b. Prepare a general fund budget on modified accrual basis
c. Prepare a schedule that reconciles any differences between amounts reported on a GAAP basis and a budgetary basis
d. Prepare a schedule that reconciles any differences between the original budget and the amended budget

9. The amount that a government has available to spend would be indicated by

a. Encumbrances minus the sum of appropriations, expenditures, and net adjustments
b. Reserve for encumbrances plus appropriations minus the sum of expenditures and net adjustments
c. Appropriations plus encumbrances minus the sum of expenditures and net adjustments
d. Appropriations minus the sum of expenditures, encumbrances, and net adjustments

Purchase this Solution

Solution Summary

The problem includes a series of multiple choice questions about not-for-profit and government accounting concepts including auditing issues, reporting, mission statements, and details of encumbrances, fund balances, and expenditures accounting.

Solution Preview

1. 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

a. They have different missions
b. They have fewer assets
c. Their assets are intangible
d. Taxes are a major expenditure of businesses

a. Because non-profits and government goals are to provide services; for profit must make returns for shareholders.

3. The primary objective of a not-for-profit organization or a government is to

a. Maximize revenues
b. Minimize expenditures
c. Provide services to constituents
d. All of the above

c. services yes; not profits. Now one might say that they should also do a. and b., but truth is they don't'.

4. In governments, in contrast to businesses,

a. Expenditures are driven mainly by the ability of the entity to raise revenues
b. The amount of revenues collected is a signal of the demand for services
c. There may not be a direct relationship between revenues raised and the demand for the entity's services
d. The amount of expenditures is independent of the amount of revenues collected

c. There may not be a direct relationship between revenues raised and the demand for the entity's services

5. The organization responsible for setting accounting standards for state and local governments is the

a. FASB
b. GASB
c. FASAB
d. AICPA

a. GASB controls the reporting for governmental entities: Government Accounting Standards Board.

7. Governments differ from businesses in that they

a. Do not raise capital in the financial markets
b. Do not engage in transactions in which they ''sell'' goods or services
c. Are not required to ...

Purchase this Solution


Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.