Chapter 1 Governmental and Nonprofit Accounting—Environment and Characteristics

1. Which
of the following would not
be considered a government or nonprofit organization?
A. A
software company that sells software exclusively to state and local
governments.
B. A
public elementary school.
C. A
church.
D. A
private trust organized for charitable purposes.

2. Which
of the following activities would most likelybe accounted for as a
business-type activity?
A. Fire
protection.
B. Recreation.
C. Water
operations.
D. Street
maintenance.

3. Prior
to the creation of the Governmental Accounting Standards Board in 1984, which
of the following organizations had the greatest influence over accounting
concepts, principles, and standards for the state and local governments?
A. The
National Council on Governmental Accounting (NCGA)
B. The
National Association of College and University Business Officers (NACUBO).
C. The
American Institute of Certified Public Accountants (AICPA).
D. The
Comptroller General of the United States.

4. Which
of the following is considered a health and welfare organization?
A. Secondary
schools.
B. Young
Men’s Christian Association (YMCA).
C. Child
protection agencies.
D. United
Way.

5. Which
of the following characteristics best distinguishes a government entity from a
business entity?
A. Governments
operate in a very small section of the economy while businesses operate
globally.
B. Cost
analysis and other control and evaluation techniques are essential to ensure
that resources are used economically and efficiently.
C. Those
contributing resources to the entity do not necessarily receive a direct or
proportionate share the services.
D. Businesses
must acquire and convert scarce resources while governments can demand whatever
they need.

6. Which
source of financial resources is unique to governments?
A. Borrowings.
B. Gifts
and grants.
C. Charges
for services provided.
D. Taxation.

7. Which
of the following is not an operational accountability measure for a government?
A. Economic
cost of providing services.
B. Net
income.
C. Assessment
whether a government raised sufficient revenues each period to cover the cost
of providing services.
D. Assessment
whether services are being provided economically and efficiently.

8. Which
of the following is not a primary financial reporting objective of state and local
government (SLG) reporting?
A. Provide
information necessary to assess the level of LG services and its ability to
continue to finance its activities and meet its obligations.
B. Provide
information necessary for investment and credit decisions.
C. Provide
a means of demonstrating the SLG’s accountability that enables users to assess
that accountability.
D. Provide
information necessary to evaluate the SLG’s operating results for the period.

9. The
primary purpose of a fund is
A. To
provide expenditure authority for a government or not-for-profit organization.
B. To
segregate an organization’s resources according to the purpose(s) for which
they are to be used.
C. To
keep an organization’s constituency from trying to insist that the organization
utilize resources that it wants to save for a specific future objective.
D. To
confuse and confound the legislative body as to the use and purpose of
government resources.

10. Which
of the following is not a characteristic of a fund?
A. Fiscal
entity.
B. Separate
legal entity.
C. Accounting
entity.
D. Contains
self-balancing set of accounts.