Multiple Choice Questions Identify the best answer for each of

Multiple Choice Questions
Identify the best answer for each of the following:
1. The body with primary accounting standards-setting authority for state and local governments is the
a. American Institute of Certified Public Accountants.
b. Financial Accounting Standards Board.
c. Government Finance Officers Association.
d. Governmental Accounting Standards Board.
e. U.S. Government Accountability Office.
2. The body with primary accounting standards-setting authority for colleges and universities is the
a. National Association of College and University Business Officers.
b. Financial Accounting Standards Board.
c. Governmental Accounting Standards Board.
d. Governmental Accounting Standards Board for governmental colleges and universities and the Financial Accounting Standards Board for all other colleges and universities.
e. U.S. Department of Education.
3. A governmental (expendable) fund accounting entity
a. Is often useful in accounting for general government activities but is optional (expendable).
b. Includes only financial assets and related liabilities and depreciable (expendable) capital assets. Nondepreciable capital assets are not reported in governmental funds.
c. Includes financial assets and related liabilities.
d. Has its operating activities measured and reported in terms of revenues and expenses, but the timing of expense recognition differs from that in similar business organizations.
4. In which of the following situations would the amounts of expense and expenditure for the period differ?
a. An entity uses and is billed for utilities but has paid only half of the amount billed at year end.
b. An entity purchases equipment for cash. The purchase occurred on the last day of the fiscal year.
c. Salaries and wages incurred and paid during the period were $100,000. Additional salaries and wages accrued at year end were $4,000.
d. The amount of expense and expenditure to be recognized differs in more than one of these situations.
5. Legally adopted budgets of governmental funds are
a. Fixed-dollar budgets, which establish expenditure limits that are not to be exceeded.
b. Fixed budgets that cannot be modified during the budget year.
c. Flexible budgets in which the expenditure limits are automatically modified to reflect larger than budgeted levels of various services.
d. Always adopted using the same basis of accounting required by GAAP.
6. Which of the following statements is false? A fund
a. Is an entity for which financial statements can be prepared.
b. Has a self-encompassing, self-balancing accounting equation.
c. Is used to account for a subset of an organization's resources that is to be used for a specific purpose or to achieve a particular objective.
d. Is an accounting entity that is used for one year only. Each year a new set of funds must be established.
7. Which of the following pronouncements provides the most authoritative guidance applicable to financial reporting for state and local governments?
a. FASB Accounting Standards Codification
b. Statements of Position of the AICPA that have been "cleared" by the GASB
c. GASB Technical Bulletins
d. The AICPA government audit guide
e. GASB Interpretations.
8. One unique characteristic of most government and nonprofit organizations is that
a. A primary source of financing is sales of services and goods to customers.
b. Their constituency automatically dictates what the government's or nonprofit organization's resources are (to be) used to accomplish.
c. There is no direct relationship between the amount of goods or services that most resource providers receive and the amount of resources provided by each individual.
d. These entities sometimes have restrictions placed on what their resources may be used for, whereas such restrictions cannot be placed on business resources.
9. Organizations that are considered to be nonprofit include all of the following except:
a. Churches.
b. The Boy Scouts and Girl Scouts.
c. Semi-professional baseball team
d. State CPA societies.
10. Which of the following statements is true?
a. Governmental and nonprofit organizations never operate with a profit motive.
b. Businesses have scarce resources that must be allocated to different uses; governments and nonprofits are able to command sufficient resources to avoid the need for such allocations.
c. Typically, governmental and nonprofit organizations have more restricted resources than do business entities.
d. Nonprofit organizations never use fund accounting.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...


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