Select the best answer. 1. The traditional business model of accounting is inadequate for governments and not-for-prot

Select the best answer.
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

2. If businesses are “governed by the marketplace,” governments are governed by
a. Legislative bodies
b. Taxes
c. Budgets
d. State constitutions

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

6. The number of governmental units in the United States is approximately
a. 895
b. 8,950
c. 89,000
d. 895,000

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. Inter period 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

9. Which of the following is not one of the GASB’s financial reporting objectives?
a. Providing information on the extent to which inter-period equity is achieved
b. Ensuring that budgeted revenues are equal to or exceed budgeted expenses
c. Reporting on budgetary compliance
d. Providing information on service efforts and accomplishments

10. Which of the following is not one of the FASB’s financial reporting objectives?
a. Providing information about economic resources, obligations, and net resources
b. Providing information to help resource providers make rational decisions
c. Reporting on budgetary compliance
d. Providing information on service efforts and accomplishments