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Question 1

GAAP in the U.S. for federal, state, and local governmental bodies is established by the Governmental Accounting Standards Board (GASB).

Answer 1

Accounting principles for the federal government are issued by the Federal Accounting Standards Advisory Board (FASAB), established in 1990.

Question 2

Primary users can obtain all necessary financial information solely from general-purpose financial reports.( true or false)

Answer 2

false Primary users cannot obtain all necessary financial information solely from general-purpose financial reports. These reports do not suffice to determine the value of the entity and are significantly based on estimates, judgments, and models.

Question 3

One distinguishing characteristic of not-for-profit, nongovernmental entities is that they have no single indicator of performance, such as net income for business entities. ( true or false)

Answer 3

true , One distinguishing characteristic of not-for-profit, nongovernmental entities is that they have no single indicator of performance, such as net income for business entities.

Question 4

An entity may possess some of the characteristics of a not-for-profit, nongovernmental entity but not others.9 true or false)

Answer 4

true, An entity may possess some of the characteristics of a not-for-profit, nongovernmental entity but not others. Examples include private not-for-profit hospitals and schools that receive small amounts of contributions but are essentially dependent on debt issue and user fees. For such entities, the reporting objectives of for-profit entities may be more appropriate.

Question 5

The GASB’s conceptual framework describes two inherent control characteristics of the governmental environment: (1) the implications of a budget as both the embodiment of policy decisions and as a legally binding control tool, and (2) the segregation of governmental functions into governmental-type activities and business-type activities. ( true or false )

Answer 5

False, The two inherent control characteristics of the governmental environment are (1) the implications of a budget as the expression of policy decisions and as a legally binding control tool and (2) the use of fund accounting.

Question 6

The constraints on financial accounting include industry practices and conservatism ( true or false)

Answer 6

The constraints on financial accounting are cost, industry practices, and conservatism.