ACCT 3050: Chapter 1 Flashcards
True or false: According to FASB, governmental and business organizations share the purpose of providing goods and services at a profit or profit equivalent.
False
Match the type of entity with the financial reporting objectives.
Financial reporting is used in making economic, social and political decisions and in assessing accountability.
State and local governments
Match the type of entity with the financial reporting objectives.
Financial reporting should provide information useful in making resource allocation decisions.
Not-for-profit organizations
Match the type of entity with the financial reporting objectives.
Financial reporting should help achieve accountability and assist report users in evaluating budgetary integrity.
Federal government
GASB concluded that reporting on operational accountability is best achieved by using essentially the same basis of accounting and measurement focus used by ______ organizations.
business
Government-wide financial statements are intended to provide an aggregated overview of which of the following?
a government’s net position and changes in net position
Not-for-profit organizations are required to prepare a set of organization-wide financial statements that include:
statement of financial position (balance sheet)
statement of activities (income statement)
statement of cash flows
Which of the following is true of not-for-profit organizations?
They are similar to business entities in many ways.
They have different uses for financial reports, depending on the type of organization.
They have reporting objectives that emphasize financial accountability needs over decision usefulness.
They are similar to business entities in many ways.
Proprietary and fiduciary funds follow account and reporting principles similar to those of ______ organizations.
business
Which is true of a CAFR?
It is not required.
Management’s discussion and analysis is found in the ______ section of a CAFR.
financial
The ______ Codification requires a specific set of statistical tables for inclusion in a CAFR.
GASB
Donor-imposed restrictions may be ______.
temporary or permanent
_____ purpose governments are provided the power by state laws to levy and collect taxes and to raise revenues from nontax sources to finance the services they provide.
Both general and special
Financial reporting for the federal government is intended to assist report users in evaluating:
budgetary integrity
operating performance
stewardship
adequacy of systems and controls
States, counties, municipalities, and townships are examples of ______ purpose governments. They provide a wide range of services to their residents, such as police and fire protection, sanitation, construction and maintenance of streets, roads, and bridges, and culture and recreation.
general
Independent school districts, public colleges and universities, and special districts are examples of ______ purpose governments. They provide a single function or limited number of functions to their residents, such as education, drainage and flood control, irrigation, soil and water conservation, fire protection, and water supply.
special
The ______ distinguishes government entities in the United States from both not-for-profit and business entities by stressing that governments exist in an environment in which power rests in the hands of the people.
GASB
Governmental Accounting Standards Board
Revenues raised by each level of government come, ultimately, from
taxpayers
FASB
Financial Accounting Standards Board
FASAB
Federal Accounting Standards Advisory Board
Which of the following are true of taxpayers?
They are involuntary contributors of revenue to government.
They cannot rely on a net income figure to assess government performance.
They have little choice over the level of service they receive.
Accounting and reporting standards for not-for-profit organizations that are independent of governments are set by
FASB
The ______ was established in 1990 to recommend accounting principles and standards for the federal government and its agencies.
FASAB
_____ is the cornerstone of all financial reporting in government.
accountability
The concept of ______ helps users to assess whether current-year revenues are sufficient to pay for services provided that year.
Ensures the government “lives within its means.”
interperiod equity
The ______ is required supplementary information designed to be able to communicate in an easy-to-read format the purpose of the basic financial statements.
MD&A
Management’s Discussion and Analysis
Characteristics that distinguish governmental and not-for-profit business entities from business organizations include
Receipts of significant amounts of resources from resource providers who do not expect to receive either repayment or economic benefits proportionate to the resources provider.
Operating purposes that are other than to provide goods or services at a profit or profit equivalent.
Absence of defined ownership interests that can be sold, transferred, or redeemed or that convey entitlement to a share of a residual distribution of resources in the event of liquidation of the organization.
Match the authoritative body with the organization for which it establishes accounting principles.
FASB
Financial Accounting Standards Board
Business (for-profit) organizations
Nongovernmental not-for-profit organizations
Match the authoritative body with the organization for which it establishes accounting principles.
GASB
Governmental Accounting Standards Board
State and local government organizations
Government not-for-profit organizations
Match the authoritative body with the organization for which it establishes accounting principles.
FASAB
Federal Accounting Standards Advisory Board
Federal government and its agencies and departments
Financial reporting for state and local governments is in making economic, social, and political decisions and in assessing accountability primarily by:
comparing actual financial results
assessing financial conditions and results of operations
assisting in determining compliance with finance-related laws, rules, and regulations
assisting in evaluating efficiency and effectiveness
The authority to establish accounting principles means
the authority to establish accounting and financial reporting standards.
Financial reporting for not-for-profit organizations should provide information useful in:
making resource allocation decisions
assessing services and ability to provide services
assessing management stewardship and performance
assessing economic resources, obligations, net resources, and changes in them
The MD&A is considered so important the GASB identifies it as
RSI
Required Supplementary Information
Central to the GASB model is the ___, designed to communicate in narrative, easily readable form the purpose of the basic financial statements and the government’s current financial position and results of financial activities compared with those of the prior year.
MD&A
___ are intended to provide an aggregated overview of a government’s net position and changes in net position (net assets).
government-wide financial statements
Revenues are recognized in the period they are measurable and available for spending and expenditures are recognized when they create an obligation to be paid from current financial resources under the ______ basis.
*accrual
*modified accrual
*cash
*modified cash
modified accrual
Detailed financial information about the government is found in which of the following?
*fund financial statements
*management’s discussion and analysis
*government-wide financial statements
fund financial statements
