ACC 410 Week 2 Quiz – Strayer NEW
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Chapter 1
The Government and Not-For-Profit Environment
TRUE/FALSE (CHAPTER 1)
1.
The main
objective of a typical governmental entity is to earn a profit.
2.
A government’s
budget may be backed by the force of law.
3.
Governmental
entities have no need for an accounting system.
4.
Governments and
not-for-profits employ a system of accounting known as fund accounting.
5.
Governments and
not-for-profits may never engage in business-type activities.
6.
Lenders use the
financial statements of governments and not-for profits just as they would
those of businesses, that is, to help assess the borrower’s credit-worthiness.
7.
Financial
statements, no matter how prepared, do not directly impact the economic worth
of an entity.
8.
Cash flow
statements are governments’ paramount financial documents.
9.
Most governments
budget on an accrual basis.
10.
The Governmental
Accounting Standards Board established generally accepted accounting principles
for all state and local government entities, as well as all nongovernment
entities.
MULTIPLE CHOICE (CHAPTER 1)
1. A primary characteristic that distinguishes
governmental entities from business entities is
a) the need to generate revenues equal to or in excess of
expenditures/expenses.
b) the importance of the budget in the governing process.
c) the need to provide goods or services.
d) the correlation between revenues generated and demand
for goods or services.
2. Which of
the following characteristics is NOT a characteristic that may distinguish a
governmental or not-for-profit entity from a business entity?
a) There is often no direct link between revenues
generated and expenditures/expenses incurred.
b) Capital assets may neither produce revenues nor save
costs.
c) Revenues may not be indicative of demand for goods and
services.
d) The mission of the entity will determine the goods or
services provided.
3. The most significant financial document
provided by a governmental entity may be
a) the balance sheet.
b) the operating statement.
c) the operating budget.
d) the cash flow statement.
4. Which of the following statements is NOT
true?
a) All governmental entities engage in similar
activities.
b) There are many different types of governments.
c) Governments may engage in activities similar to
activities engaged in by for-profit entities.
d) Managers may have a short-term focus and thereby
sacrifice the long-term viability of the entity.
5. Which of
the following activities is NOT an activity in which a governmental entity
might engage?
a) Selling electric power.
b) Operating a golf course.
c) Operating a book store.
d) All of the above are activities that might be carried
out by a government.
6. In which of the following activities is a
not-for-profit entity least likely to engage?
a) Providing educational services.
b) Providing health-care services.
c) Providing for the national defense.
d) Retail sales of cookies.
7. To obtain
a comprehensive understanding of a government’s fiscal health, a financial
analyst should obtain an understanding of which of the following?
a) All of the resources owned by the governmental entity.
b) All of the resources which may be summoned by a
governmental entity.
c) Demographic data about the residents served by the
governmental entity.
d) All of the above.
8. Which of
the following is common to both governments and not-for-profit entities but
distinguishes these entities from for-profit entities?
a) The budget is generally the most significant financial
document.
b) Revenues are not necessarily indicative of demand for
goods or services.
c) There is frequently no direct link between revenues
and expenses.
d) All of the above are common to both governments and
not-for-profit entities but distinguish them from for-profit entities.
9. Which of
the following is NOT a purpose of external financial reporting by
governments? External financial reports
should allow users to
a) Assess financial condition.
b) Compare actual results with the budget.
c) Assess the ability of elected officials to effectively
manage people.
d) Evaluate efficiency and effectiveness.
10. Which of
the following is NOT a reason that users of government and not-for-profit
external financial statements need to have information to enable them to assess
the financial condition of a government?
a) To determine the ability of the entity to meet its
obligations.
b) To determine the ability of the entity to continue to
provide services.
c) To predict future fiscal developments.
d) To evaluate the overall profitability of the entity.
11. Users of
financial statements should be interested in information about compliance with
laws and regulations for which of the following reasons?
a) To determine if the entity has complied with bond
covenants.
b) To determine if the entity has complied with taxing
limitations.
c) To determine if the entity has complied with donor
restrictions on the use of funds.
d) To determine all of the above.
12. Which of
the following is NOT generally considered a main user of government and
not-for-profit entity external financial statements?
a) Investors and creditors.
b) Taxpayers.
c) Donors.
d) Management.
13. Which of
the following is NOT a probable use a donor would make of the external
financial statements of a not-for-profit entity?
a) To determine the creditworthiness of the entity for
investment purposes.
b) To determine the proportion of entity resources
directed to programs as opposed to fund-raising.
c) To determine the salaries paid to the top officials of
the entity.
d) To determine the allocation of resources within the
entity.
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