Govt Accounting Study Guide

Topics: Generally Accepted Accounting Principles, Balance sheet, Financial statements Pages: 60 (16595 words) Published: May 4, 2013
Chapter 1
Which of the following governments would be considered a general purpose government? A)Mineral Valley State University.
B)Jackson County.
C)Billings Community Library.
D)Darien Consolidated School District.

Feedback: General purpose governments typically provide a wide array of service functions. This would be the case for a county government, whereas the other choices depict special purpose governments?entities that provide either a single service or a narrow range of services.

The organization that establishes accounting and financial reporting standards for the federal government is the: A)Governmental Accounting Standards Board (GASB).
B)Federal Accounting Standards Advisory Board (FASAB).
C)Financial Accounting Standards Board (FASB).
D)Cost Accounting Standards Board (CASB).

Feedback: The FASAB is the body recognized by the American Institute of CPAs to establish accounting and financial reporting standards for the federal government. According to the FASAB hierarchy, the FASAB is the only body authorized to establish GAAP for the Federal Government.

The Governmental Accounting Standards Board (GASB) has the authority to set accounting and financial reporting standards for all of the following except: A)Governmental not-for-profit organizations.

B)State and local governments.
C)Public colleges and universities.
D)The federal government and its agencies and departments.

Feedback: Choice C may look like a good choice, but choice D is the only correct choice since the GASB does not set standards for the federal government. Public colleges and universities are not-for-profit components of state or local governments or stand-alone governments in their own right.

Which of the following concepts is the cornerstone of governmental financial reporting? A)Relevance.
B)Interperiod equity.

According to the GASB, accountability is the cornerstone of governmental financial reporting.

Federal accounting and reporting standards issued by the FASAB: A)First require ratification by the GASB before being released. B)Are considered authoritative guidance for the federal government and its agencies and departments under Rule 203 of the AICPA Code of Professional Conduct, as well as under the GAAP hierarchy promulgated by the FASAB. C)Should not be construed as generally accepted accounting principles. D)Both A and B are correct.

Feedback: Of these choices, only choice B is correct. See Illustration 1-1 and related discussion in this chapter.

The concept of interperiod equity relates to whether:
A)Current period revenues are sufficient to pay for current period services. B)Current assets are larger than current liabilities.
C)The organization enforces a policy of tax equity.
D)All of the above.

Feedback: Of these choices, only choice A is correct. If interperiod equity is being achieved, then future taxpayers, or perhaps future generations, will not have to assume a financial burden for benefits received by present or past taxpayers.

Which authoritative standards-setting body focuses its standards on both internal and external financial reporting? A)A

Feedback: Choice D is the correct answer. Only the FASAB, as shown in Illustration 1-2, has as an objective to provide information internally for such purposes as assessing budgetary integrity and adequacy of systems and controls. Also, the FASAB specifically identifies executives and program managers as primary information users.

As compared with business organizations, which of the following are distinguishing characteristics of governments and not-for-profit organizations? A)Lower importance of cost accounting systems.
B)Resource providers expect benefits proportional to the resources provided. C)Absence of profit motive.
D)All of the above.

Feedback: Choice C is the correct answer since a governmental entity does not exist...
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