Multiple Choice Questions: Funds Accounting

Introduction – Funds Accounting (#1)


1.Which of the following is a distinguishing characteristic of a nonbusiness organization?
a.Its revenues do not exceed its expenses
b.There is an absence of ownership interests that can be sold, transferred, or redeemed
c.It does not depreciate its capital assets
d.It does not charge fees for any of its services
Answer: b

2.Which of the following activities is performed by governments but not by not-for-profit organizations?
a.Issuing federal tax-free debt
b.Receiving grants
c.Preparing budgets
d.Providing services to constituents
Answer: a

3.Government and nonprofit accounting focuses on which of the following?
a.Calculating profit or loss
b.Protecting investors from fraud
c.Demonstrating accountability
d.Reporting to management
Answer: c

4.For which types of organizations is the Financial Accounting Standards Board (FASB) responsible for establishing accounting and financial reporting standards? a.Business-type organizations and not-for-profit organizations, including not-for-profit colleges, universities and health care providers b.Business-type organizations; not-for-profit organizations; and all colleges, universities and health care providers, whether organized as not-for-profit or governmental entities c.Business-type organizations only

d.All entities, except for those under the jurisdiction of the American Institute of CPAs
Answer: a

5.A not-for-profit organization performs all of the following activities except
a.Charging a fee for services provided
b.Paying dividends to shareholders
c.Purchasing long-lived (capital) assets
d.Paying overtime to employees
Answer: b

6.The Governmental Accounting Standards Board (GASB) establishes financial reporting standards for state and local governmental...
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