Test bank for accounting for governmental and nonprofit entities 14th edition by wilson

Ch1-3 Key General purpose governments provide a wide range of services to their residents, such as public safety, road maintenance, and health and welfare TRUE Content: Concept Level: Easy Wilson - Chapter 01 #1 Examples of special purpose governments include public schools, libraries, and water supply plants that receive tax revenue to finance the services they provide TRUE Content: Concept Level: Medium Wilson - Chapter 01 #2 The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all governmental and not-for-profit organizations FALSE The GASB does not have authority over the federal government or its agencies or nongovernmental, not-for-profit organizations Content: Concept Level: Easy Wilson - Chapter 01 #3 A characteristic common to governmental and not-for-profit organizations is the 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 TRUE This is one of the characteristics; others include receipt of significant amounts of resources from resource providers who not expect to receive either repayment or economic benefits proportionate to the resources provided and operating purposes that are other than to provide goods or services at a profit and absence of defined ownership interests Content: Concept Level: Easy Wilson - Chapter 01 #4 From https://testbankgo.eu/p/Test-Bank-for-Accounting-for-Governmental-and-Nonprofit-Entities-14th-Edition-by-Wilson The Federal Accounting Standards Advisory Board (FASAB) recommends accounting principles and standards for the federal government and its agencies and state governments FALSE The FASAB does not have responsibility for setting standards for state governments, the GASB does Content: Concept Level: Easy Wilson - Chapter 01 #5 Interperiod equity refers to the concept that current-year revenues are sufficient to pay for services provided that year, so that future taxpayers will not be required to assume the burden for services previously provided TRUE Interperiod equity is a significant part of accountability of the government to its taxpayers, both current and future Content: Concept Level: Easy Wilson - Chapter 01 #6 The FASB, GASB, and FASAB all base their standards on both internal and external financial reporting FALSE While it is true that the FASAB sets standards for both internal and external users of financial information, the FASB and GASB base their standards only on external financial reporting Content: Concept Level: Medium Wilson - Chapter 01 #7 The two government-wide financial statements required by GASBS 34 are the statement of net assets and the statement of activities TRUE In addition to these two statements, there are two required basic financial statements for governmental funds, three for proprietary funds, and two for fiduciary funds, as illustrated and described in this chapter Content: Concept Level: Medium Wilson - Chapter 01 #8 From https://testbankgo.eu/p/Test-Bank-for-Accounting-for-Governmental-and-Nonprofit-Entities-14th-Edition-by-Wilson 13 The body that has been established to recommend accounting and financial reporting standards for the federal government is the A B C D Financial Accounting Standards Board (FASB) Governmental Accounting Standards Board (GASB) Cost Accounting Standards Board (CASB) Federal Accounting Standards Advisory Board (FASAB) Content: Concept Level: Easy Wilson - Chapter 01 #13 14 The GASB has identified which of the following as the "cornerstone" of all financial reporting in government? A B C D Understandability Representational faithfulness Accountability Interperiod equity Content: Concept Level: Easy Wilson - Chapter 01 #14 15 Which of the following distinguishes governments from nongovernmental not-for-profit organizations? A B C D Absence of profit motive The power to enact and enforce a tax levy Resource providers not expect benefits proportional to the resources provided Absence of a defined ownership interest that can be sold, transferred, or redeemed Content: Concept Level: Medium Wilson - Chapter 01 #15 16 Which of the following is not an objective of financial reporting by state and local governments? A To assist financial report users in comparing actual financial results with the legally adopted budget B To assist users in assessing financial condition and results of operations C To assist users in assessing the adequacy of systems and controls D None of the above; that is, all of the above are objectives of state and local government financial reporting Content: Concept Level: Medium Wilson - Chapter 01 #16 17 The minimum requirements for general purpose external financial reporting include: A B C D Management's discussion and analysis (MD&A) Government-wide and fund basic financial statements, including the notes thereto Required supplementary information (other than the MD&A) All of the above Content: Concept Level: Easy Wilson - Chapter 01 #17 From https://testbankgo.eu/p/Test-Bank-for-Accounting-for-Governmental-and-Nonprofit-Entities-14th-Edition-by-Wilson 18 The three sections recommended by GASB for inclusion in the Comprehensive Annual Financial Report (CAFR) are: A B C D Introductory, financial, and statistical Letter of transmittal, MD&A, and financial Introductory, MD&A, and financial Letter of transmittal, financial, and supplementary Content: Concept Level: Easy Wilson - Chapter 01 #18 19 Which of the following would be included in a properly prepared comprehensive annual financial report (CAFR) but not in the minimum requirements for general purpose financial reporting specified by GASBS 34? A B C D Management Discussion and Analysis (MD&A) Statistical information Notes to the financial statements Fund financial statements Content: Concept Level: Easy Wilson - Chapter 01 #19 20 Combining financial statements of a governmental entity should be included in A B C D A comprehensive annual financial report (CAFR) The basic financial statements The notes to the financial statements Any of the above is acceptable under GAAP Content: Concept Level: Medium Wilson - Chapter 01 #20 21 Which of the following would not be included in the introductory section of a comprehensive annual financial report? A B C D Title and contents page Letter of transmittal Management discussion and analysis Reference to other sections of the CAFR so readers desiring detailed information can find it conveniently Content: Concept Level: Easy Wilson - Chapter 01 #21 22 Which of the following is information that should be included in the financial section of a comprehensive annual financial report? A B C D The auditor's report The basic financial statements Notes to the financial statements All of these should be included Content: Concept Level: Easy Wilson - Chapter 01 #22 From https://testbankgo.eu/p/Test-Bank-for-Accounting-for-Governmental-and-Nonprofit-Entities-14th-Edition-by-Wilson Governments that are temporarily short of cash but that have levied taxes expected to be collectible during the fiscal year are generally able to borrow on short-term notes known as "tax anticipation notes payable" TRUE Property taxes are a lien on the underlying property; therefore, the tax levy is generally considered by bankers or other lenders to be good security for short-term loans Content: Concept Level: Medium Wilson - Chapter 04 #4 In order to account correctly for the receipt of goods or services ordered in a prior fiscal year it is necessary to know which appropriations were affected when the encumbrance documents were issued TRUE The appropriations of the year in which encumbrance documents were issued were charged for the estimated liability at the time the encumbrances were issued In most jurisdictions the encumbered portion of the appropriation does not lapse at fiscal year-end and may properly be expended in the subsequent years when goods and services are received Content: Concept Level: Easy Wilson - Chapter 04 #5 When purchase orders or contracts are issued for legally authorized purposes a record must be kept, but no entries in the General Fund or special revenue fund accounts are necessary FALSE GASB standards provide that the encumbrance be recorded to assist in budgetary control over expenditures so that appropriations will not be over-expended Content: Concept Level: Medium Wilson - Chapter 04 #6 If the actual liability for goods or services ordered in the current year differs from the estimated liability, the Encumbrances account should be credited in the amount of the actual liability FALSE If the actual liability for goods received differs from the estimated liability (which is often the case), the Encumbrances account is credited for the estimated liability that was originally debited Content: Concept Level: Easy Wilson - Chapter 04 #7 From https://testbankgo.eu/p/Test-Bank-for-Accounting-for-Governmental-and-Nonprofit-Entities-14th-Edition-by-Wilson The payment of liabilities by the General Fund or a special revenue fund requires the expenditure of an appropriation FALSE The appropriation was expended when the liability was given accounting recognition; payment of the liability by a government is recorded in the same manner as would be done by a business organization, as a decrease of cash and a decrease of the liability Content: Concept Level: Medium Wilson - Chapter 04 #8 Under the modified accrual basis of accounting applicable to governmental fund types, Revenues is credited for the total amount of property tax bills prepared FALSE Revenues should be credited for the portion of the receivable expected to be collectible; the estimated uncollectible portion is credited to Estimated Uncollectible Current Taxes Content: Journal Entry Level: Easy Wilson - Chapter 04 #9 10 Under the modified accrual basis of accounting applicable to governmental fund types, revenue from sources such as fines and forfeits is accrued and recorded at net realizable value FALSE Fines and forfeits, and many other sources of revenue of general and special revenue funds, is recognized when cash is received because there is no practicable way of measuring the revenue before collection Content: Concept Level: Easy Wilson - Chapter 04 #10 11 Under current GASB standards the revenue from property taxes should be recorded in the period and in the amounts in which taxes are collected FALSE Property tax revenue is considered susceptible to accrual and should be recognized when tax bills are prepared GASBS 33 requires that imposed nonexchange transactions, such as property taxes, be recognized in the period for which the taxes are levied Content: Concept Level: Easy Wilson - Chapter 04 #11 From https://testbankgo.eu/p/Test-Bank-for-Accounting-for-Governmental-and-Nonprofit-Entities-14th-Edition-by-Wilson 12 If property taxes are not collected by the date specified by law, additional revenue is generally earned by the fund of the government for which the taxes were levied TRUE Interest and penalties are levied by law on delinquent taxes, and to the extent estimated to be collectible, are recorded as revenue at the time the amounts are computed Content: Concept Level: Medium Wilson - Chapter 04 #12 13 Correction of errors in recording revenues or expenditures of the current year must be recorded both in the proper general ledger control account (Revenues or Expenditures) and in each subsidiary ledger account affected TRUE Subsidiary ledger accounts as well as control accounts must receive entries for the corrections so that the subsidiary and control accounts will agree properly Content: Concept Level: Medium Wilson - Chapter 04 #13 14 A government that uses the encumbrance method for purchases of goods and services is not required to use encumbrance accounting for its payrolls TRUE If neither law nor good financial management requires the use of encumbrance accounting for payrolls, which is typically the case, there is no need to use the encumbrance method An exception might be when payroll varies substantially from period to period, perhaps due to seasonal part-time employment Content: Concept Level: Medium Wilson - Chapter 04 #14 15 Governments, unlike business organizations, generally not incur expenditures/expenses for the employer's share of FICA taxes and for contributions to other retirement plans established by law FALSE Fringe benefits given to employees of state and local governments whose salaries are paid by a governmental fund must be authorized by appropriations and therefore result in expenditures; fringe benefits for employees paid by a proprietary fund result in expenses Content: Concept Level: Medium Wilson - Chapter 04 #15 From https://testbankgo.eu/p/Test-Bank-for-Accounting-for-Governmental-and-Nonprofit-Entities-14th-Edition-by-Wilson ... this chapter Content: Concept Level: Medium Wilson - Chapter 01 #8 From https://testbankgo.eu/p /Test-Bank-for-Accounting-for-Governmental-and-Nonprofit-Entities-14th-Edition-by-Wilson 13 The body... of the above Content: Concept Level: Easy Wilson - Chapter 01 #17 From https://testbankgo.eu/p /Test-Bank-for-Accounting-for-Governmental-and-Nonprofit-Entities-14th-Edition-by-Wilson 18 The three... should be included Content: Concept Level: Easy Wilson - Chapter 01 #22 From https://testbankgo.eu/p /Test-Bank-for-Accounting-for-Governmental-and-Nonprofit-Entities-14th-Edition-by-Wilson Governments