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 . 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 entities. An entity possessing the following characteristics should follow GASB standards: a. The power to enact and levy a tax. b. The power to issue debt, for which its interest is exempt from federal taxation. c.
The potential that a government could unilaterally dissolve the entity and assume their assets and liabilities. d. All of the above. e. Only a and b. Answer: d 7. For which types of organizations is the Governmental Accounting Standards Board (GASB) responsible for establishing accounting and financial reporting standards? a. All state, local, and Federal organizations b. All state and local governmental organizations, except for state and local governmental colleges, universities, health care providers, and utilities c.
All state and local governmental organizations, including government-sponsored colleges, universities, health care providers, and utilities d. All governmental and not-for-profit organizations Answer: c 8. Which entity establishes financial accounting standards and principles for the federal government? a. FASB b. GASB c. FASAB d. None of the above. Answer: c 9. Which of the following is the most authoritative source of accounting standards for cities and counties? a. Current practices widely used by not-for-profit entities b.
GASB Statements and Interpretations c. AICPA Industry Audit Guides d. Implementation guides published by GASB staff Answer: b 10. Not-for-profit organizations obtain their revenues primarily from a. Sales to customers b. Contributions from donors c. Taxes on personal property d. Taxes on real property Answer: b TRUE or FALSE State whether these statements are true or false. Discuss why the false statements are false. True a. An entity is likely to be a governmental entity if a controlling majority of its governing body is appointed by governmental officials.
True b. The objective of a government is to provide services to its constituents. False c. AICPA pronouncements have approximately the same level of authority as articles appearing in the Journal of Accountancy. True d. The objective of a not-for-profit organization is to provide services to its constituents. False e. By definition, all funds have cash, financial resources, and capital resources. True f. The objective of a business organization is to enhance the wealth of its owners.