ives7e_tif_h01ives7e_tif_ch01.doc

Chapter 1: Governmental and Not-for-Profit Accounting Environment and Characteristics Multiple Choice 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. Which of the following is not a reason that governmental accounting is different from business accounting? a. Different users of financial reports b. Expected long-life of governments c. Capital assets are used by governments d. Revenues that are unique to governments Answer: c 5. Which basis of accounting is used for the basic governmental functions of state and local governments? a. Cash basis of accounting b. Modified accrual basis of accounting c. Accrual basis of accounting d. Regulatory basis of accounting Answer: b  6. 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