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Chapter 1 Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organizations T EST B ANK TO A CCOMPANY E SSENTIALS OF A CCOUNTING FOR G OVERNMENTAL AND N OT- FOR-P ROFIT O RGANIZATIONS : T ENTH E DITION P REPARED BY : M ARY L ORETTA M ANKTELOW J AMES M ADISON U NIVERSITY 1 Chapter 1 Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organizations True/False Questions 1. FASAB, GASB and FASB standards are set forth primarily in documents called interpretations. Answer: False 2. FASAB, GASB and FASB standards are set forth primarily in documents called statements. Answer: True 3. The FASAB was established to recommend accounting and financial reporting standards for governmental and commercial enterprises. Answer: False 4. The GASB requires supplementary information to be reported with its financial statements if it is essential to establish appropriate context for the financial statements and notes. Answer: True 5. The Governmental Accounting Standards Board sets financial reporting standards for all units of government: federal, state, and local. Answer: False 6. Fund accounting exists primarily to provide assurance that resources are used according to legal or donor restrictions. Answer: True 7. The Financial Accounting Standards Board sets financial reporting standards for private sector organizations, except nongovernmental, not-for-profit organizations. Answer: False 8. The Financial Accounting Standards Board sets financial reporting standards for private not-for-profits and investor-owned businesses. Answer: True 2 Chapter 1 Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organizations 9. The Federal Accounting Standards Advisory Board and the Governmental Accounting Standards Board are parallel bodies under the oversight of the Financial Accounting Foundation. Answer: False 10. An organization is presumed to be governmental if it has the ability to issue directly debt that is exempt from federal taxes. Answer: True 11. The Federal Accounting Standards Advisory Board requires less extensive reports than does the FASB or GASB. Answer: False 12. The FASAB requires more financial statements than are typically required of state and local governments. Answer: True 13. One objective of the Governmental Accounting Standards Board is to help users determine compliance with finance-related laws, rules, and regulations. Answer: True 14. All Governments must have as many funds as necessary to fulfill legal requirements and sound financial administration but must have at a minimum a General Fund. Answer: True 15. The Governmental Accounting Standards Board considers the financial reporting entity to include the primary government and its component units. ... View Full Document

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