Exam 1: Governmental and Not-For-Profit

Not-for-profit organizations obtain their revenues primarily from

(Discussion problem on entity and GAAP hierarchy) A large private bus company in Empire City went bankrupt.At Empire City's request,the state legislature established a legally separate public benefit corporation named Metro City Bus.In the law establishing Metro City Bus,Empire City was authorized to appoint Metro's entire governing body,and Metro was authorized to issue tax-exempt debt to assume the assets of the private bus company. When Metro City Bus went to prepare its financial statements,two questions were raised.Was Metro City Bus a government? And if it were a government,how should it prepare its cash flow statement? Research showed that,when the bus company was a private organization,it followed FASB Statement No.95,which required cash flow statements to be prepared using a particular format.However,GASB Statement No.9 did not approve the use of FASB Statement No.95,and instead required governmental enterprises to prepare cash flow statements using a different format.An article published in the Journal of Accountancy suggested that all business-type activities,private or governmental,ought to adopt FASB Statement No.95. Required: a.Discuss whether Metro City Bus is or is not a governmental entity.What are the specific factors in this situation that cause Metro to be one or the other? b.Discuss whether Metro City Bus should prepare its cash flow statements using the FASB format or the GASB format.What are the factors that affect your conclusion?

An activity that is unique to governments is

Which basis of accounting is used for the basic governmental functions of state and local governments?

(Discussion problem on fund accounting) Discuss the nature and purpose of "fund accounting."

Which of the following is not a reason that governmental accounting is different from business accounting?

Which entity establishes financial accounting standards and principles for the federal government?

A not-for-profit organization performs all of the following activities except

(Matching organizational characteristics with different types of organizations. ) Listed below are some identifying characteristics of organizations.Indicate with a check mark (Y)in the appropriate column(s)those characteristics that apply to each type of organization.Some characteristics may apply to more than one type of organization.

To what extent do organizations that use fund accounting also report on the entity as a whole?

For which types of organizations is the Governmental Accounting Standards Board (GASB)responsible for establishing accounting and financial reporting standards?

Which of the following is the most authoritative source of accounting standards for cities and counties?

Government and nonprofit accounting focuses on which of the following?

Which of the following activities is performed by governments but not by not-for-profit organizations?

Concepts statements issued by the GASB and the FASAB emphasize which of the following objectives of governmental financial reporting?

Which of the following is a distinguishing characteristic of a nonbusiness organization?

For which types of organizations is the Financial Accounting Standards Board (FASB)responsible for establishing accounting and financial reporting standards?