Accounting For Governmental And Nonprofit Entities 19th Edition Suzanne Lowensohn, Daniel Neely, Jacqueline Reck - Solutions

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Which of the following is not identified by SFFAC No. 2 as a perspective from which the federal government can be viewed for accounting and reporting purposes?a. Budget.b. Legal.c. Organizational.d. Program.
Which of the following accounts may be shown on the balance sheet of a state and local government but would not be shown on the balance sheet for the federal government.a. Taxes receivable.b. Investments.c. Inventory.d. Deferred Inflows of Resources.
Which of the following federal funds is most similar to a custodial fund used by state and local governments?a. Trust fund.b. Special fund.c. Deposit fund.d. General fund.
Which of the following is not a true statement about the difference between accounting and reporting for federal government agencies versus state and local governments?a. State and local governments record material amounts of inventory at the fund and government-wide levels, as does the federal
Which of the following accounts would not be considered a budgetary account?a. Other Appropriations Realized.b. Fund Balance with Treasury.c. Allotments.d. Commitments.
Which of the following is not a component of a consolidated performance and accountability report (PAR)?a. MD&A.b. The basic financial statements.c. Statistical information section.d. A transmittal letter from the agency head.
Which of the following is a correct mathematical relationship among proprietary account balances?a. Net Position equals Total Assets minus Total Liabilities.b. Fund Balance with Treasury equals Unexpended Appropriations.c. Cumulative Results of Operations equals Revenues and Financing Sources minus
Assuming that an agency’s unused appropriations expire at year-end but appropriations continue in effect for obligated amounts (purchase orders, etc.), which of the following budgetary accounts would likely be found in the agency’s postclosing trial balance at year-end?a. Undelivered Orders and
Which of the following is a required basic financial statement for federal agencies?a. Balance sheet.b. Statement of cash flows.c. Statement of operations.d. Statement of budgetary revenues and expenditures.
Objectives that are identified by Statement of Federal Financial Accounting Concepts (SFFAC) No. 1 for federal financial reporting include all of the following excepta. Budgetary integrity.b. Adequacy of controls.c. Stewardship.d. Relevance and reliability of information.
Which of the following is the highest level of GAAP for the federal government?a. The FASAB’s technical bulletins.b. The FASAB’s concepts statements.c. The FASAB’s interpretations.d. The FASB standards if adopted by FASAB.
Which of the following is an important aid in assisting federal agencies in preparing their performance and accountability reports?a. Statement of Federal Financial Accounting Concepts No. 1.b. Statement of Federal Financial Accounting Concepts No. 6.c. OMB Circular A-134.d. OMB Circular A-136.
Which of the following represents one of the roles of the Government Accountability Office in federal financial accounting and reporting?a. Providing an independent assessment of the financial reports of the federal government.b. Providing the chart of accounts for the standard general ledger used
Which of the following is true regarding charity services?a. Charity service is recorded as a bad debt expense by NFP health care entities, but as a contra-revenue by government health care entities.b. Charity service is recorded as an other revenue by both government health care entities and NFP
An NFP hospital has determined that a portion of patient charges are implicit price concessions. The implicit price concessions would be recorded asa. a contra-revenue account reducing patient revenue.b. a bad debt expense and included with operating expenses.c. an other revenue.d. the implicit
Which of the following would be most useful for evaluating the financial profitability of a not-for-profit health care organization?a. Current ratio.b. Debt-to-capitalization.c. Excess margin.d. Debt services coverage.
The Patient Protection and Affordable Care Act, passed in 2010,a. Resulted in a decrease in the number of insured patients.b. Did not impact Form 990 filings for 501(c)(3) health care organizations.c. Required health care organizations to implement new cost accounting systems where each service
Wellness Psychiatric Clinic received a large contribution from the family of a former patient. The contribution came with a request that the funds be used or invested to support any activities that the clinic felt would be best. On this not-for-profit clinic’s statement of cash flows, this
The controller for Harris Regional Hospital, a government hospital, estimates that the uncollectible patient accounts have increased by $315,000.The increase in uncollectible patient accounts would be recorded asa. An other revenue.b. An operating expense.c. A contra-revenue reducing patient
Why are health care organizations motivated to track the actual costs of services?a. Third-party payors contract with the organization to reimburse a set amount, and the organization risks a loss if costs are greater than the amount reimbursed.b. They must report their actual expenses so that
Which of the following is an example of an asset limited as to use?a. Real estate donated to build a clinic for the homeless.b. Contributed cash that the board is considering setting aside for self-insurance.c. Investments bequeathed to the health care organization where the income is to be used to
Fees received by a hospital for a “healthy heart” workshop offered to patients should be reported asa. Patient service revenue.b. Other revenue.c. Administrative service revenue.d. Nonoperating gains.
Which of the following is a true statement regarding a performance indicator?a. All health care organizations are required to report a performance indicator.b. Only governmental health care organizations are required to report a performance indicator.c. The purpose of reporting a performance
A not-for-profit hospital would present all of the following financial statements except aa. Balance sheet or statement of financial position.b. Statement of revenues, expenses, and changes in net position.c. Statement of operations.d. Statement of cash flows.
Which of the following entities would consider portions of the AICPA Audit and Accounting Guide: Health Care Entities category b authoritative guidance?a. A business-type government hospital.b. A not-for-profit hospital.c. A for-profit hospital.d. All of the above.
Which of the following is not a step in the tuition revenue recognition process for private colleges and universities?a. Identify the contract.b. Determine the transaction price.c. Estimate the amount of donor contributions that will be received in the current period.d. Identify the performance
Which of the following is a performance measure of an outcome?a. Farley College students complete an undergraduate degree in an average of 4.3 years.b. A state survey of employers showed that 70 percent of employers ranked Beasley State University’s graduates as “very well prepared” to enter
Many endowment management policies establish a spending rate for the college or university’s endowment funds. A spending rate is best defined asa. The portion of the total return that can currently be used to carry out the endowment purpose.b. The average rate of return earned on the endowment
Which of the following statements is incorrect concerning the financial reports of colleges and universities?a. The NACUBO account titles are frequently used for reporting revenues and expenses by both private and public entities.b. State appropriations are reported as nonoperating revenues by
How would a university account for funds received from an external donor that are to be retained and invested, with the related earnings restricted to the purchase of library books?a. Net position without donor restrictions in a private university.b. Net position with donor restrictions in a
Gresham College is a local private college. When reviewing the college’s financial reports, you would expect to see which of the following categories on its statement of financial position?a. Unrestricted net position, restricted net position, and net investment in capital assets.b. Unrestricted
Last year Zelnick College showed a positive revenue over expenses number for the first time in several years. The college is funded with contributions, grants, two government appropriations (state and local), and tuition and fees. Zelnick College is most likely what type of college?a. A private
A university expended $2,475,000 on a new parking facility. The transaction was reported as an investing activity on its direct method statement of cash flows. What type of university prepared the statement of cash flows?a. A public university.b. A for-profit university.c. A private university.d.
Which of the following is a true statement about tuition revenue in a college or university?a. Tuition waivers received as part of compensation should be recorded as an expense by both private and public colleges and universities.b. Tuition receivables estimated to be uncollectible should be
Which of the following statements is prepared by both a private and public college or university?a. Statement of net assets.b. Statement of cash flows.c. Statement of activities.d. Statement of net position.
Colleges and universities look to which standard-setting body for GAAP?a. The GASB.b. The FASB.c. The NACUBO.d. It depends on whether the entity is public, private, or for-profit.
The museum of natural history is deciding whether to record its recent purchase of rare artifacts as an asset on its financial statements. Which of the following criteria must exist for the purchase of rare artifacts to be classified as a collection and thus provide the museum of natural history
We Shelter, a nongovernmental not-for-profit organization, received a generous pledge of $1,000,000. Under which of the following donor stipulations will the pledge not be recognized in the current financial statements?a. The donor stipulates that We Shelter must use the pledge to increase the
Lifeworks is a nongovernmental not-for-profit organization that recently received a large gift from a donor in the amount of $5,000,000 in cash.The donor wishes to leave a legacy and therefore specified that Lifeworks cannot spend the $5,000,000 but can invest the $5,000,000 and use any earnings
On December 31, Ecology Center, a nongovernmental not-for-profit organization, received an unconditional pledge of $125,000 to be received in three years. The Ecology Center is confident that it will collect the entire $125,000. The Ecology Center uses the present value technique when measuring
Volunteers contributed services to the symphony that had a fair value of$50,000. The services provided by the volunteers did not require specialized skills. Under what condition should the symphony recognize the fair value of the contributed services received?a. The contributed services will be
A particular organization functions as an intermediary between donors and other beneficiary organizations. The intermediary organization must report contribution revenue from donors ifa. The organization has variance power.b. The organization elects to consistently report such donor gifts as
Save Our Beaches, an NFP organization, prepared and distributed a trifold flyer to individuals and families at White Sands Beach, a popular beach for both residents and tourists. The flyer provided information about beach pollution and invited the public to participate in the organization’s
Many not-for-profit organizations attempt to classify fund-raising expenses as program services expenses by making the activities look educational in nature or advocating for the mission of the organization. For such expenses to be reported as program services expenses, they must meet which of the
The Maryville Cultural Center recently conducted a successful talent show in which local talent performed for a nominal prize. The talent show is an ongoing major event and is central to the center’s mission. The event raised $4,800 in gross revenue. Expenses related to the event included$1,000
Orlando Perez, president of a local information systems company, volunteered his time to help develop software for Best Friends, a local no-kill pet shelter. The software will allow the organization to track intake, placement, and statistics of animals in its three locations. Without Mr. Perez’s
A wealthy donor promised $1 million to the local art museum to expand the size of its building, contingent on the museum obtaining a grant from the State Endowment for the Arts of at least $500,000. Upon completing a signed agreement with the donor, the museum shoulda. Record a debit to
In a local NFP elementary school’s statement of cash flows, a contribution restricted for use on a new building project would be reported asa. A financing activity.b. A capital and related financing activity.c. An investing activity.d. An operating activity.
Jane’s Planes is an organization that provides air transportation for critically ill children. A friend of Jane’s Planes, Richard Bucks, donated a plane to be used for whatever purpose the organization chooses. In addition, he donated a substantial amount of investments that were to be used
According to GAAP, all not-for-profit organizations are required to prepare only the following statements:a. A statement of activities, a balance sheet, and a statement of cash flows using accrual accounting.b. A statement of activities, a statement of cash flows, and a statement of functional
Which of the following organizations would be considered a nongovernmental not-for-profit organization?a. An organization that provides shelter for people who have been victims of domestic violence and has been designated as a notfor-profit organization by the IRS. The board of trustees is composed
Which of the following is not one of the general criteria for an allowable cost?a. The cost must be adequately documented.b. The cost must be approved by an external or federal auditor.c. The cost must be accorded consistent treatment.d. The cost must be necessary and reasonable for the performance
Which of the following costs is generally unallowable under Office of Management and Budget (OMB) cost principles?a. Depreciation.b. Use allowances.c. Employee benefits.d. Bad debt expense.
Efficiency measures, as the term is used in the service efforts and accomplishments(SEA) literature, can be described asa. Measures that relate the quantity or cost of resources used to units of output.b. Measures that relate to the amount of financial and nonfinancial resources used in a program
Governments that choose to report service efforts and accomplishments (SEA)a. Must adhere to GASB SEA guidance.b. Must adhere to GASB SEA guidance only if the SEA report is part of the CAFR.c. Must adhere to guidance provided by the Association of Government Accountants(AGA) because GASB has not
Which of the following does not represent a performance measurement group under the balanced scorecard?a. Customer.b. Internal business processes.c. Economy and efficiency.d. Learning and growth.
The increase in data availability has allowed governments toa. Post large datasets online.b. Increase the use of performance measures.c. Facilitate fiscal transparency.d. All of the given statements are true.
Enterprise risk management in governmenta. Was introduced during the Hoover Commissions.b. Often relies upon preventative and control measures to achieve entity goals.c. Facilitates goals such as cash management and long-term planning.d. Merges strategic plans and accountability.
Under entrepreneurial budgeting, public administrators:a. Must justify the existence of each line-item expenditure.b. Are encouraged to look beyond typical spending-oriented budgeting to develop the revenue side of the budget.c. Demonstrate the inflows and outflows of all program resources.d. Only
An approach to budgeting that requires the very existence of each program and the amount of resources requested to be allocated to that program to be justified each year is calleda. Incremental budgeting.b. Zero-based budgeting.c. Performance budgeting.d. Planning-programming-budgeting.
The budgetary comparisons required of state and local governments under GASB standardsa. Can be presented as a schedule within required supplementary information(RSI) or as a statement in the basic financial statements.b. Must be a schedule included as part of RSI.c. May be presented in the notes
Which of the following steps would not usually be part of the budgeting process?a. Heads of operating departments prepare budget requests.b. The chief executive (mayor or city manager, as appropriate) formally adopts the budget, thus giving it the force of law.c. One or more public budget hearings
The budgeting principle in generally accepted accounting principles (GAAP)for state and local governments states that budgetary comparisons should be presented fora. All funds of a government.b. All major fundsc. The General Fund.d. The General Fund and each major special revenue fund that has a
Which of the following statements regarding budgets of not-for-profit organizations is true?a. Not-for-profit organization budgets are legal documents reflecting plans for spending resources.b. A not-for-profit entity may choose to prepare a budget to demonstrate accountability to its resource
The reporting package for a single audit consists of all of the following except aa. Schedule of expenditures of federal awards.b. Summary schedule of prior audit findings.c. SFAC data collection form.d. Corrective action plan.
Using the risk-based approach for selecting major programs for audit during a single audit, an auditora. Classifies low-risk Type A programs as those programs with awards less than $750,000.b. Classifies Type A programs as those that exceed 25 percent (0.25) of the$750,000 threshold.c. Must audit
When evaluating nonaudit services that may impact auditor independence, each of the following routine services is acceptable under GAGAS excepta. Deciding which of an outside third party’s recommendations to implement.b. Educating the audited entity on matters within the technical expertise of
Supplementary information presented with government financial statementsa. Is awarded the same audit procedures as basic financial statement information.b. Receives different audit attention when deemed required supplementary information rather than other information.c. Receives an in-relation-to
Dan Cole is the head of the county’s Division of Animal Control. The division receives funding from both the state and federal governments and is required to have its audit under GAGAS. You and Dan were fraternity brothers at All State University, and your families often celebrate holidays and
An auditor must audit as a major programa. All Type A programs, unless the auditor has identified one as low risk.b. All Type A programs, including those the auditor considers low-risk programs.c. One-fourth of all Type B programs.d. At least 40 percent of all federal funds received.
Under the GASB reporting model, materiality is determineda. For opinion units.b. At the government-wide level.c. At the fund level.d. For governmental and business-type activities and the aggregate discretely presented component units only.
Single audits performed pursuant to OMB’s Uniform Guidancea. Apply to all entities that receive $750,000 or more of federal funds in a fiscal year.b. Apply to not-for-profit organizations only.c. Require the auditor to use generally accepted government auditing standards when conducting the
An additional auditing standard imposed by GAGAS when compared to GAAS isa. The auditor must pinpoint the criteria, condition, cause, and effect of findings to the extent that these elements are relevant and necessary to achieve the audit objectives.b. The auditor must perform procedures aimed at
The GAGAS conceptual framework for independence should be employeda. Annually.b. At the end of the audit engagement, just prior to issuing the audit report.c. Prior to accepting a nonaudit service engagement at an audited entity.d. All of the above.
As executive director of a small not-for-profit, Paula Pascal has engaged an auditor to assess the cash receipts process for donations. The objective is to obtain recommendations, rather than an opinion or conclusion. This type of engagement is calleda. An attestation engagement.b. A performance
A government audit opinion is expressed fora. All CAFR content.b. The government-wide financial statements.c. Specified opinion units.d. All fund financial statements.
Under the hierarchy of GAAP for a state and local government, which of the following has the highest level of authority?a. AICPA literature if specifically made applicable to state and local governments by the AICPA (and cleared by the GASB).b. GASB Technical Bulletins.c. GASB Implementation
What is Electronic Municipal Market Access, or EMMA?a. A library-based service that provides information about state and local governments that have issued debt.b. A fee-based service that provides information to investors and credit analysts about government bond issues.c. An online service that
Which of the following factors is not considered by the rating agencies when conducting a ratings assessment?a. The entity’s demographics.b. The entity’s debt and other obligations.c. The economy.d. The entity’s management.
Which of the following could be viewed as a signal of increasing fiscal stress?a. Increasing education level.b. Increasing number of households at the poverty level.c. Increasing population age.d. Increasing demand for building permits.
Which of the following would be considered a negative indicator when conducting a financial analysis?a. Property values that have remained unchanged over the last three years.b. An increase in defined pension benefits offered to employees.c. An increase in capital expenditures for necessary
Which of the following statements concerning the revenues/expenditures ratio is correct?a. A ratio of 1.1 is an indicator of very strong performance.b. A ratio of 1.1 is an indicator of weak performance.c. A ratio of 1.1 is an indicator of average performance.d. A ratio of 1.1 is an indicator of
When interpreting the debt service percent (ratio), which of the following statements is a correct interpretation?a. A value of 25 percent is considered a warning sign related to fiscal stress.b. A value of 15 percent is considered a warning sign related to fiscal stress.c. A value of 10 percent is
When interpreting the fund balances measure, which of the following is correct?a. A ratio of 5 percent or better is considered adequate.b. A ratio of 15 percent is considered strong.c. A ratio of between 5 and 15 percent is considered average.d. A ratio of between 10 and 25 percent is considered
Rating agencies, such as FitchRatings, Moody’s Investor Service, KBRA, and Standard & Poor’s, produce bond ratings thata. Are created using the exact same measures and weights.b. Allow users to know how much better one issuing entity’s financial condition is than another’s.c. Focus both on
Which of the following conditions could signal decreasing fiscal stress?a. Increasing unemployment.b. Decreasing property values.c. Increasing revenues relative to expenditures.d. Increasing levels of unfunded pension obligations and other postemployment retirement benefits.
Which of the following would be an effective means of benchmarking?a. Comparing a city’s key ratios to those of special purpose governments in the area.b. Comparing current-period ratios to published medians of the same ratios for cities of similar size or in the same geographic region.c.
Which of the following environmental factors impacts the demand for services and the government’s ability to provide services?a. Community needs and resources.b. Political culture.c. Intergovernmental constraints.d. Management practices and legislative policies.
According to the ICMA, which of the following comprises financial condition?a. Cash solvency and budgetary solvency.b. Cash solvency, budgetary solvency, long-term solvency, and servicelevel solvency.c. Cash solvency, long-term solvency, and risk solvency.d. Budgetary solvency and service-level
Why does the GASB prefer to use the term economic condition rather than financial condition?a. Economic condition considers the probability that the government will meet both financial and service obligations currently and in the future, but financial condition does not.b. Financial condition does
Which of the following terms or concepts focuses primarily on a government’s ability to generate enough revenues to cover expenditures without incurring a deficit?a. Interperiod equity.b. Financial position.c. Budgetary solvency.d. Cash solvency.
Evaluation of government financial performance is important for which of the following reasons?a. Credit analysts use it to determine whether bonds should be issued.b. Investors use it to make decisions about bond investments.c. Oversight bodies use it to develop new laws.d. Managers use it to
Which of the following statements concerning popular reports is true?a. Similar to the CAFR, the reports are subject to audit.b. Information presented in popular reports is a simple summary of the CAFR.c. Popular reports are easier to read and understand than a CAFR.d. The Government Finance
The GASB Financial Reporting Project has the potential to primarily do which of the following?a. Affect how governmental funds are reported.b. Affect how governmental activities are reported.c. Affect how proprietary funds are reported.d. Change the number and type of notes to the financial
The city manager set aside $100,000 during the current fiscal year to extend the city’s bike trails during the next fiscal year. How would the fund balance be classified for the $100,000 at the end of the current fiscal year?a. Committed.b. Assigned.c. Restricted.d. Unassigned.
A city established a special revenue fund for federal Department of Transportation funds that are to be used for street construction, maintenance, and repair. How would the fund balance for the special revenue fund be classified?a. Committed.b. Assigned.c. Restricted.d. Unassigned because this
A positive unassigned fund balance can be found in which of the following funds?a. Special revenue fund.b. Debt service fund.c. General fund.d. All of the above.
Which of the following would not be included as a reconciling item in reconciling the governmental funds statement of revenues, expenditures, and changes in fund balances to the government-wide statement of activities?a. Bond principal payment reported as an expenditure in a governmental fund.b.
What are intra-entity transactions?a. Nonexchange transactions between a primary government and its component units.b. Exchange or nonexchange transactions between a primary government and its component units.c. Nonexchange transactions between a primary government and any discretely presented
Which of the following require a statement of changes in net position?a. Fiduciary funds.b. Government-wide financial statements.c. All governmental funds.d. Both proprietary funds and fiduciary funds.

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Accounting For Governmental And Nonprofit Entities 19th Edition Suzanne Lowensohn, Daniel Neely, Jacqueline Reck - Solutions

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