Government > QUESTIONS & ANSWERS > Governmental and Non-profit Accounting Exam #1 Test Bank Study Questions and 100%correct answers (All)
Which of the following is a distinguishing characteristic of a nonprofit organization? a. Its revenues do not exceed its expenses b. There is an absence of ownership interests that can be sold, tran... sferred, or redeemed c. It does not depreciate its capital assets d. It does not charge fees for any of its services Answer: B Rationale: Nonprofit organizations, unlike business enterprises, lack ownership interests. Therefore, they do not engage in ownership-type transactions, such as issuing stock and paying dividends. Topic: Operating Environment LO: 1 2. Which of the following activities is performed by state and local governments but not nonprofit organizations? a. Issuing federal tax-exempt debt b. Receiving grants c. Preparing budgets d. Providing services to constituents Answer: A Rationale: A unique characteristic of state and local governments is that they can issue debt whose interest is free of federal income tax. State and local governments and nonprofit organizations receive grants, prepare budgets, and provide services to constituents. Topic: Operating Environment LO: 1 3. Which of the following is a reason that governmental accounting is different from business accounting? a. Governments provide services. b. Governments are expected to have a long-life. c. Governments have budgets. d. Governments may have liabilities Answer: B Rationale: The long-life of governments, as compared to business enterprises, is a reason that governmental accounting is different. To illustrate, the GASB allows the difference between projected and actual earnings for pension investments to be reported as either as deferred inflows of resources or deferred outflows of resources and recognized as an expense over a fiveyear period rather than being reported immediately as an expense. This will be discussed in more detail in Chapter 8. 1 Topic: Operating Environment LO: 1 4. Most of the revenues obtained by most governments come from: a. Taxes b. Sales of goods or services c. Borrowing d. All of the above. Answer: A Rationale: Governments obtain most of their revenues from various types of taxes. Of course, borrowing does not result in revenue. Although a few governments obtain a large portion of their revenues from the sale of goods or services—such as a government-owned utilities or hospitals —the largest source of revenues for states, cities, counties, and most other governments is taxes. Topic: Operating Environment LO: 1 5. Which of the following is a major source of resources for many nonprofits, but not for businesses or governments? a. Donor contributions b. Taxes c. Sales of goods to consumers d. Sale of stock Answer: A Rationale: Donor contributions are significant source of revenues for many nonprofits. Some governments receive donations, but generally, not to the extent of nonprofits. A government’s major source of revenue generally is various types of taxes. Businesses receive most of their revenue from the sale of goods or services. Topic: Operating Environment LO: 1 6. A nonprofit organization performs all of the following activities except a. Charging a fee for services provided b. Paying dividends to shareholders c. Purchasing long-lived (capital) assets d. Paying overtime to employees Answer: B Rationale: Nonprofit organizations, unlike business enterprises, lack ownership interests. Therefore, they do not engage in ownership-type transactions, such as issuing stock and paying dividends. [Show More]
Last updated: 1 year ago
Preview 1 out of 53 pages
Connected school, study & course
About the document
Uploaded On
Oct 03, 2021
Number of pages
53
Written in
This document has been written for:
Uploaded
Oct 03, 2021
Downloads
0
Views
57
In Browsegrades, a student can earn by offering help to other student. Students can help other students with materials by upploading their notes and earn money.
We're available through e-mail, Twitter, Facebook, and live chat.
FAQ
Questions? Leave a message!
Copyright © Browsegrades · High quality services·