Accounting for Governmental and Nonprofit Entities, 18e (Reck)
1) Responsibility for setting accounting and reporting standards for federal agencies rests
primarily with the Federal Accounting Standards Advisory Board.
2) By law, federal agencies must incorporate the accounting standards (GAAP) established for the
federal government into their financial management systems.
3) The objectives of federal financial reporting are to assist report users in evaluating budgetary
integrity, operating performance, stewardship, and adequacy of systems and controls.
4) Federal departments and agencies should utilize the U.S. Government Standard General Ledger
as the account structure for their accounting systems.
5) Fund balances of a federal agency’s various funds are reported in the fund equity section of the
agency’s balance sheet.
6) An expended appropriation occurs when cash has been disbursed to pay for a good or service.
7) Unexpended appropriations is the component of net position in a federal agency balance sheet
that represents the amount of appropriations still available for obligation, or which has been
obligated but not yet expended.
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8) Cumulative results of operations is the component of net position in a federal agency balance
sheet that represents the amount of appropriations still available for obligation, or which has been
obligated but not yet expended.
9) The federal budgetary term “commitment” is synonymous with “appropriations” as used in state
and local government terminology.
10) The financial statements of the U.S. government are prepared using generally accepted
accounting principles promulgated by the Governmental Accounting Standards Board.
11) Federal government agencies prepare a management’s discussion and analysis (MD&A) to be
included in their general purpose federal financial report.
12) Under SFFAC No. 2, all federal agencies are defined as separate reporting entities for financial
statement preparation and reporting purposes.
13) Objectives that are identified by SFFAC No. 1 for federal financial reporting include budgetary
integrity, operating performance, transparency, and stewardship.
14) Heritage assets are defined as beneficial investments of the federal government in items such
as nonfederal physical property, human capital, and research and development.
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15) At the present time, the conceptual framework for the federal government and its agencies
does not provide definitions of the basic elements of the financial statements.
16) Similar to state and local governments, the federal government uses funds to demonstrate
funds are being used for their intended purposes.
17) Social Security is an example of a trust fund administered by the federal government.
18) The purpose of revolving funds of the federal government is similar to that of proprietary funds
of state and local governments.
19) According to FASAB, entity assets are defined as those assets arising from transactions
between federal entities.
20) An example of a federal government general property, plant, and equipment asset would be
Yellowstone National Park.
21) Stewardship assets are reported as a classification within the property, plant, and equipment
section of the federal balance sheet.
22) The fund balances of a federal reporting entity should be separated into unexpended
appropriations, restricted appropriations, and cumulative fund balance.
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23) When an appropriation is passed a federal agency would record entries in both the budgetary
and the proprietary track accounts.
24) A federal agency does not record depreciation expense.
25) A federal agency only records entries in the proprietary track accounts for supplies inventory.
26) Which of the following is not a fund group used by the federal government?
A) General Fund.
B) Permanent Fund.
C) Special Fund.
D) Trust Fund.
27) Which of the following is not a part of the FASAB due process for establishing a federal
financial accounting standard?
A) Public comment on a discussion memorandum.
B) Issuing an exposure draft.
C) Unanimous approval by the FASAB.
D) Support (or lack of opposition) of the standard by the three principals (Comptroller General,
Secretary of the Treasury, and Director of the Office of Management and Budget).
28) As identified by FASAB, which of the following are major user groups of federal financial
reports?
A) Congress, executives, program managers, and citizens.
B) Congress, executives, citizens, and municipal rating agencies.
C) Congress, program managers, foreign governments, and citizens.
D) Congress, program managers, bond rating agencies, and political parties.
29) The “net position” of a federal agency may include all of the following components, except:
A) Unexpended appropriations.
B) Cumulative results of operations.
C) Appropriations represented by undelivered orders and unobligated balances.
D) Fund balance with U.S. Treasury.
30) Which of the following is not an objective identified in FASAB Statement of Accounting and
Reporting Concepts No. 1 ?
A) To assist report users in evaluating budgetary integrity.
B) To assist report users in evaluating the extent to which tax burdens have changed.
C) To assist report users in evaluating stewardship.
D) To assist report users in evaluating operating performance.
31) Which of the following statements most accurately describes the dual-track accounting system
used in federal agency accounting?
A) Recording internal budgetary transactions and proprietary transactions with external parties on
a modified accrual basis of accounting.
B) Use of double-entry accounting.
C) Maintaining self-balancing sets of proprietary and budgetary accounts and recording the effects
of transactions on both available budgetary resources and proprietary accounts.
D) Keeping separate books, one on a tax basis and the other on a GAAP basis.
32) Under federal government accounting, recording the estimated amount of equipment prior to
actually placing an order or entering into a contract is called a(an):
A) Obligation.
B) Apportionment.
C) Commitment.
D) Allotment.