Principles of Government and Nonprofit Organizations
Chapter Exam Questions
Course Introduction
This course provides an in-depth exploration of the foundational principles governing the operation and management of government and nonprofit organizations. Students will examine the key concepts, structures, and functions that distinguish these sectors from the private sector, including accountability, public value, transparency, and mission-driven service. Topics cover the legal and regulatory environment, governance frameworks, budgeting and financial management, ethics, and the role of leadership in shaping organizational objectives. Through case studies and practical applications, students will gain a comprehensive understanding of how government and nonprofit entities address public needs and challenges in dynamic, resource-constrained environments.
Recommended Textbook
Essentials of Accounting for Governmental and Not for Profit Organizations 9th
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13 Chapters
1497 Verified Questions
1497 Flashcards
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Page 2
Edition by Paul Copley
Chapter 1: Introduction to Accounting and Financial
Reporting for Governmental and Not-For-Profit Organizations
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Which of the following funds requires a Budgetary Comparison Schedule?
A) Enterprise Funds
B) Internal Service Funds
C) Investment Trust Funds
D) General Fund
Answer: D
Q2) Which of the following is true regarding the government-wide Statement of Net Assets?
A) Discretely presented component units are included in a separate column (or columns)
B) Net assets are broken down into three categories: invested in capital assets, reserved and unreserved
C) Both of the above
D) Neither of the above
Answer: A
Q3) Governmental-Wide financial statements use the economic resources measurement focus and the accrual basis of accounting.
A)True
B)False
Answer: True Page 3
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Page 4
Chapter 2: Overview of Financial Reporting for State and Local Governments
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Sample Questions
Q1) Under GASB Statement 34, capital assets:
A) Must be reported in government-wide statements but are not reported in any of the fund financial statements
B) Must be reported in government-wide statements and in proprietary fund financial statements
C) Are not to be reported in either government-wide or fund financial statements
D) Are to be reported but not depreciated in government-wide and fund financial statements
Answer: B
Q2) Contrast revenue recognition under the accrual and modified accrual bases of accounting.
Answer: Under modified accrual accounting, revenues should be recognized when measurable and available to finance expenditures of the current period. Under accrual accounting, revenues are recognized when earned and realizable.
Q3) The GASB recently published a white paper outlining prohibited transactions for not-for-profit organizations.
A)True
B)False
Answer: False
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Chapter 3: Modified Accrual Accounting: Including the Role of
Fund Balances and Budgetary Authority
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Sample Questions
Q1) Expenditure classification by character includes current, capital outlay and debt service.
A)True
B)False
Answer: True
Q2) Revenues of governmental fund types should be recognized when:
A) Collected in cash
B) Authorized by the budget ordinance
C) Taxes become delinquent
D) Measurable and available
Answer: D
Q3) When a computer which is to be used by an activity accounted for by the General Fund of a governmental unit is received, it should be recorded in the General Fund as a(an):
A) Expenditure
B) Appropriation
C) Encumbrance
D) Capital asset
Answer: A
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Chapter 4: Accounting for the General and Special Revenue Funds
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Sample Questions
Q1) The city of Canandaigua receives proceeds from the sale of land, the transaction is considered to be a special item. The proceeds are:
A) Reported as a revenue
B) Reported separately after other financing sources and uses
C) Reported as an item that changes the Fund Balance
D) Not recorded but the gain on the sale is
Q2) When closing the books for the General Fund, an excess of revenues over expenditures and encumbrances would be credited to Fund Balance-Unreserved.
A)True
B)False
Q3) When recording property taxes, the estimated uncollectible amount of property taxes is:
A) Recognized as an expenditure
B) Recognized as a reduction of revenue
C) Not recognized
D) None of the above
Q4) In the General Fund, revenues are recognized when earned and measurable.
A)True
B)False
7
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Chapter 5: Accounting for Other Governmental Fund Types:
Capital Projects, Debt Service, and Permanent
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Sample Questions
Q1) Grant proceeds received from the state for a capital project would be recorded in a capital projects fund of a city government as a (an):
A) Revenue
B) Other Financing Source
C) Direct addition to Fund Balance
D) Other Financing Use
Q2) Debt service funds are used to account for the payment of principal and interest of both general and enterprise related long-term debt of a state or local governmental unit.
A)True
B)False
Q3) When accounting for interest expenditures through debt service funds, interest is normally recorded as an expenditure when due and payable; it is not accrued at year-end.
A)True
B)False
Q4) Budgets are typically not recorded for Debt Service Funds.
A)True
B)False
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Chapter 6: Proprietary Funds
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Sample Questions
Q1) A portion of the estimated cost of closure of solid waste landfills should be charged as an expense and a liability of the landfill operation each year on a:.
A) Actual cost method
B) Units-of-production method
C) Estimated cost method
D) None of the above
Q2) Which of the following is false regarding restricted net assets?
A) They are presented separately
B) May be the result of constraints imposed by creditors, grantors, contributors or laws or regulations of other governments
C) They can be imposed by law through constitutional provisions or enabling legislation
D) None, all of the above are true
Q3) Internal Service Funds account for activities that produce goods or services to be provided to outside customers on a cost reimbursement basis
A)True
B)False
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Chapter 7: Fiduciary Trust Funds
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Sample Questions
Q1) In an agency fund the government is acting as an agent for another entity and therefore they do not have rights to these types of funds.
A)True
B)False
Q2) What is the correct journal entry for a Tax Agency Fund to record tax levies of other governments certified to it?
A) Taxes Receivable - Current Revenues Control
B) Taxes Receivable - Current Due from Other Governments
C) Taxes Receivable Transfer Out
D) Taxes Receivable for Other Governments Due to Other Governments
Q3) Governments offering postemployment benefits to their retired employees must present two financial statements related to their plans: the Statement of Plan Net Assets and the Statement of Changes in Plan Net Assets, as well as additional required supplementary information.
A)True
B)False
Q4) What is a defined benefit pension plan?
Q5) What are the required statements and schedules for a pension trust fund?
Q6) What is a cost sharing state pension plan?
Page 10
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Chapter 8: Government-Wide Statements, Capital Assets,
Long-Term
Debt
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Sample Questions
Q1) Which of the following would NOT need to be addressed/adjusted in compiling the government-wide statements?
A) Principal repayment on general obligation bonds
B) Principal repayment on proprietary funded bonds
C) Interfund transfers
D) Interest accrual on general obligation bonds
Q2) To qualify as a collection, a donated or purchased item must meet all of the following conditions except:
A) Held for public exhibition, education or research to further public service
B) Protected, kept unencumbered, cared for and preserved
C) Subject to an organizational policy that requires th90e proceeds from sales of collection items to be used to acquire other collectibles
D) All of the above conditions must be met
Q3) Internal Service Funds are most commonly included in the business-type activities category of the government-wide statements.
A)True
B)False
Q4) With regard to the government-wide statements, list the required statements.
Page 11
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Chapter 9: Accounting for Special-Purpose Entities, Including
Public Colleges and Universities
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Q1) Which of the following would be true regarding the Statement of Net Assets for a public college reporting as a special purpose entity engaged in business type activities only?
A) A classified statement is required, separating current and long-term assets and liabilities
B) The two net asset categories are restricted and unrestricted
C) Both of the above are true
D) Neither of the above is true
Q2) Reimbursement grants require that the appropriate expenditure be made before the revenue can be recognized.
A)True
B)False
Q3) Public colleges who waive fees for graduate assistants must report tuition at the gross amount and expense the fees waived.
A)True
B)False
Q4) What are the required parts of the annual financial report for special-purpose local governments engaged only in business-type activities?
Page 12
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Chapter 10: Accounting for Private Not-For-Profit Organizations
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Sample Questions
Q1) Not-for-profit organizations are not required to record depreciation expense.
A)True
B)False
Q2) When expenses are recognized for a transaction and the not-for-profit possess funds restricted for transactions of that type, it is assumed that ______________.
A) Unrestricted Funds Are Used First
B) Funds Restricted for That Purpose are Used First
C) Permanently Restricted Funds Are Used First
D) Either Purpose Restricted Funds or Unrestricted Funds are Used First
Q3) Examples of voluntary health and welfare organizations would include the Girl Scouts and the American Heart Association.
A)True
B)False
Q4) Contributions to be paid in future periods should be recorded at present value.
A)True
B)False
Q5) All donated services are recognized as revenue.
A)True
B)False
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Chapter 11: College and University Accounting Private Institutions
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Sample Questions
Q1) A Charitable gift annuity is a split-interest agreement.
A)True
B)False
Q2) Private colleges and universities are required to present a Statement of Cash Flows.
A)True
B)False
Q3) With respect to colleges and universities, estimates of uncollectible accounts are accounted for as reductions in revenue rather than bad debt expense.
A)True
B)False
Q4) Under NACUBO guidelines, tuition waivers associated with student work study programs should be reported as:
A) Expenses
B) Reductions in revenue
C) Transfers
D) None of the above
Q5) How should the income earned by a private college's endowment be classified?
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Chapter 12: Accounting for Hospitals and Other Health Care
Providers
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Sample Questions
Q1) Both commercial and no-for-profit hospitals in the private sector follow FASB standards.
A)True
B)False
Q2) With respect to health care organizations, assets that have limited use are temporarily restricted on the balance sheet.
A)True
B)False
Q3) The AICPA Audit and Accounting Guide: Health Care Organizations applies to:
A) Private not-for-profit health care organizations
B) Governmentally owned health care organizations
C) Investor-owned health care organizations
D) All of the above
Q4) Investor owned health care organizations have the following equity section accounts:
A) Paid in capitals and retained earnings
B) Unrestricted, temporarily restricted or permanently restricted net assets
C) Invested in capital assets net of related debt, restricted and unrestricted net assets
D) Paid in capital, restricted and unrestricted net assets
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Chapter 13: Auditing, Tax-Exempt Organizations, and Evaluating Performance
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Sample Questions
Q1) Which of the following is not prohibited of organizations receiving tax exempt status under IRS Section 501(c)3?
A) Earning a profit (increase in net assets)
B) Endorsing political candidates or attempting to influence legislation
C) Distributing earnings to the benefit of members or officers
D) None of the above. All of these are prohibited of Tax Exempt organizations
Q2) The use of opinion units allows the auditor to
A) Only allow one opinion for entire entity not its components
B) Plan the audit better and increase the effectiveness of substantive procedures
C) Provide different opinions on different components of the reporting entity
D) Eliminate the need for Test of Controls
Q3) Entities that are tax exempt under Section 501(c)3 of the Internal Revenue Code do not have to pay income taxes, even if some of their activities compete with commercial enterprises.
A)True
B)False
Q4) What is an "opinion unit" and what are the five opinion units for state and local governments?
Q5) How is the Unrelated Business Income Tax computed?
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