The Government and Not-For-Profit Environment

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Chapter 1 The Government and Not-For-Profit Environment TRUE/FALSE (CHAPTER 1) 1. F The main objective of a typical governmental or not-for-profit entity is to earn a profit. 2. TA government’s budget may be backed by the force of law. 3. FGovernmental entities have no need for an accounting system. 4. TA government’s internal managers rely on general purpose financial statements for a considerable amount of information about their government. 5. FGovernments and not-for-profits may never engage in business-type activities. 6. TLenders use the financial statements of governments and not-for profits just as they would those of businesses, that is, to help assess the borrower’s credit-worthiness. 7. TFinancial…show more content…
a) All of the resources owned by the governmental entity. b) All of the resources which may be summoned by a governmental entity. c) Demographic data about the residents served by the governmental entity. d) All of the above. 11. Which of the following is common to both governments and not-for-profit entities but distinguishes these entities from for-profit entities? a) The budget is a legal, financial document. b) Revenues are usually indicative of demand for goods or services. c) There is direct matching of revenues and expenses. d) There are no defined ownership interests. 12. Which of the following is NOT a purpose of external financial reporting by governments? External financial reports should allow users to a) Assess financial condition. b) Compare actual results with the budget. c) Assess the ability of elected officials to effectively manage people. d) Evaluate efficiency and effectiveness. 13. Which of the following is NOT a reason why users need governmental and not-for-profit external financial statements? a) To determine the ability of the entity to meet its obligations. b) To determine the ability of the entity to continue to provide services. c) To predict future fiscal solvency. d) To evaluate the overall profitability of the

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