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Governmental & Not-for-Profit Accounting Flashcards

7 cards from real CPA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. Which accounting standard-setting body establishes accounting and financial reporting standards for state and local governments in the United States?

    Answer: GASB

    The Governmental Accounting Standards Board (GASB) is the authoritative standard-setter for state and local government financial reporting in the U.S.

  2. Under GASB standards, what is the primary measurement focus for governmental fund financial statements?

    Answer: Current financial resources

    Governmental fund statements use the current financial resources measurement focus, reporting only current assets and current liabilities.

  3. Which basis of accounting is used for governmental fund financial statements?

    Answer: Modified accrual basis

    Governmental fund statements use the modified accrual basis, recognizing revenues when measurable and available, and expenditures when the related liability is incurred.

  4. A city receives a grant that can only be used for road repairs. How should this grant be reported in governmental fund accounting?

    Answer: Special Revenue Fund revenue

    Restricted grants designated for a specific purpose are reported in a Special Revenue Fund, which accounts for resources legally restricted to particular purposes.

  5. Under GASB Statement No. 34, government-wide financial statements are presented using which basis of accounting?

    Answer: Full accrual

    GASB 34 requires government-wide statements to use the full accrual basis and economic resources measurement focus, similar to business-type accounting.

  6. Which of the following is classified as a proprietary fund type under GASB standards?

    Answer: Enterprise Fund

    Enterprise Funds are proprietary funds used to account for activities financed primarily through user charges, similar to business operations.

  7. In a not-for-profit organization following FASB ASC 958, net assets are classified into which two categories?

    Answer: With donor restrictions and without donor restrictions

    ASU 2016-14 (FASB ASC 958) simplified net asset classification to two categories: with donor restrictions and without donor restrictions.