Govt Accounting Study Guide

The organization that establishes accounting and financial reporting standards for the federal government is the:

1. Governmental Accounting Standards Board (GASB).
2. Federal Accounting Standards Advisory Board (FASAB).
3. Financial Accounting Standards Board (FASB).
4. Cost Accounting Standards Board (CASB).

Feedback: The FASAB is the body recognized by the American Institute of CPAs to establish accounting and financial reporting standards for the federal government. According to the FASAB hierarchy, the FASAB is the only body authorized to establish GAAP for the Federal Government.

The Governmental Accounting Standards Board (GASB) has the authority to set accounting and financial reporting standards for all of the following except:

1. Governmental not-for-profit organizations.
2. State and local governments.
3. Public colleges and universities.
4. The federal government and its agencies and departments.

Feedback: Choice 3 may look like a good choice, but choice 4 is the only correct choice since the GASB does not set standards for the federal government. Public colleges and universities are not-for-profit components of state or local governments or stand-alone governments in their own right.

Which of the following concepts is the cornerstone of governmental financial reporting?

1. Relevance.
2. Interperiod equity.
3. Accountability.
4. Liquidity.

Depreciation expense on general capital assets may be reported on the government-wide statement of activities as:

1. A direct expense of a function or program.
2. An indirect expense that can either be allocated to functions or programs on some appropriate basis, such as square footage of building use, or be reported on a separate line on the statement of activities.
3. Either A or B, as applicable.
4. None of the above. Depreciation expense is not reported for general capital assets.

Feedback: As noted in this chapter, depreciation expense generally is recorded and reported as a direct expense on the appropriate line for the related function or program. Or it can be an indirect expense that is allocated on a rational basis to the appropriate functions or programs. Finally, if there is no rational basis for allocating depreciation to functions or programs, a government may report depreciation expense as a separate line-item. In this case, there should be a note explaining that this line does not include depreciation reported as direct expenses of functions or programs.