ACCY 407 EXAM 1. Top Questions & Answers. Graded A+

ACCY 407 EXAM 1. Top Questions & Answers. Graded A+ CH 1 - - Types of Governments General purpose governments: -Provide a broad array of services -Examples: Federal government, state governments, cities, towns, townships, villages, counties, boroughs, and parishes Special purpose governments: -Usually provide only a single or just a few services -Examples: independent school systems, public colleges and universities, public hospitals, fire protection districts, sewer districts, transportation authorities - - Not- For- Profit Organizations -Legally separate organizations -Usually exempt from federal, state, and local taxation -Religious, community service, private educational and health care, museums, and fraternal and social organizations, among many other kinds of organizations - -Own separate entity from people who give them money "private" normally set up for not for profits EX: ole miss (special purpose) harvard (not for profit) Compared to Business Organizations -Characteristics distinguishing STATE AND LOCAL GOVERNMENTS and non-profits from business organizations (SFAC 4): -Receipts of significant amounts of resources from resource providers who do not expect to receive either repayment or economic benefits proportionate to the resources provided. -Operating purposes that are other than to provide goods or services at a profit or profit equivalent. -Absence of defined ownership interests that can be sold, transferred, or redeemed, or that convey entitlement to a share of a residual distribution of resources in the event of liquidation of the organization. - -Providers: resources= assets. Organizations are getting assets from providers. Providers do not expect money back. NOT equal value in exchange Operating Purposes: governments / not profits---- not doing it for "profit" Absence of Ownership: Defined ownership interest- shares- a share defines your ownership interest. NO shares or ownership in not for profit Redeem a share- go to company and give company the shares and you will get money back (ONLY for preferred shares) Share defines how much you will get if company dissolves Residual distribution- whatever is left of assets after you have paid off all your liabilities. What you will get after everything is left over ^ none of this a thing for government and not for profits Difference Between Governments and Not for Profits Organizations For governmental entities -Power ultimately rests in the hands of the people --People delegate power to public officials through the election process -Empowered by and accountable to a higher level government -Taxation powers - -Not For Profits: Power in Board of Trustees Don't have taxation powers Sources of GAAP and Financial Reporting Standards FASB - Financial Accounting Standards Board -Business organizations -Nongovernmental not-for-profits GASB - Governmental Accounting Standards Board -State and local governmental organizations -Governmental not-for-profits FASAB -Federal Accounting Standards Advisory Board -Federal government, its agencies and departments - -Harvard (FASB) Ole Miss (GASB) Objectives of Financial Reporting Business Organizations SFAC 1 (superseded by SFAC 8): Provide useful information for making investment (equity--- do I buy ownership)and credit (debt--- do I lend money?decisions -FASB used to not treat credit decisions as investments- it does now -Allowing users to