SOLUTION MANUAL For Government and Not-
for-Profit Accounting
How do Government & Not-for-Profit practices differ from business practices? - ANSWERS-
Different purposes in society
- Management has special duty to be accountable for how resources are used in providing
services
- Financed by providers who do not expect benefits proportional to the resources they provide.
What are the two type of governments and what services do they provide? - ANSWERS1)
General Purpose
- Federal, state, and local governments
2) Special purpose
- School systems, public colleges, universities,
hospitals, fire protection districts, etc.
Characteristics of Government and Not-for-Profit Organizations - ANSWERS- Organization lacks
profit motive
- Absence of Transferable Ownership Rights
Characteristics of Government - ANSWERS- Power rests in the hands of the people
- People delegate power to public officials through elections
- Empowered by and accountable to a higher level government
- Power to tax
FASAB - ANSWERSFinancial Accounting Standards Accounting Board
,- Federal Government and its agencies and departments
GASB - ANSWERSGovernmental Accounting Standards Board
- State and local governments and governmental not-for-profits
FASB - ANSWERSFinancial Accounting Standards Board
- Business organizations and non-governmental not-for profits
Accountability - ANSWERSThe requirement of governments to answer to citizens to justify the
raising of public resources and the purposes for which they are used.
Inter-period Equity - ANSWERSA government's obligation to disclose whether current-year
revenues were sufficient to pay for current-year benefits or will future taxpayers be required to
pay for them instead?
What are governmental financial reports primarily used for? - ANSWERS- To COMPARE actual
financial results with the legally adopted budget
- To ASSESS financial conditions and results of operations
- To ASSIST in determining compliance with finance-related laws, rules, and regulations.
- To EVALUATE efficiency and effectiveness
What are the two types of governmental financial statements? - ANSWERS1) Government Wide
- Aggregate Overview of Net Position and
Change in Net Position
2) Fund
- Detailed Financial Information
, Characteristics of Government Wide Financial Statements - ANSWERS- Operational
Accountability: Whether the government has used its resources efficiently and effectively in
meeting service objectives.
- Focuses on flow of economic resources
- Uses the accrual basis of accounting
Characteristics of Fund Financial Statements - ANSWERS- Fiscal Accountability: Whether the
government raised and spend financial resources in accordance with budgetary legal and
regulatory constraints.
- Uses the modified accrual basis of accounting
Modified Accrual - ANSWERS- Revenues recognized when measurable and available for
spending
- Expenditures recognized when an obligation is incurred that will be paid from currently
available financial resources.
CAFR - ANSWERSComprehensive Annual Financial Report
- Provides more detail than required
- Prepared in conformity with GASB
What are the three sections of the CAFR and what does each section contain? - ANSWERS1)
Introductory
- Title Page
- Table of Contents
- Letter of Transmittal
2) Financial
- Auditor's Report
- Management's Discussion and Analysis
for-Profit Accounting
How do Government & Not-for-Profit practices differ from business practices? - ANSWERS-
Different purposes in society
- Management has special duty to be accountable for how resources are used in providing
services
- Financed by providers who do not expect benefits proportional to the resources they provide.
What are the two type of governments and what services do they provide? - ANSWERS1)
General Purpose
- Federal, state, and local governments
2) Special purpose
- School systems, public colleges, universities,
hospitals, fire protection districts, etc.
Characteristics of Government and Not-for-Profit Organizations - ANSWERS- Organization lacks
profit motive
- Absence of Transferable Ownership Rights
Characteristics of Government - ANSWERS- Power rests in the hands of the people
- People delegate power to public officials through elections
- Empowered by and accountable to a higher level government
- Power to tax
FASAB - ANSWERSFinancial Accounting Standards Accounting Board
,- Federal Government and its agencies and departments
GASB - ANSWERSGovernmental Accounting Standards Board
- State and local governments and governmental not-for-profits
FASB - ANSWERSFinancial Accounting Standards Board
- Business organizations and non-governmental not-for profits
Accountability - ANSWERSThe requirement of governments to answer to citizens to justify the
raising of public resources and the purposes for which they are used.
Inter-period Equity - ANSWERSA government's obligation to disclose whether current-year
revenues were sufficient to pay for current-year benefits or will future taxpayers be required to
pay for them instead?
What are governmental financial reports primarily used for? - ANSWERS- To COMPARE actual
financial results with the legally adopted budget
- To ASSESS financial conditions and results of operations
- To ASSIST in determining compliance with finance-related laws, rules, and regulations.
- To EVALUATE efficiency and effectiveness
What are the two types of governmental financial statements? - ANSWERS1) Government Wide
- Aggregate Overview of Net Position and
Change in Net Position
2) Fund
- Detailed Financial Information
, Characteristics of Government Wide Financial Statements - ANSWERS- Operational
Accountability: Whether the government has used its resources efficiently and effectively in
meeting service objectives.
- Focuses on flow of economic resources
- Uses the accrual basis of accounting
Characteristics of Fund Financial Statements - ANSWERS- Fiscal Accountability: Whether the
government raised and spend financial resources in accordance with budgetary legal and
regulatory constraints.
- Uses the modified accrual basis of accounting
Modified Accrual - ANSWERS- Revenues recognized when measurable and available for
spending
- Expenditures recognized when an obligation is incurred that will be paid from currently
available financial resources.
CAFR - ANSWERSComprehensive Annual Financial Report
- Provides more detail than required
- Prepared in conformity with GASB
What are the three sections of the CAFR and what does each section contain? - ANSWERS1)
Introductory
- Title Page
- Table of Contents
- Letter of Transmittal
2) Financial
- Auditor's Report
- Management's Discussion and Analysis
