29 Questions
What are some similarities between Government and Not-for-Profit entities and Business entities?
Both are part of the same economy, both need resources to operate, both need a viable information system, both need cost analysis and evaluation techniques.
What are some differences between Government/Not-for-Profit entities and Business entities?
Organizational objectives, source of financial resources, regulation and control, ownership interest, cost-benefit relationship, and scope of operation.
Which bodies set standards for for-profit business organizations and nongovernmental not-for-profit organizations?
FASB (Financial Accounting Standards Board)
Who sets standards for state and local governments, including governmental not-for-profit organizations?
GASB (Governmental Accounting Standards Board)
Which organization recommends accounting principles and standards for the federal government and its agencies and departments?
Federal Accounting Standards Advisory Board (FASAB)
What are the GASB and FASB referred to as in the private sector?
Independent standards-setting boards
Who were the forerunners of the FASB before it was formed in 1973?
The Accounting Principles Board and The Committee on Accounting Procedure
Which bodies are responsible for establishing Generally Accepted Accounting Principles (GAAP) for state and local governments, the federal government, and business organizations and nongovernmental not-for-profit organizations respectively?
GASB, FASAB, and FASB
Who are the major external users of financial reports for government and not-for-profit entities?
Resource providers like taxpayers, donors, investors, bond-rating agencies, and grant-providing organizations
Who are considered internal users of accounting information for government and not-for-profit entities?
Managers and employees
What were the roles of the Accounting Principles Board and The Committee on Accounting Procedure?
Establishing accounting principles and standards
What is the basis of accounting that has evolved for governmental funds?
Modified accrual
When are revenues recorded under the modified accrual basis of accounting?
When they are measurable and available for paying current period obligations
When are expenditures generally recognized under the modified accrual basis of accounting?
When incurred
Why are expenditures reported in the governmental fund statement of revenues, expenditures, and changes in fund balances?
Outlays to acquire goods or services are more relevant than expenses in measuring the outflow of current financial resources
At the government-wide level, what financial metric is more relevant than expenditures?
Expenses
Why are expenses, classified by program or function, reported for both governmental and business-type activities?
To measure the cost of services provided
What is the primary purpose of financial reporting for the Federal Government?
To help in making economic, social, and political decisions and in assessing accountability.
What are the key objectives of financial reporting for State and Local Governments?
Comparing actual financial results, assessing accountability, and assisting in determining compliance with finance-related laws, rules, and regulations.
What information should financial reporting provide for Not-for-Profit Organizations?
Information useful for making resource allocation decisions, assessing services, management stewardship and performance, and economic resources.
How do the FASB and GASB differ in their approach to standards?
The FASB and GASB base their standards only on external financial reporting, while the FASAB and federal government focus on both internal and external financial reporting.
What is the key focus of financial reporting for the Federal Government compared to other entities?
Making economic, social, and political decisions and assessing accountability.
What is the main purpose of financial reporting for State and Local Governments in terms of compliance?
Assisting in determining compliance with finance-related laws, rules, and regulations.
What does the Statement of Revenues, Expenses, and Changes in Fund Net Position report?
Revenues, expenses, gains, losses, and changes in net position for the fiscal period.
What is the purpose of Fiduciary Funds?
To account for resources held by the government in a trustee or agency capacity.
What does the Statement of Fiduciary Net Position show?
Assets, liabilities, and net position (equity) of the fund.
What information does the Statement of Changes in Fiduciary Net Position report?
Additions (contributions) and deductions (benefits paid) to the fund, investment income, and changes in net position.
How do Government fund statements differ from Government-wide financial statements?
Government fund statements focus on current financial resources and near cash resources, while Government-wide statements provide a broader perspective on the overall financial health.
Why are long-term obligations and noncurrent assets not reported in governmental funds?
Because they do not have to be paid in the current budgetary period and do not provide resources for current-period obligations.
Explore the different financial reporting objectives of State and Local Governments, Federal Government, and Not-for-Profit Organizations. Understand how financial reporting is used in decision-making and accountability assessments in various levels of government and non-profit sector.
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