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What are the 4 characteristics of a governmental orginization?
  • The majority of their governing body is popularly elected OR the controlling majority of their governing body is appointed or approved by governmental officials.
  • They have the power to enact and enforce a tax levy
  • They can issue debt whose interest is texempt from federal taxation
  • They face the potential that a government might dissolve them unilaterally and assume their assets and liabilities.
What are the major environmental differences between government and enterprise?
  • organizational purpose
  • sources of revenue
  • potential for ongevity
  • relationship with stakeholders
  • role of the budget
What do governmental and not-for-profit organizations exist for?
They exist to provide service to their constituents. They generally try to accumulate a reasonable surplus of financial resources to cushion against econimic contractions and to provide for emergency needs. THEY DON'T EXIST TO MAXIMIZE INFLOWS OVER OUTFLOWS
What is the challenge to financial reporting in Government?
Demonstrating accountability for the resources entrusted to the organizations.
The GASB encourages state and local governments to report on?
Outputs and outcomes. Performance and Accountability report is required by the federal government.
What is the main source of revenue for government?
Taxes! Resources are transfered for a basket of services that may or may not bear a direct relationship to what the taxpayer wants or needs.
Why do governmental accounting stardards-setters tend to take a longer-term perspective than their business enterprise counterparts in developing accounting measures for certain types of transactions?
Because general-purpose governments rarely go out of business and are not bought and sold like business enterprises.
Governmental entities are required by law to provide certain services? True or False
Budgetary appropriations can typically be exceeded without specific legislative approval? True or False
What is the focus for the internal accounting for governmental and not-for profit organizations?
The focus is on CONTROLS needed to ensure legal compliance. The accounting is conservative in nature and is designed to make sure that the spending amounts authorized by the legally adopted budget are not exceeded and that expenditures meet the purpose of bond issue or spending restrictions imposed by grantors and donors.
Who are the major external users of governmental and not-for profit financial reports?
  • Resource providers (taxpayers,donors and potential donors, investors and potential investors, bond rating agencies, grant providing organizations)
  • oversight bodies (higher level governments and regulatory agencies)
  • service recipients (citizen advocate groups)
Users of governmental financial statements might use the accounting information to?
  • determine the likelihood of repaying short-term and long-term debt
  • determine the likelihood of continuing to provide a particular level of service
  • determine the availability of resources to cushion against economic downturns
  • determine whether the organization has complied with restrictions on the use of resources
  • determine the extent to which existing resource levels are free from restrictions as to use
GASB requires both entity-wide and _____-_____ reporting.
Who sets Financial Reporting Standards?
This type of accounting segregates an entity's assets, liabilities, and net assets into seperate accounting entities based on legal restrictions, donor-imposed restrictions, or special regulations?
Fund accounting is a convenient control mechanism to help ensure that resources are spent for the intended purposes? True or False
Because each fund is a seperate accounting entity, each must have a set of ____ _________ ________.
Self Balancing accounts
Refers to when assets, liabilities, revenues, and expenses are recognized?
Basis of accounting
Hybrid-type basis of accounting that is used by state and local governments for governmental type funds?
Modified accrual basis of accounting.They measure only inflows and outflows of current financial resources.
Unique characteristics of SLG reporting

  • Use of Fund Accounting
  • Incorporation of Budgets in Accounting Systems
  • Measurement Focus and Basis of Accounting
  • Entity Wide and Fund-Level Reporting
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