solution manual for government and not for profit accounting with fully and latest updated with multiple choices(GRADE A+)

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Solution Manual for Government And Not For Profit Accounting
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f Concepts And Practices 9th Edition Michael H. Granof|Latest
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f Updated Version 2024. A+
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Chapter1 f




The Government and Not-For-Profit Environment
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Questions for Review and Discussion f f f f




1. The critical distinction between for-profit businesses and not-for-profits including
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governments is that businesses have profit as their main motive whereas the others have service. A
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primary purpose of financial reporting is to report on an entity‘s accomplishments — how well it
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achieved its objectives. Accordingly, the financial statements of businesses measure profitability,
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their key objective. Financial reports of governments and other not-for-profits should not focus on
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profitability, since it is not a relevant objective. Ideally, therefore, they should focus on other
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performance objectives, such as how well the organizations met their service goals. In reality,
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however, the goal of reporting on how well they have achieved such goals has proven difficult to
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attain and the financial reports have focused mainly on financially- related data.
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2. Governments and not-for-profits are ―governed‖ by the budget, whereas businesses are f f f f f f f f f f




governed by the marketplace. The budget is the key political and fiscal document of governments
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and not-for-profits. It determines how an entity obtains its resources and how it allocates them. It
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encapsulates most key decisions of consequence made by the organization. In a government the
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budget is not merely a managerial document; it is the law.
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3. Owing to the significance of the budget, constituents want assurance that the entity
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achieves its revenue estimates and complies with its spending mandates. They expect the
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financial statements to report on how the budget was administered.
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4. Interperiod equity is the concept that taxpayers of today pay for the services that they f f f f f f f f f f f f f f




receive and not shift the payment burden to taxpayers of the future. Financial reporting must
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indicate the extent to which interperiod equity has been achieved. Therefore, it must determine
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and report upon the economic costs of the services performed (not merely the cash costs) and of the
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taxpayers‘ contribution toward covering those costs.
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5. The matching concept may be less relevant for governments and not-for-profits than for
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businesses because there may be no connection between revenues generated and the quantity,
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quality or cost of services performed. An increase in the demand for, or cost of, services provided
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by a homeless shelter would not necessarily result in an increase in the amount of donations that it
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receives. Of course, governments and not- for-profits are concerned with measuring interperiod
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equity and for that purpose the matching concept may be very relevant.
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6. Governments must maintain an accounting system that assures that restricted resources are f f f f f f f f f f f




not inadvertently expended for inappropriate purposes. Moreover, statement users may need
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separate information on the restricted resources by category of restriction and the unrestricted
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resources. In practice, these requirements have led governments to adopt a system of ―fund‖
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accounting and reporting.
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7. Even governments within the same category may engage in different types of activities. For
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example, some cities operate a school system whereas others do not. Those that are not within the
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same category may have relatively little in common. For example, a state government shares few
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characteristics with a city.
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8. If a government has the power to tax, then it has command over, and access to, resources.
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Therefore, its fiscal well-being cannot be assessed merely by measuring the assets that it
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―owns.‖ For example, the fiscal condition of a city should incorporate the wealth of the
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residents and businesses within the city, their earning capacity, and the city‘s willingness to exploit
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its tax base.
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9. Many governments budget on a cash or near-cash basis. However, the cash basis of
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accounting does not provide adequate information with which to assess interperiod equity.
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Financial statements that satisfy the objective of reporting on interperiod equity may not satisfy that
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of reporting on budgetary compliance. Moreover, statements that report on either interperiod
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equity or budgetary compliance are unlikely to provide sufficient information with which to assess
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service efforts and accomplishments.
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10. Measures of service efforts and accomplishments are more significant in governments
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and not-for-profits because their objectives are to provide service. By contrast, the objective of
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businesses is to earn a profit. Therefore, businesses can report on their accomplishments by
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reporting on their profitability. Governments and not-for-profits must report on other measures of
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accomplishment.
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11. The FASB influences generally accepted accounting principles of governments in two key
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ways. First, FASB pronouncements are included in the GASB ―hierarchy‖ of GAAP. FASB
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pronouncements that the GASB has specifically made applicable to governments are included in the
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highest category; those that the GASB has not specifically adopted are included in the lowest
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category. Second, the business-type activities of governments are required (with a few exceptions)
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to follow the business accounting principles as set forth by the FASB.
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2-2
12. It is more difficult to distinguish between internal and external users in governments than in
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businesses because constituents, such as taxpayers, may play significant roles in establishing
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policies that are often considered within the realm of managers. Also, legislators are internal to the
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extent they set policy, but external insofar as the executive branch must account to the legislative
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branch.
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Exercises




EX 1-1 f




1. a
2. c
3. c



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