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

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Solution Manual for Government And Not For Profit Accounting C
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oncepts And Practices 9th Edition Michael H. Granof|Latest Update
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d Version 2024. A+
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Chapter 1 m




The Government and Not-For-Profit Environment
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QuestionsmformReviewmandmDiscussion
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1. Themcriticalmdistinctionmbetweenmfor-profitmbusinessesmandmnot-for-
profitsmincludingmgovernmentsmismthatmbusinessesmhavemprofitmasmtheirmmainmmotivemwhereasmthem
othersmhavemservice.mAmprimarympurposemofmfinancialmreportingmismtomreportmonmanmentity‘smaccom
plishmentsm—
m howmwellmitmachievedmitsmobjectives.mAccordingly,mthemfinancialmstatementsmofmbusinessesmmeasu
remprofitability,mtheirmkeymobjective.mFinancialmreportsmofmgovernmentsmandmothermnot-for-
profitsmshouldmnotmfocusmonmprofitability,msincemitmismnotmamrelevantmobjective.mIdeally,mtherefore,mt
heymshouldmfocusmonmothermperformancemobjectives,msuchmasmhowmwellmthemorganizationsmmetmthei
rmservicemgoals.mInmreality,mhowever,mthemgoalmofmreportingmonmhowmwellmtheymhavemachievedmsuch
m goalsmhasmprovenmdifficultmtomattainmandmthemfinancialmreportsmhavemfocusedmmainlymonmfinanciall
y-mrelatedmdata.


2. Governmentsmandmnot-for-
profitsmarem―governed‖mbymthembudget,mwhereasmbusinessesmaremgovernedmbymthemmarketplace.mT
hembudgetmismthemkeympoliticalmandmfiscalmdocumentmofmgovernmentsmandmnot-for-
profits.mItmdeterminesmhowmanmentitymobtainsmitsmresourcesmandmhowmitmallocatesmthem.mItmencapsul
atesmmostmkeymdecisionsmofmconsequencemmadembymthemorganization.mInmamgovernmentmthembudget
m ismnotmmerelymammanagerialmdocument;mitmismthemlaw.


3.
Owingmtomthemsignificancemofmthembudget,mconstituentsmwantmassurancemthatmthementitymach
ievesmitsmrevenuemestimatesmandmcompliesmwithmitsmspendingmmandates.mTheymexpectmthemfinancial
m statementsmtomreportmonmhowmthembudgetmwasmadministered.




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4.
Interperiodmequitymismthemconceptmthatmtaxpayersmofmtodaympaymformthemservicesmthatmtheymr
eceivemandmnotmshiftmthempaymentmburdenmtomtaxpayersmofmthemfuture.mFinancialmreportingmmustmin
dicatemthemextentmtomwhichminterperiodmequitymhasmbeenmachieved.mTherefore,mitmmustmdeterminema
ndmreportmuponmthemeconomicmcostsmofmthemservicesmperformedm(notmmerelymthemcashmcosts)mandmo
fmthemtaxpayers‘mcontributionmtowardmcoveringmthosemcosts.


5. Themmatchingmconceptmmaymbemlessmrelevantmformgovernmentsmandmnot-for-
profitsmthanmformbusinessesmbecausemtheremmaymbemnomconnectionmbetweenmrevenuesmgeneratedman
dmthemquantity,mqualitymormcostmofmservicesmperformed.mAnmincreaseminmthemdemandmfor,mormcostmof
,mservicesmprovidedmbymamhomelessmsheltermwouldmnotmnecessarilymresultminmanmincreaseminmthemam
ountmofmdonationsmthatmitmreceives.mOfmcourse,mgovernmentsmandmnot-mfor-
profitsmaremconcernedmwithmmeasuringminterperiodmequitymandmformthatmpurposemthemmatchingmcon
ceptmmaymbemverymrelevant.


6.
Governmentsmmustmmaintainmanmaccountingmsystemmthatmassuresmthatmrestrictedmresourcesm
aremnotminadvertentlymexpendedmforminappropriatempurposes.mMoreover,mstatementmusersmmaymnee
dmseparateminformationmonmthemrestrictedmresourcesmbymcategorymofmrestrictionmandmthemunrestricte
dmresources.mInmpractice,mthesemrequirementsmhavemledmgovernmentsmtomadoptmamsystemmofm―fund
‖maccountingmandmreporting.


7.
Evenmgovernmentsmwithinmthemsamemcategorymmaymengageminmdifferentmtypesmofmactivities.
m Formexample,msomemcitiesmoperatemamschoolmsystemmwhereasmothersmdomnot.mThosemthatmaremnotmw
ithinmthemsamemcategorymmaymhavemrelativelymlittleminmcommon.mFormexample,mamstatemgovernment
m sharesmfewmcharacteristicsmwithmamcity.


8.
Ifmamgovernmentmhasmthempowermtomtax,mthenmitmhasmcommandmover,mandmaccessmto,mresourc
es.mTherefore,mitsmfiscalmwell-



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beingmcannotmbemassessedmmerelymbymmeasuringmthemmmassetsmmmthatmmmitmmm―owns.‖mmFormmmexample
,mmmthemmfiscalmmconditionmmofmmammcitymmshouldmincorporatemthemwealthmofmthemresidentsmandmbusines
sesmwithinmthemcity,mtheirmearningmcapacity,mandmthemcity‘smwillingnessmtomexploitmitsmtaxmbase.


9. Manymgovernmentsmbudgetmonmamcashmormnear-
cashmbasis.mHowever,mthemcashmbasismofmaccountingmdoesmnotmprovidemadequateminformationmwithm
whichmtomassessminterperiodmequity.mFinancialmstatementsmthatmsatisfymthemobjectivemofmreportingmo
nminterperiodmequitymmaymnotmsatisfymthatmofmreportingmonmbudgetarymcompliance.mMoreover,mstat
ementsmthatmreportmonmeitherminterperiodmequitymormbudgetarymcompliancemaremunlikelymtomprovide
m sufficientminformationmwithmwhichmtomassessmservicemeffortsmandmaccomplishments.


10.
Measuresmofmservicemeffortsmandmaccomplishmentsmaremmoremsignificantminmgovernmentsma
ndmnot-for-
profitsmbecausemtheirmobjectivesmaremtomprovidemservice.mBymcontrast,mthemobjectivemofmbusinessesm
ismtomearnmamprofit.mTherefore,mbusinessesmcanmreportmonmtheirmaccomplishmentsmbymreportingmonmt
heirmprofitability.mGovernmentsmandmnot-for-
profitsmmustmreportmonmothermmeasuresmofmaccomplishment.


11.
ThemFASBminfluencesmgenerallymacceptedmaccountingmprinciplesmofmgovernmentsminmtwom
keymways.mFirst,mFASBmpronouncementsmaremincludedminmthemGASBm―hierarchy‖mofmGAAP.mFA
SBmpronouncementsmthatmthemGASBmhasmspecificallymmademapplicablemtomgovernmentsmareminclud
edminmthemhighestmcategory;mthosemthatmthemGASBmhasmnotmspecificallymadoptedmaremincludedminmth
emlowestmcategory.mSecond,mthembusiness-
typemactivitiesmofmgovernmentsmaremrequiredm(withmamfewmexceptions)mtomfollowmthembusinessmacco
untingmprinciplesmasmsetmforthmbymthemFASB.


2-2
m 12.
Itmismmoremdifficultmtomdistinguishmbetweenminternalmandmexternalmusersminmgovernmentsmth



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