SOLUTION MANUAL For Government and Not-for-Profit Accounting: Concepts and Practices 9th Edition by Granof; Khumawala; Calabrese, Verified Chapters 1 - 17, Complete Newest Version

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Solution Manual for Government And Not For Profit Accounting
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qq Concepts And Practices 9th Edition Michael H. Granof|Latest
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qq Updated Version 2024. A+
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Chapter 1 qq




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




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




2. Governments and not-for-profits are ―governed‖ by the budget, whereas businesses are
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qq governed by the marketplace. The budget is the key political and fiscal document of
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q q governments and not-for-profits. It determines how an entity obtains its resources and how it
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qq allocates them. It encapsulates most key decisions of consequence made by the organization. In
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qq a government the 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
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entity achieves its revenue estimates and complies with its spending mandates. They
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qq expect the 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
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qq they receive and not shift the payment burden to taxpayers of the future. Financial reporting
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qq must indicate the extent to which interperiod equity has been achieved. Therefore, it must
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qq determine


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and report upon the economic costs of the services performed (not merely the cash costs) and of
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qq the 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
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qq for businesses because there may be no connection between revenues generated and the
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qq quantity, quality or cost of services performed. An increase in the demand for, or cost of,
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qq services provided by a homeless shelter would not necessarily result in an increase in the
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qq amount of donations that it receives. Of course, governments and not- for-profits are
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qq concerned with measuring interperiod equity and for that purpose the matching concept may
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qq be very relevant.
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6. Governments must maintain an accounting system that assures that restricted qq qq qq qq qq qq qq qq qq




qq resources are not inadvertently expended for inappropriate purposes. Moreover, statement
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qq users may need separate information on the restricted resources by category of restriction and
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qq the unrestricted
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resources. In practice, these requirements have led governments to adopt a system of ―fund‖
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qq accounting and reporting. qq qq




7. Even governments within the same category may engage in different types of
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qq activities. For example, some cities operate a school system whereas others do not. Those
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qq that are not within the same category may have relatively little in common. For example, a
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qq state government shares few 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,
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qq resources. Therefore, its fiscal well-being cannot be assessed merely by measuring the
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q q assets q q that q q it
―owns.‖ For q q q q example, q q the fiscal condition of a city should incorporate the
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qq wealth of the residents and businesses within the city, their earning capacity, and the city‘s
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qq willingness to exploit its tax base. qq qq qq qq qq




9. Many governments budget on a cash or near-cash basis. However, the cash basis of
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qq accounting does not provide adequate information with which to assess interperiod equity.
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qq Financial statements that satisfy the objective of reporting on interperiod equity may not
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qq satisfy that of reporting on budgetary compliance. Moreover, statements that report on either
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interperiod
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