Chapter 1 ACCT NFP

Course Intro Governments - Provide services that benefit all citizens - Services that the private sector may not provide - Course focus on state and local govt (SLG) - Characteristics / Revenue Sources - GASB Not-for-profits - Private organizations serving a purpose (other than to make profit) - Characteristics / Revenue Sources - FASB Entities - Examples Governmental - State governments - Local governments (municipalities) - Governmental college and universities - School districts - Park districts (Non-governmental) NFPs - Foundations - Colleges and universities - Cultural organizations - Religious organizations Chapter 1 Introduction to State and Local Governmental Units Differences in Govt. Environment Organizational Purposes - exist for the well being of citizens by providing public services, not for the purpose of generating returns to owners Sources of Revenues - Derive many of their resources from taxes and other non-exchange transactions Potential for Longevity - Rarely go out-of-business. Long term nature of operations changes the focus to the sustainability of services and the ability to meet future demand Relationship with Stakeholders - Obligation to demonstrate accountability for public funds Role of the Budget - Budgets carry the authority of law, preventing public officials from spending outside their budgetary authority How Accounting Adapts for Govt. Differences Different view/meaning of view of "equity"
Budget compliance > income measurement Revenue recognition - Non-exchange transactions Emphasize on the existence of restrictions on the use of resources How Do Govt. Objectives Differ from Business Objectives? There is more emphasis on - The budget - Legal compliance - Efficiency and effectiveness measures other than net income GASB Concepts Statement No. 2 explains that nonfinancial measures (i.e. measures other than dollars) are required to assess effectiveness Overview of Basic Financial Statements Government-wide Statements - Statement of Net Position Similar to business balance sheet - Statement of Activities Similar to business income statement Fund Financial Statements - Detailed reports of governmental, proprietary, and fiduciary activities Overview of Fund Financial Statements Governmental — general citizen services - Balance Sheet - Statement of Revenues, Expenditures, and Changes in Fund Balance Proprietary — business-like activities such as water utility - Statement of Net Position - Statement of Revenues, Expenses, and Changes in Fund Net Position - Statement of Cash Flows Fiduciary — holding money in trust for others - Statement of Fiduciary Net Position - Statement of Changes in Fiduciary Net Position Accrual and Modified Accrual Basis Accrual Basis/Economic Resources Measurement Focus - General business concepts of revenue and "expense" apply when recording exchange-like transactions Modified Accrual Basis/Current Financial Resources Measurement Focus - Applies to funds financed by taxes and other involuntary contributions Modified Accrual Basis Revenues are recorded when "measurable and available" - For example, property taxes revenues are recorded as revenues if levied this year and collected this year, or soon enough after the year end to still pay current year bills Outflows are called "expenditures" - typically cash basis What is a "fund"? A fund
- Represents a part of the activities of some organization - Is an accounting entity Self-balancing set of accounts, reflecting the assets, liabilities, net assets, and changes in those balances - Segregates resources for specific activities In such a way as to ensure compliance with appropriate regulations or restrictions Chapter 1 Part 2 Introduction to State and Local Governmental Units State and Local Government Fund Types Governmental (5) - Used for activities that are largely unique to the government environment and do not fall into either the proprietary or fiduciary categories Proprietary (2) - Business-type activities Fiduciary (4) - Acting as an agent or trustee of money that generally belongs to other parties Governmental-Type Funds General Fund accounts for most of the basic services provided by the government (It accounts for and reports all financial resources not accounted for and reported in another fund) Special Revenue Funds account for the proceeds of specific revenue sources that are restricted or committed for specified purpose other than debt service or capital projects Debt Service Funds account for financial resources that are restricted, committed or assigned for principal and interest (other than interest or principal on proprietary or fiduciary activities) Governmental-Type Funds Permanent Funds account for resources that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs Capital Projects Fund account for resources that are restricted, committed or assigned for capital outlays (accounts for the purchase of capital improvements, except those in a proprietary fund) Proprietary Funds Types Enterprise Fund
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