ch17 - Chapter 17 CHAPTER SEVENTEEN INTRODUCTION TO FUND ACCOUNTING I CLASSIFICATIONS OF NONBUSINESS ORGANIZATIONS A Governmental Units Federal state

ch17 - Chapter 17 CHAPTER SEVENTEEN INTRODUCTION TO FUND...

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Chapter 17 CHAPTER SEVENTEEN - INTRODUCTION TO FUND ACCOUNTING I. CLASSIFICATIONS OF NONBUSINESS ORGANIZATIONS A. Governmental Units Federal , state governmental entities Local governmental unites, include counties, townships, municipalities and school districts. Special districts, include organizational units such as port authorities, industrial development districts, sanitation districts, and soil and water conservation districts. B. Hospitals and Other Health Care Providers. C. Colleges and Universities D. Voluntary Health and Welfare Organizations. E. All Other Nonbusiness Organizations II. DISTINCTIONS BETWEEN NONBUSINESS ORGANIZATIONS AND PROFIT- ORIENTED ENTERPRISES A. A nonbusiness organization’ s primary goal is not to earn a profit. B. Persons who contribute resources to a nonbusiness organization receive no equity interest in the net assets of the organization. C. Nonbusiness organizations do not often finance their operations through charges to the individuals benefiting from the service. Thus, they must rely on political action or fund- raising campaigns to sustain their activities and replenish their financial resources. D. Tax levies and voluntary contributions cannot ordinarily be justified on the basis of the value of the nonbusiness organization's services to the individuals from whom such contributions come. F. Restrictions or limitations on the use of resources may be legally imposed through formal action of the governing board or directly imposed by the individuals or groups that contribute such resources. III. FINANCIAL ACCOUNTING AND REPORTING STANDARDS FOR NONBUSINESS ORGANIZATIONS Standards of accounting and reporting for nonbusiness organizations are not as well developed as those for profit-making entities. However, GASB is responsible for establishing financial accounting standards for all state and local governmental bodies and the FASB is responsible for establishing financial accounting standards for all other nonbusiness entities.
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Chapter 17
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Chapter 17 IV. FUND ACCOUNTING Designed primarily to meet internal reporting and control objectives. A. Expendable Fund Entities: Expendable fund entities consist of net financial resources that are dedicated to a specified use. The difference between the financial resources of an expendable fund entity and claims against those resources is referred to as the fund balance. The financial resources of an expendable fund entity are intended to be expended annually or over some other specified time period in order to carry out the objectives for which the fund were created. The accounting model for the operating statement of an expendable fund entity is: Financial resources inflows (by source) - Financial resource outflows (by function) = Change in fund balance B. Restricted and Unrestricted Fund Entities 1. Restricted fund entities : Resources that bear a legal restriction as to use imposed by parties outsid e the organization.
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