Chap002 - CHAPTER 2: PRINCIPLES OF ACCOUNTING AND FINANCIAL...

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CHAPTER 2: PRINCIPLES OF ACCOUNTING AND FINANCIAL REPORTING FOR STATE AND LOCAL GOVERNMENTS OUTLINE Number Topic Type/Task Status (re: 12/e) Questions: 2-1 Governmental activities Describe Same 2-2 Business-type activities Describe Revised 2-3 Fiduciary activities Describe Revised 2-4 Definition of a fund Define 2-5 Revised 2-5 BTA and GAAP Explain 2-7 Revised 2-6 Fund vs. general long-term liabilities Explain 2-9 Revised 2-7 Government-wide financial statements Explain 2-11 Revised 2-8 Measurement focus and basis of accounting Identify New 2-9 Basic financial statements Explain 2-14 Revised 2-10 Component units Define 2-15 Revised Cases: 2-1 Journal articles on GASBS 34 Research New 2-2 CAFRs on the Internet Internet New Exercises/Problems: 2-1 Examine the CAFR Examine Revised 2-2 Various Multiple Choice Revised 2-3 Various True/False 2-5 revised 2-4 Examples of funds Matching New 2-5 Major funds Written Report New 2-6 General capital asset transaction Journal Entry New 16
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CHAPTER 2: PRINCIPLES OF ACCOUNTING AND FINANCIAL REPORTING FOR STATE AND LOCAL GOVERNMENTS Answers to Questions 2-1. Certain core services are provided by most general purpose governments—those related to protection of life and property (e.g., police and fire protection), public works (e.g., streets and highways, bridges, and public buildings), parks and recreation facilities and programs, and cultural and social services. Governments must also incur costs for general administrative support such as data processing, finance, and personnel. Core governmental services, together with general administrative support, comprise the major part of what GASB refers to as governmental activities . The measurement focus and basis of accounting for these activities is on the flow of current financial resources on the modified accrual basis in the governmental funds and on the flow of economic resources on the accrual basis in the governmental activities column of the government-wide financial statements. 2-2. The business-type activities of a government include public utilities (such as electric, water, gas, and sewer utilities), transportation systems, toll roads and bridges, hospitals, parking garages and lots, liquor stores, golf courses, airports, and swimming pools among other things. Many of these activities are intended to be self-supporting by charging users for the services they receive. Focusing on economic resources measured on the accrual basis of accounting allows the government to determine whether revenues, such as charges for services, are sufficient to cover the full cost of the activity. This measurement focus and basis of accounting is the same used for reporting governmental activities in the government-wide financial statements, but quite different from the current financial resources measurement focus and modified accrual basis of accounting used in the governmental funds. Those funds emphasize comparing the current year’s financial operations with the annual budget for those activities, a much different
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This note was uploaded on 04/06/2010 for the course ACCT 100 taught by Professor Smith during the Spring '10 term at Harvard.

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Chap002 - CHAPTER 2: PRINCIPLES OF ACCOUNTING AND FINANCIAL...

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