Chapter 1 - Questions: 1-4 One should apply the criteria...

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Unformatted text preview: Questions: 1-4 One should apply the criteria discussed in the section headed Determining Whether a Not-for-Profit Organization is Governmental . Essentially if an organization is a public corporation or body corporate and politic or has certain government-like characteristics described in this section, then it should be treated as a governmental organization and GASB standards should be followed. Otherwise, one would follow FASB standards. 1-5 Interperiod equity, whether current period revenues were sufficient to pay for current period services, is an important component of accountability. But, as noted in Chapter 1, accountability is the cornerstone of governmental financial reporting and is a broader concept than interperiod equity. See, for example, the discussion of fiscal and operational accountability in the answer to Question 1-6. 1-7 Financial information related to governmental activities is reported in two different ways to meet two different reporting objectives. The government-wide financial statements are intended to report on the government’s operational accountability and therefore governmental activities are reported in those statements using accrual accounting with an economic resources measurement focus—similar to commercial accounting. In the governmental fund financial statements, the reporting objective is fiscal accountability, leading to the use of modified accrual and a focus on the flow of current financial resources. As a result, the same underlying transactions result in different amounts being reported in the government-wide and governmental fund financial statements. These differences must be reconciled so that readers can understand how the statements relate to each other....
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This note was uploaded on 07/19/2011 for the course ACCOUNT 346 taught by Professor Bino during the Spring '11 term at Rutgers.

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Chapter 1 - Questions: 1-4 One should apply the criteria...

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