chap_2_dup - Chapter Two FUND ACCOUNTING Chapter 2...

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Chapter Two FUND ACCOUNTING Chapter 2 Granof-5e 1
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Granof-5e 2 State and local governments (SLGs) and non-profits (NPs) are required to provide a financial report that includes: 1. 2. Basic Financial Statements 3. Required Supplementary Information (RSI) Other Chapter 2
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Basic Financial Statements Basic Financial Statements consist of A. Government-Wide Financial Statements B. Fund Financial Statements C. Notes to the Financial Statements Chapter 2 Granof-5e 3
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In governmental and non-profit accounting, a fund is a fiscal and accounting entity used to account for certain transactions of the GNP. Each fund has its own complete set of accounts; requiring its own set of books (general journal and general ledger.) These are used to construct the fund’s financial statements. Depending on the fund, the fundamental accounting equation is: Assets - Liabilities = Fund Balance, or Assets - Liabilities = Net Assets Chapter 2 Granof-5e 4
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GNPs Financial Reporting GASB also recommends that GNPs provide a Comprehensive Annual Financial Report (CAFR) that requires additional information beyond the basic requirements . This will be discussed in more detail later. Chapter 2 Granof-5e 5
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Multiple Sets of Financial Statements The two separate sets of financial statements are based upon the use of two different accounting methods. The accounting methods are based upon 1. Measurement Focus , and 2. Basis of Accounting Chapter 2 Granof-5e 6
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Measurement Focus Measurement focus refers to what items are being reported in the financial statements. The all Economic Resources measurement focus measures both current and long term assets and liabilities. That is, its focus is on ALL economic resources (and the claims to those resources) available to the GNP. Reports using this focus provide disclosure and measurement of net income, financial position and cash flows. The focus is also used to measure operational accountability. Chapter 2 Granof-5e 7
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Measurement Focus (2) The alternative measurement focus is Current Financial Resources . Alternative definitions exist; generally the focus is on current (liquid) resources (primarily current assets) and claims against those resources (primarily current liabilities. Provides information on the inflows and outflows of current financial resources; used to measure fiscal accountability. Chapter 2 Granof-5e 8
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Basis of Accounting refers to WHEN transactions and events are recognized in the accounting records . This primarily refers to when to recognize inflows and outflows (revenues and expenses/expenditures) or resources (assets) and claims to those resources (liabilities ). Chapter
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This note was uploaded on 09/13/2011 for the course ACCT 504 taught by Professor Staff during the Spring '11 term at S.F. State.

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chap_2_dup - Chapter Two FUND ACCOUNTING Chapter 2...

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