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Solution Manual for Government And Not For Profit Accounting
n n n n n n n n
nConcepts And Practices 9th Edition Michael H. Granof|Latest
n n n n n n n
Updated Version 2024. A+
n n n n
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Chapter 1 n
The Government and Not-For-Profit Environment
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Questions nfor nReview nand nDiscussion
1. The ncritical ndistinction nbetween nfor-profit nbusinesses nand nnot-for-profits nincluding
n governments nis nthat nbusinesses nhave nprofit nas ntheir nmain nmotive nwhereas nthe nothers nhave
n service. nA nprimary npurpose nof nfinancial nreporting nis nto nreport non nan nentity‘s naccomplishments
n — nhow nwell nit nachieved nits nobjectives. nAccordingly, nthe nfinancial nstatements nof nbusinesses
n measure nprofitability, ntheir nkey nobjective. nFinancial nreports nof ngovernments nand nother nnot-for-
profits nshould nnot nfocus non nprofitability, nsince nit nis nnot na nrelevant nobjective. nIdeally, ntherefore,
n they nshould nfocus non nother nperformance nobjectives, nsuch nas nhow nwell nthe norganizations nmet
n their nservice ngoals. nIn nreality, nhowever, nthe ngoal nof nreporting non nhow nwell nthey nhave nachieved
n such ngoals nhas nproven ndifficult nto nattain nand nthe nfinancial nreports nhave nfocused nmainly non
n financially- nrelated ndata.
2. Governments nand nnot-for-profits nare n―governed‖ nby nthe nbudget, nwhereas nbusinesses nare
n governed nby nthe nmarketplace. nThe nbudget nis nthe nkey npolitical nand nfiscal ndocument nof
n governments nand nnot-for-profits. nIt ndetermines nhow nan nentity nobtains nits nresources nand nhow nit
n allocates nthem. nIt nencapsulates nmost nkey ndecisions nof nconsequence nmade nby nthe norganization. nIn
n a ngovernment nthe nbudget nis nnot nmerely na nmanagerial ndocument; nit nis nthe nlaw.
3. Owing nto nthe nsignificance nof nthe nbudget, nconstituents nwant nassurance nthat nthe
entity nachieves nits nrevenue nestimates nand ncomplies nwith nits nspending nmandates. nThey
n
n expect nthe nfinancial nstatements nto nreport non nhow nthe nbudget nwas nadministered.
4. Interperiod nequity nis nthe nconcept nthat ntaxpayers nof ntoday npay nfor nthe nservices nthat
n they nreceive nand nnot nshift nthe npayment nburden nto ntaxpayers nof nthe nfuture. nFinancial nreporting
n must nindicate nthe nextent nto nwhich ninterperiod nequity nhas nbeen nachieved. nTherefore, nit nmust
n determine
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and nreport nupon nthe neconomic ncosts nof nthe nservices nperformed n(not nmerely nthe ncash ncosts) nand nof
n the ntaxpayers‘ ncontribution ntoward ncovering nthose ncosts.
5. The nmatching nconcept nmay nbe nless nrelevant nfor ngovernments nand nnot-for-profits nthan
n for nbusinesses nbecause nthere nmay nbe nno nconnection nbetween nrevenues ngenerated nand nthe
n quantity, nquality nor ncost nof nservices nperformed. nAn nincrease nin nthe ndemand nfor, nor ncost nof,
n services nprovided nby na nhomeless nshelter nwould nnot nnecessarily nresult nin nan nincrease nin nthe
n amount nof ndonations nthat nit nreceives. nOf ncourse, ngovernments nand nnot- nfor-profits nare
n concerned nwith nmeasuring ninterperiod nequity nand nfor nthat npurpose nthe nmatching nconcept nmay
n be nvery nrelevant.
6. Governments nmust nmaintain nan naccounting nsystem nthat nassures nthat nrestricted
n resources nare nnot ninadvertently nexpended nfor ninappropriate npurposes. nMoreover, nstatement
n users nmay nneed nseparate ninformation non nthe nrestricted nresources nby ncategory nof nrestriction nand
n the nunrestricted
resources. nIn npractice, nthese nrequirements nhave nled ngovernments nto nadopt na nsystem nof n―fund‖
n accounting nand nreporting.
7. Even ngovernments nwithin nthe nsame ncategory nmay nengage nin ndifferent ntypes nof
n activities. nFor nexample, nsome ncities noperate na nschool nsystem nwhereas nothers ndo nnot. nThose
n that nare nnot nwithin nthe nsame ncategory nmay nhave nrelatively nlittle nin ncommon. nFor nexample, na
n state ngovernment nshares nfew ncharacteristics nwith na ncity.
8. If na ngovernment nhas nthe npower nto ntax, nthen nit nhas ncommand nover, nand naccess nto,
n resources. nTherefore, nits nfiscal nwell-being ncannot nbe nassessed nmerely nby nmeasuring nthe
n assets n that n it
―owns.‖ n For n example, n the n fiscal n condition n of n a n city n should nincorporate nthe nwealth nof
n the nresidents nand nbusinesses nwithin nthe ncity, ntheir nearning ncapacity, nand nthe ncity‘s nwillingness
n to nexploit nits ntax nbase.
9. Many ngovernments nbudget non na ncash nor nnear-cash nbasis. nHowever, nthe ncash nbasis nof
n accounting ndoes nnot nprovide nadequate ninformation nwith nwhich nto nassess ninterperiod nequity.
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n Financial nstatements nthat nsatisfy nthe nobjective nof nreporting non ninterperiod nequity nmay nnot
n satisfy nthat nof nreporting non nbudgetary ncompliance. nMoreover, nstatements nthat nreport non neither
interperiod
n
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