To account for the financial assets, related liabilities, changes in net assets, and balances that may be expended in its nonbusiness-type activities (eg, for fire and police protection).
Governmental (expendable) funds
In what respects is the governmental-type activity environment unique?
purpose; sources of financial resources; financial resource allocation mechanisms; accountabilities; reporting issues and problems
What is included in governmental-type activities?
fire and police protection; courts; street and traffic control; health and welfare; executive and legislative offices; and other "general governmental" activities
_____ are typically subject to more stringent legal, regulatory, and other controls than are ____.
G&NP; private business
A government (expendable) fund accounting entity includes ____.
financial assets and related liabilites
What does GASB stand for?
Governmental Accounting Standards Board
Who fostered the development of accounting principles and standards for hospitals and other health care institutions?
American Hospital Association and Healthcare Financial Management Association
Give examples of governmental nonprofits.
Federal, state, county, municipal, township, village, and other local governmental authorities and special districts
What primarily do G&NPs rely on for financial resources? (List 10)
1. Taxation (government only) 2. donations 3. income from trust funds 4. State appropriations 5. Federal and State Grants 6. Tuition and Fees 7. Client Charges 8. Gifts 9. Bequests 10. Services and Goods
The amount of net financial resources expended during the period for current operations, capital outlay, and long--term debt principal retirement and interest.
Fixed Dollar Budget
commonly prepared for each governmental fund
How is a G&NPs organization structure controlled?
form, composition of governing board, number and duties of personnel, lines of authority and responsibility, policies concerning which officials or employees are to be elected, appointed, or hired
A self-contained accounting entity with its own asset, liability, revenue, expenditure or expense, and fund balance or net position accounts and with its own ledger
Which of the following is considered a health and welfare organization? A. Secondary Schools B. YMCA C. Child Protection Agencies D. United Way
Child Protection Agencies
In G&NP; a dollar is a financial resource whether acquired through ____.
donations, user charges, sales of assets, loans, or some other manner
_____ activities often involve a direct relationship between the charge and the service.
Business Type Activities
Financial management in the G&NP environment typically focuses on ____.
sources and uses of expendable financial resources, budget status, and cash flow-rather than on net income
What are the major types of government and nonprofit organizations? (List 6)
Governmental, Educational, Health and Welfare, Religious, Charitable, Foundations
What does the financial reporting objective set forth in SFAC 4 state?
That financial reporting by nonbusiness organizations should provide information that is useful to present and potential resource providers and other users in: 1. making rational decisions about the allocation of resources to those organizations 2. assessing the services that a nonbusiness organization provides and its ability to continue to provide those services 3. assessing how managers of a nonbusiness organization have discharged their stewardship responsibilities and other aspects of their performance
What does fiscal accountability encompass?
1. use of financial resources from various revenue sources or bond issues in accordance with any restrictions on their use 2. compliance with fund and budget restrictions
The primary purpose of a fund is ___.
To segregate an organization's resources according to the purpose(s) for which they are to be used
Give examples of religious nonprofits.
YMCA, YWCA, Salvation Army, and any other church-related organizations
Binding appropriations _____ expenditures for specified purposes and ____ the amounts that can be expended for each specified purpose.
Give examples of educational nonprofits.
kindergartens, elementary, and secondary schools; vocational and technical schools; and colleges and universities
What is the objective of most governmental and nonprofit organizations?
To provide as much service each year as their financial and other resources permit
The body with primary accounting standards-setting authority for state and local governments is the ____.
Government Accounting Standards Board
Wh led development of principles for colleges and universities?
American Council on Education and National Association of College
Which of the following is not a characteristic of a fund. A. Fiscal entity B. Separate Legal Entity C. Accounting Entity D. Contains self-balancing set of accounts
Separate Legal Entity
To account for the revenues, expenses, assets, liabilities, and net position of its business-type activities (eg, utilities, cafeterias, or transportation systems).
Proprietary (nonexpendable) funds
An ____ has the force of law.
How is a G&NPs sources of financial resources controlled?
types and maximum amounts of taxes, licenses, fines, or fees a government may levy; procedure for setting user charges; tuition rates; debt limits; purposes for which debt may be incurred; allowable methods for soliciting charitable contributions
What aspects of G&NPs operations may be regulated or otherwise controlled? (List 7)
1. Organization Structure 2. Personnel policies & procedures 3. Sources of financial resources 4. Uses of financial resources 5. Accounting 6. Financial reporting 7. Auditing
The cost of assets and services consumed during the period.
Who led the development of accounting concepts, principles, and standards for state and local governments until the Governmental Accounting Standards Board (GASB) was created in 1984?
National Council on Governmental Accounting (NCGA)
Which of the following is not an operation accountability measure for a government? A. Economic cost of providing services B. net income C. Assessment whether a gov raised sufficient revenues each period to cover the cost of providing the services D. Assessment whether services are being provided economically and efficiently.
Reporting whether revenues were obtained and expended as anticipated and whether authorized expenditure limitations (appropriations) were exceeded.
What does FASB stand for?
Financial Accounting Standards Board
Which of the following statements is false? A fund A. is an entity for which financial statements can be prepared B. has a self-encompasing, self-balancing accounting equation C. is used to account for a subset of a organization's resources that is to be used for a specific purpose or to achieve a particular objective D. is an accounting entity that is used for one year only. Each year a new set of funds must be established
The budget is an expression of ____.
public policy and intent
separate fiscal and accounting entities that include both cash and non-cash resources-segregated according to the purposes or activities for which they are to be used-as well as related liabilities
The power to tax causes taxpayers to be ____ financial resource providers.
Give examples of health and welfare nonprofits.
hospitals, nursing homes, child protection agencies, the American Red Cross, and United Services Organizations
Who provides the most authoritative guidance applicable to financial reporting for state and local governments.
Most capital assets of business-type activities are ____.
The cost of goods delivered or serves rendered, whether paid or unpaid, including current operating costs, provision for retirement of debt not reported as a liability for the fund from which retired, and capital outlays.
Which characteristic best distinguishes a government entity from a business entity?
those contributing resources to the entity do not necessarily receive a direct or proportionate share of the services
Prior to the creation of the GASB in 1984, which organization had the greatest influence over accounting concepts, principles, and standards for the state and local governments.
National Council on Governmental Accounting
What addresses the objectives of general purpose external financial reporting by nonbusiness organizations?
FASB Statement of Financial Accounting Concepts No. 4 FASB SFAC 4
____ assets are often separated both ___ and ____.
physically and accountingly
A government's responsibility to demonstrate the extent to which it has met its operating objectives and whether it can continue to meet its objectives in the foreseeable future.
In which of the following questions would the amounts of expense and expenditure for the period differ? A. An entity uses and is billed for utilities but has paid only half of the amount billed at year end. B. An entity purchases equipment for cash. The purchase occurred on the last day of the fiscal year. C. Salaries and wages incurred and paid during the period were $100,000. Additional salaries and wages accrued at year end were $4000.
One unique characteristic of most government and nonprofit organizations is that ___.
there is no direct relationship between the amount of goods or services that most resource providers receive and the amount of resources provided by each individual
What is the cost measurement focus of proprietary (nonexpendable) fund accounting and of entity-wide financial reports.
What is the primary reason for the use of funds and non fund accounts?
restrictions on resource use
How is a G&NPs uses of financial resources controlled?
purposes for which resources may be used, including the legal restriction of certain resources only for specific purposes; purchasing procedures to be followed; budgeting methods, forms, or procedures
G&NP organizations typically operate on a ____ basis.
What are the major differences between G&NP organizations and regular business?
1. organizational objectives 2. sources of financial resources 3. methods of evaluating performance and operating results
The cost of acquiring a capital asset is considered an ____.
What are the mechanisms used for allocating general government resources?
Restrictions on Resource Use Budget
The purpose in increasing the amount of resources made available to a G&NP is ___.
to enable the organizations to provide more or better services
Taxation is a ____ transaction or event.
What is include din business-type activities?
public utilities (electricity, water); other activities for which user fees are charged and that are operated similarly to private businesses.
What are the different sources of revenues for governments?
1. Taxation 2. Intergovernmental Revenues
____ decrease ____ available financial assets.
How is a G&NPs auditing controlled?
frequency of audit; who is to perform the audit; scope and type of audit; time and place for filing the audit report; who is to receive or have access to the audit report
The technique that permits managers to determine their remaining expenditure authority at any time during the period.
Which of the following actives would most likely be accounted for as a business-type activity? A. fire protection B. recreation C. Water operations D. Street Maintenance
What is the formula for multiple accounting entities?
For each expendable fund FB = A - L where FB represents the fund balance For each nonexpendable fund A-L = NP where NP = Net Position
A government's responsibility to demonstrate its compliance with public decisions about the raising and spending of public monies in he short term.
What is one unique aspect of the SLG environment?
governments may be involved in both governmental-type and business-type activities
What is the formula for single accounting profit-seeking entities?
A = L + OE
Who set forth accounting principles and standards for nonprofit organizations in audit and accounting guides until the FASB began issuing guidance for nongovernmental non profit organizations in 1993
Committees of the American Institute of Certified Public Accountants (AICPA)
Taxes and other revenues are allocated to various uses by placing even more detailed ___.
A user fee is charged for a specific service provided.
Must indicate the fund from which the expenditure may be made and specify the purposes, the maximum amount, and the period of time for which the expenditure authority is granted.
What are the two basic categories of fund accounting entities used by SLGs?
Governmental (expendable) funds Proprietary (nonexpendable) funds
How is a G&NPs accounting controlled?
Any or all phases of the accounting system; for example, chart of accounts, bases of accounting, forms, and procedures
Who oversees the FASB and GASB?
Financial Accounting Foundation (FAF)
What is a critical determination that dictates whether a company must follow GASB or FASB?
Whether or not the organization is "government"
what are the primary groups of users of external financial reports of SLGs as identified by the GASB?
1. The citizenry 2. Legislative and oversight bodies 3. investors and creditors
How is a G&NPs personnel policies and procedures controlled?
who will appoint or hire personnel; tenure of personnel; policies and procedures upon termination; compensation levels; promotion policies; types and amounts of compensation increments
No distinction generally is made between ____ and ____ of G&NP organizations.
invested capital; revenue
Give examples of charitable nonprofits.
United Way, Community Chest, and similar fund-raising agencies; related charitable agencies; and other charitable organizations
How is a G&NPs financial reporting controlled?
type and frequency of financial reports; report format and content; report recipients
Legally adopted budges of governmental funds are ____.
Fixed-dollar budgets, which establish expenditure limits that are not to be exceeded.
Who led the federal government accounting standards effort until the Federal Accounting Standards Advisory Board was established in 1990?
Comptroller General of the United States
To whom is a SLG accountable?
1. constituencies 2. other governments 3. own legislative and executive bodies
What is the typical non-debt source of financial resources for businesses.
sales of goods or services; investments by owners
Which source of financial resources is unique to governments?
Give examples of foundations.
private trusts and corporations organized for educational, religious, or charitable purposes
Organizations that are considered to be nonprofit include all of the following except: A. Churches B. Boy Scouts and Girl Scouts C. Semi-Professional Baseball Team D. State CPA Societies
When approved by the governing body, he budgetary expenditure estimates becoming binding ____.
What is the cost measurement focus of governmental (expendable) fund accounting?
A financial plan that indicates the proposed expenditures for the year and the means of financing them
The body with primary accounting standards setting authority for colleges and universities is the ____.
Government Accounting Standards Board
Why is evaluating the performance and operating results of most G&NP organizations difficult?
1. No open market supply-and-demand test occurs to evaluate the value of the services. 2. The relationship, if any, between the resource contributors and the recipients of the services is remote and indirect 3. G&NP organizations are not profit oriented in the usual sense and are not expected to operate profitability, thus no profit test 4. governments can force financial resource contributions through taxation
Government and other nonprofit organizations are unique in the what ways? (List 6)
1. They do not attempt to earn a profit 2. Most are exempt from taxes 3. They are owned collectively by their constituents 4. Those contributing financial resources to the organizations do not necessarily receive a direct or proportionate share of their services 5. Their major policy and some operating decisions are made by majority vote of an elected or appointed governing body whose members serve part time, receive modest or no compensation, and have diverse backgrounds 6. Decisions are usually made in the public, open meetings and records