Governmental and Nonprofit Accounting
March 2, 2012
1-2. Five environmental differences between governments and for-profit business enterprises. 1. Organizational purposes – Commercial is to generate profit for its owners and government is for the well being of citizens. 2. Sources of Revenue – Business generate its income from sales. Government derives its income from taxes. 3. Potential for Longevity – Government rarely go out of business and Business longevity is determine by the need and success. 4. Relationship with Stakeholders - The government must show accountability for public funds and a business can use its resources as it deems appropriate. 5. Role of the Budget – Commercial it’s used for planning and control purposes, for government budgets carry the authority of law, preventing
1-3.Identify and briefly describe the three organizations that set standards for state and local governments, the federal government, and nongovernmental not-for-profit organizations. 1. GASB set the accounting and financial reporting standards for state and local government in the US. GASB also set accounting and financial reporting standards for governmentally related not for profit organizations. 2. FASB set standards for profit seeking business and for nongovernmental not for profit organizations. 3. FASAB set the accounting and financial for the federal government.
1-4. What is the definition of a government as agreed upon by the FASB and GASB? Public corporations and bodies corporate and politic are governmental organizations. Other organizations are governmental organizations if they have one or more of the following characteristics. 1. Popular election of officers or appointment (or approval) of a controlling majority of the members of the organization’s governing body by officials of one or more state or local governments. 2. The potential for unilateral dissolution by a government with the net...
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