Scribd Logo
Upload

Welcome to Scribd!

  • 149 views

    Government and NFP Assignment Solution

    Uploaded by

    Habte Debele
    The document discusses the differences between government, not-for-profit, and for-profit organizations. It provides information on their accounting standards and financial reporting requirements. Specifically, it notes that governments and nonprofits use modified accrual accounting which focuses on current resources and expenditures, while for-profits use accrual accounting which focuses on long-term assets and expenses. It also lists the various financial statements and required supplementary information that must be included in government comprehensive annual financial reports.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Government and NFP Assignment Solution

    Uploaded by

    Habte Debele
    149 views5 pages
    The document discusses the differences between government, not-for-profit, and for-profit organizations. It provides information on their accounting standards and financial reporting requirements. Specifically, it notes that governments and nonprofits use modified accrual accounting which focuses on current resources and expenditures, while for-profits use accrual accounting which focuses on long-term assets and expenses. It also lists the various financial statements and required supplementary information that must be included in government comprehensive annual financial reports.

    Original Description:

    government and npf

    Original Title

    Government and Nfp Assignment Solution

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses the differences between government, not-for-profit, and for-profit organizations. It provides information on their accounting standards and financial reporting requirements. Specifically, it notes that governments and nonprofits use modified accrual accounting which focuses on current resources and expenditures, while for-profits use accrual accounting which focuses on long-term assets and expenses. It also lists the various financial statements and required supplementary information that must be included in government comprehensive annual financial reports.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    149 views5 pages

    Government and NFP Assignment Solution

    Uploaded by

    Habte Debele
    The document discusses the differences between government, not-for-profit, and for-profit organizations. It provides information on their accounting standards and financial reporting requirements. Specifically, it notes that governments and nonprofits use modified accrual accounting which focuses on current resources and expenditures, while for-profits use accrual accounting which focuses on long-term assets and expenses. It also lists the various financial statements and required supplementary information that must be included in government comprehensive annual financial reports.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 5

    GOVERNMENT AND NFP ASSIGNMENT SOLUTION

    Solution for Q.1


    The different needs of users of financial reports of governments and business enterprises are
    reflected both in differences in components of the conceptual framework for accounting and
    financial reporting standards and in the specific accounting and financial reporting standards set
    by the GASB and the FASB.
    NOT-FOR-PROFIT ORGANIZATION
    A not-for-profit organization (NFPO) is one that does not earn profit for its owners. All money
    earned through pursuing business activities or through donations goes right back into running the
    organization.
    However, not-for-profits are not required to operate for the benefit of the public good. A not-for-
    profit can simply serve the goals of its members. A good example is a sports club; the purpose of
    the club is to exist for its members’ enjoyment. These organizations must apply for tax-exempt
    status from the IRS, including exemptions from sales tax and property taxes. That also means
    that money donated by an individual to an NFPO cannot be deducted on that person’s tax return.
    FOR-PROFIT ORGANIZATION
    A for-profit organization is one that operates with the goal of making money. Most businesses
    are for-profits that serve their customers by selling a product or service. The business owner
    earns an income from the for-profit and may also pay shareholders and investors from the profits.
    Whether you decided to start a for-profit, not-for-profit or nonprofit, the first steps for creating
    your entity are the same. Start by filing for a business entity in the state in which you wish to run
    your operations. Your business entity might be a corporation, LLC, sole proprietorship or
    partnership. All of these entities can operate as for-profit, nonprofit or not-for-profit
    organizations
    Solution for Q.2
    a. The conceptual differences
    One method assumes an economic resources measurement focus and the accrual basis of
    accounting, and the other method assumes a flow of current financial resources measurement
    focus and modified accrual accounting. The accrual basis of accounting is used by commercial
    businesses and the modified accrual basis of accounting undertakes activities in response to the
    needs of the public
    b. differences in revenue recognition
    The accrual basis of accounting recognizes revenues when they are earned (and are expected to
    be realized)
    The modified accrual basis of accounting revenues are generally recognized when measurable
    and available to finance the expenditures of the current period.
    c. The accrual basis of accounting recognizes expenses when the related goods or services are
    used up.
    The modified accrual basis of accounting recognizes expenditures (not expenses) in the period in
    which the fund liability is incurred.
    d. Under the accrual basis of accounting, a balance sheet is prepared on the economic resource
    focus reports the balances in fixed assets. Governmental-type activities are reported in the
    government-wide statements using the accrual basis of accounting, including fixed assets.
    The modified accrual basis of accounting, fixed assets is not reported in governmental funds.
    e. Under the accrual basis of accounting, long term debt is reported in the government wide
    statements.
    The modified accrual accounting methods are not reported in governmental funds. Long term
    debt is not recognized in the period in which the debt occurred.
    Solution for Q.3
    Different financial report users with different needs
     Governmental financial reporting focuses on stewardship and accountability for how public
    resources are raised and used to provide services
    Governmental financial reports are used primarily to:
     Compare actual financial results with legally adopted budget
     Assess financial condition and results of operations
     Assist in determining compliance with finance related laws, rules, and regulations
     Assist in evaluating efficiency and effectiveness
    Federal government financial reporting should assist report users in evaluating:
     Budgetary integrity
     Operating performance
     Stewardship
     Adequacy of systems and controls
    NFP financial reporting should provide information useful in:
     Making resource allocation decisions
     Assessing services and ability to provide services
     Assessing management stewardship and performance
     Assessing economic resources, obligations, net resources, and changes in them
    Solution Q.4
    IPSAS applies to:
     International organizations
     Public sector entities i.e.
     National government
     Local government
    Other government agencies and commissions
    IPSAS does not apply to:
     Government Business Entities
    Basis of Accounting Comparison of IPSAS and IFRS
    A Government Entity can choose to apply either accrual basis; or cash basis
    IFRS applies to:
     Government Business Entities
     Private sectors
    IFRS • IFRS is accruals based
    Presentation of Financial Statements
    IPSAS 1
    A complete set of financial statements comprises:
     Statement of financial position;
     Statement of financial performance;
     Statement of changes in net assets/equity;
     Cash flow statement;
     A comparison of budget and actual amounts; (where available publicly)
     Notes to FS Contains commentary on the responsibility for the preparation of financial
    statements
    IAS 1
    IFRS
    A complete set of financial statements comprises:
     Statement of financial position;
     Statement of Comprehensive Income
     Statement of changes in equity;
     Cash flow statement;
     Notes to FS
    Solution Q.5
    a. What are the three major sections?
    The sections of the CAFR include:
    The Comprehensive Annual Financial Report has three major sections which are
     Introductory
     Financial and
     Statistical
    b. List the government-wide statements. Indicate the measurement focus and basis of
    accounting used for the government-wide statements.
     Government-wide statements include the Statement of Net Position and the Statement of
    Activities.
     The measurement focus is on Economic Resources
     It uses Accrual-Based Accounting
    c. List the governmental fund statements. Indicate the measurement focus and basis of
    accounting used for the governmental fund statements.
     This section of the statements includes the Balance Sheet and the Statement of Revenues,
    Expenditures, and Changes in Fund Balance.
     The measurement focus is on Current Resources
     It uses Modified Accrual-Based Accounting
    d. List the proprietary fund statements. Indicate the measurement focus and basis of
    accounting used for the proprietary fund statements.
     This section of the statements include the Statement of Net Position, Statement of Revenues,
    Expenses, and Changes in Fund Net Position, and the Statement of Cash Flows
     The measurement focus is on Economic Resources
     It uses Accrual-Based Accounting
    e. List the fiduciary fund statements. Describe the measurement focus and basis of
    accounting used for the fiduciary fund statements.
     This section of the statements includes the Statement of Fiduciary Net Position and the Statement
    of Changes in Fiduciary Net Position.
     The measurement focus is on Economic Resources
     It uses Accrual-Based Accounting
    f. Outline the reports and schedules to be reported as required supplementary information.
    RSI includes:
     Budgetary Comparison Schedule
     Information regarding Infrasture Assets that use the Modified Approach to account, and
     Pension and other post-employment benefit information.
    Solution for Q.6
    The financial statements of an entity are not only prepared for internal users but also for external
    stakeholders. It is important to understand the needs of these stakeholders so that the financial
    statements can be prepared in accordance with those needs. Let us understand the crucial external
    users that matter

    You might also like