{"product_id":"government-and-not-for-profit-accounting","title":"Government and Not-for-Profit Accounting","description":"\u003cp\u003ePreface vii\u003c\/p\u003e \u003cp\u003e\u003cb\u003e1 The Government and Not- for- Profit Environment 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eHow Do Governments and Not- For- Profits Compare With Businesses? 2\u003c\/p\u003e \u003cp\u003eIn Practice: Why Is State And Local Government Accounting Important? 6\u003c\/p\u003e \u003cp\u003eWhat Other Characteristics of Governments and Not- For- Profits Have Accounting Implications? 9\u003c\/p\u003e \u003cp\u003eHow Do Governments Compare With Not-For- Profits? 12\u003c\/p\u003e \u003cp\u003eWhat Are The Overall Purposes of Financial Reporting? 14\u003c\/p\u003e \u003cp\u003eWho are The Users, and What are The Uses of Financial Reports? 14\u003c\/p\u003e \u003cp\u003eWhat are The Specific Objectives of Financial Reporting As Set Forth By The GASB and The FASB? 17\u003c\/p\u003e \u003cp\u003eExample: Clash Among Reporting Objectives 19\u003c\/p\u003e \u003cp\u003eDo Differences In Accounting Principles Really Matter? 22\u003c\/p\u003e \u003cp\u003eIn Practice: Will Accounting Changes Make A Difference? 24\u003c\/p\u003e \u003cp\u003eWho Establishes Generally Accepted Accounting Principles? 24\u003c\/p\u003e \u003cp\u003eIn Practice: Assessing the Profitability of An Athletic Program 25\u003c\/p\u003e \u003cp\u003eIn Practice: Governments and Not- For- Profits May Also Be Aggressive In Their Accounting 26\u003c\/p\u003e \u003cp\u003eSummary 29\u003c\/p\u003e \u003cp\u003eKey Terms In This Chapter 30\u003c\/p\u003e \u003cp\u003eQuestions For Review and Discussion 30\u003c\/p\u003e \u003cp\u003eExercises 31\u003c\/p\u003e \u003cp\u003eContinuing Problem 33\u003c\/p\u003e \u003cp\u003eProblems 33\u003c\/p\u003e \u003cp\u003eQuestions For Research, Analysis, And Discussion 37\u003c\/p\u003e \u003cp\u003e\u003cb\u003e2 Fund Accounting 38\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat is a Fund? 39\u003c\/p\u003e \u003cp\u003eWhat are the Key Elements of Government Financial Statements? 39\u003c\/p\u003e \u003cp\u003eWhat Characterizes Funds? 41\u003c\/p\u003e \u003cp\u003eUse of Multiple Funds to Account for An Entity 44\u003c\/p\u003e \u003cp\u003eBasis of Accounting and Measurement Focus 45\u003c\/p\u003e \u003cp\u003eExample: Fund Accounting in a School District 46\u003c\/p\u003e \u003cp\u003eMajor VS. Nonmajor Funds 49\u003c\/p\u003e \u003cp\u003eHow Can Funds be Combined and Consolidated? 49\u003c\/p\u003e \u003cp\u003eWhat are the Main Types of a Government’s Funds? 59\u003c\/p\u003e \u003cp\u003eWhat’s Notable About Each Type of Governmental Fund? 61\u003c\/p\u003e \u003cp\u003eWhat’s Notable About Each Type of Proprietary Fund? 64\u003c\/p\u003e \u003cp\u003eWhat’s Notable About Each Type of Fiduciary Fund? 70\u003c\/p\u003e \u003cp\u003eWhat is Included in a Government’s Annual Comprehensive Financial Report (ACFR)? 71\u003c\/p\u003e \u003cp\u003eExample: Government-Wide Statement of Activities 74\u003c\/p\u003e \u003cp\u003eHow Do the Funds and Annual Reports of Not-For-Profits Differ From Those of Governments? 75\u003c\/p\u003e \u003cp\u003eSummary 78\u003c\/p\u003e \u003cp\u003eKey Terms In This Chapter 80\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 80\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 81\u003c\/p\u003e \u003cp\u003eExercises 82\u003c\/p\u003e \u003cp\u003eContinuing Problem 85\u003c\/p\u003e \u003cp\u003eProblems 86\u003c\/p\u003e \u003cp\u003eQuestions for Research, Analysis, and Discussion 91\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 92\u003c\/p\u003e \u003cp\u003e\u003cb\u003e3 Issues of Budgeting and Control 95\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat are the Key Purposes of Budgets? 96\u003c\/p\u003e \u003cp\u003eWhy is More Than One Type of Budget Necessary? 96\u003c\/p\u003e \u003cp\u003eHow are Expenditures and Revenues Classified? 98\u003c\/p\u003e \u003cp\u003eWhy are Performance Budgets Necessary? 99\u003c\/p\u003e \u003cp\u003eWhat are the Key Phases of the Budget Cycle? 101\u003c\/p\u003e \u003cp\u003eIn Practice: Budgeting In The Midst of a Pandemic 103\u003c\/p\u003e \u003cp\u003eOn What Basis of Accounting are Budgets Prepared? 105\u003c\/p\u003e \u003cp\u003eIn Practice: States Balance Their Budgets the Painless Way 106\u003c\/p\u003e \u003cp\u003eIn Practice: The Cost of GAAP 107\u003c\/p\u003e \u003cp\u003eIn Practice: Balancing the Budget by Selling Assets to Yourself 108\u003c\/p\u003e \u003cp\u003eWhat Cautions Must be Taken in Budget-to-Actual Comparisons? 108\u003c\/p\u003e \u003cp\u003eHow Does Budgeting in Not-For-Profit Organizations Compare with that in Governments? 111\u003c\/p\u003e \u003cp\u003eHow Do Budgets Enhance Control? 112\u003c\/p\u003e \u003cp\u003eWhat are the Distinctive Ways Governments Record Their Budgets? 114\u003c\/p\u003e \u003cp\u003eExample: Budgetary Entries 115\u003c\/p\u003e \u003cp\u003eAn Alternative Method: Crediting or Debiting the Difference Between Revenues and Expenditures to “Budgetary Control” 117\u003c\/p\u003e \u003cp\u003eHow Does Encumbrance Accounting Prevent Overspending? 117\u003c\/p\u003e \u003cp\u003eExample: The Encumbrance Cycle—Year 1 118\u003c\/p\u003e \u003cp\u003eExample: The Encumbrance Cycle—Year 2 120\u003c\/p\u003e \u003cp\u003eExample: Impact of Encumbrances on Fund Balance 121\u003c\/p\u003e \u003cp\u003eAre Budgetary and Encumbrance Entries Really Needed? 124\u003c\/p\u003e \u003cp\u003eSummary 125\u003c\/p\u003e \u003cp\u003eKey Terms in this Chapter 125\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 126\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 126\u003c\/p\u003e \u003cp\u003eExercises 127\u003c\/p\u003e \u003cp\u003eContinuing Problem 131\u003c\/p\u003e \u003cp\u003eProblems 131\u003c\/p\u003e \u003cp\u003eQuestions for Research, Analysis, and Discussion 139\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 139\u003c\/p\u003e \u003cp\u003e\u003cb\u003e4 Recognizing Revenues in Governmental Funds 141\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhy and How Do Governments Use the Modified Accrual Basis? 141\u003c\/p\u003e \u003cp\u003eWhat are the Main Types of Nonexchange Revenues and the Limitations on How and When They Can be Used? 145\u003c\/p\u003e \u003cp\u003eHow Should Property Taxes and Other Imposed Nonexchange Revenues be Accounted for? 146\u003c\/p\u003e \u003cp\u003eI n Practice: In Practice: Just as it did with individuals, corona viruses make some governments\u003c\/p\u003e \u003cp\u003efar more sick than others 146\u003c\/p\u003e \u003cp\u003eExample: Property Taxes 148\u003c\/p\u003e \u003cp\u003eExample: Fines 153\u003c\/p\u003e \u003cp\u003eHow Should Sales Taxes and Other Derived Tax Revenues be Accounted for? 154\u003c\/p\u003e \u003cp\u003eExample: Sales Taxes 154\u003c\/p\u003e \u003cp\u003eExample: Sales Taxes Collected by State 156\u003c\/p\u003e \u003cp\u003eExample: Income Taxes 157\u003c\/p\u003e \u003cp\u003eWhat are Tax Abatements and Why and How Must They be Disclosed? 159\u003c\/p\u003e \u003cp\u003eHow Should Grants and Similar Government-Mandated and Voluntary Nonexchange Revenues be Accounted For? 160\u003c\/p\u003e \u003cp\u003eExample: Unrestricted Grant with Time Requirement 161\u003c\/p\u003e \u003cp\u003eExample: Grant with Purpose Restriction 162\u003c\/p\u003e \u003cp\u003eExample: Reimbursement (Eligibility Requirement) Grant 162\u003c\/p\u003e \u003cp\u003eExample: Unrestricted Grant with Contingency Eligibility Requirement 163\u003c\/p\u003e \u003cp\u003eExample: Endowment Gift 163\u003c\/p\u003e \u003cp\u003eExample: Pledges 163\u003c\/p\u003e \u003cp\u003eExample: Donations of Land for Differing Purposes 164\u003c\/p\u003e \u003cp\u003eExample: On-Behalf Payments 167\u003c\/p\u003e \u003cp\u003eHow Should Sales of Capital Assets be Accounted For? 167\u003c\/p\u003e \u003cp\u003eExample: Sales of Capital Assets 168\u003c\/p\u003e \u003cp\u003eHow Should Licenses, Permits, and Other Exchange Transactions be Accounted for? 169\u003c\/p\u003e \u003cp\u003eExample: License Fees 169\u003c\/p\u003e \u003cp\u003eHow Should Governments Report Revenues in their Government-Wide Statements? 170\u003c\/p\u003e \u003cp\u003eSummary 171\u003c\/p\u003e \u003cp\u003eKey Terms In This Chapter 173\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 173\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 174\u003c\/p\u003e \u003cp\u003eExercises 174\u003c\/p\u003e \u003cp\u003eContinuing Problem 178\u003c\/p\u003e \u003cp\u003eProblems 178\u003c\/p\u003e \u003cp\u003eQuestions for Research, Analysis, and Discussion 184\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 185\u003c\/p\u003e \u003cp\u003e\u003cb\u003e5 Recognizing Expenditures in Governmental Funds 187\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eHierarchical Approach to Transaction Analysis 187\u003c\/p\u003e \u003cp\u003eHow is the Accrual Concept Modified for Expenditures? 189\u003c\/p\u003e \u003cp\u003eHow Should Wages and Salaries be Accounted for? 190\u003c\/p\u003e \u003cp\u003eExample: Wages and Salaries 190\u003c\/p\u003e \u003cp\u003eHow Should Compensated Absences Be Accounted For? 191\u003c\/p\u003e \u003cp\u003eIn Practice: Changing the Pay Date by One Day 191\u003c\/p\u003e \u003cp\u003eExample: Vacation Leave 192\u003c\/p\u003e \u003cp\u003eExample: Sick Leave 193\u003c\/p\u003e \u003cp\u003eExample: Sabbatical Leave 196\u003c\/p\u003e \u003cp\u003eHow Should Pensions and Other Postemployment Benefits Be Accounted For? 197\u003c\/p\u003e \u003cp\u003eExample: Pension Expenditure 197\u003c\/p\u003e \u003cp\u003eHow Should Claims and Judgments Be Accounted For? 198\u003c\/p\u003e \u003cp\u003eExample: Claims and Judgments 198\u003c\/p\u003e \u003cp\u003eHow Should the Acquisition and Use of Materials and Supplies Be Accounted For? 200\u003c\/p\u003e \u003cp\u003eExample: Supplies 200\u003c\/p\u003e \u003cp\u003eHow Should Prepayments Be Accounted For? 203\u003c\/p\u003e \u003cp\u003eExample: Prepayments 203\u003c\/p\u003e \u003cp\u003eHow Should Capital Assets Be Accounted For? 205\u003c\/p\u003e \u003cp\u003eExample: Capital Assets 205\u003c\/p\u003e \u003cp\u003eExample: Installment Notes 206\u003c\/p\u003e \u003cp\u003eExample: Capital Leases 207\u003c\/p\u003e \u003cp\u003eHow Should Interest and Principal on Long-Term Debt Be Accounted For? 208\u003c\/p\u003e \u003cp\u003eExample: Long-term Debt 209\u003c\/p\u003e \u003cp\u003eIn Practice: California School Children May Pay for Their Own Education 210\u003c\/p\u003e \u003cp\u003eHow Should Nonexchange Expenditures be Accounted for? 212\u003c\/p\u003e \u003cp\u003eExample: Unrestricted Grant with Time Requirement 212\u003c\/p\u003e \u003cp\u003eExample: Grant with Purpose Restriction 213\u003c\/p\u003e \u003cp\u003eExample: Reimbursement (Eligibility Requirement) Grant 213\u003c\/p\u003e \u003cp\u003eHow Should Interfund Transactions Be Accounted For? 214\u003c\/p\u003e \u003cp\u003eExample: Interfund Transfer 215\u003c\/p\u003e \u003cp\u003eExample: Interfund Purchase\/Sale 215\u003c\/p\u003e \u003cp\u003eHow Should Revenues, Expenditures, and Other Financing Sources and Uses Be Reported? 218\u003c\/p\u003e \u003cp\u003eIn Practice: Is the Coronavirus Pandemic an Extraordinary or Special Event? 218\u003c\/p\u003e \u003cp\u003eWhat is the Significance of the Current Financial Governmental Fund Statements? An Overview 219\u003c\/p\u003e \u003cp\u003eSummary 220\u003c\/p\u003e \u003cp\u003eKey Terms In This Chapter 221\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 221\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 222\u003c\/p\u003e \u003cp\u003eExercises 223\u003c\/p\u003e \u003cp\u003eContinuing Problem 227\u003c\/p\u003e \u003cp\u003eProblems 227\u003c\/p\u003e \u003cp\u003eQuestions for Research, Analysis, and Discussion 233\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 233\u003c\/p\u003e \u003cp\u003e\u003cb\u003e6 Accounting for Capital Projects and Debt Service 236\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eHow do Governments Account for Capital Projects Funds? 237\u003c\/p\u003e \u003cp\u003eExample: Bond Issue Costs 239\u003c\/p\u003e \u003cp\u003eExample: Bond Premiums and Discounts 239\u003c\/p\u003e \u003cp\u003eComprehensive Example: Main Types of Transactions Accounted for in Capital Projects Funds 241\u003c\/p\u003e \u003cp\u003eHow do Governments Account for Resources Dedicated to Debt Service? 245\u003c\/p\u003e \u003cp\u003eComprehensive Example: Main Types of Transactions Accounted for in Debt Service Funds 246\u003c\/p\u003e \u003cp\u003eHow do Governments Handle Special Assessments? 250\u003c\/p\u003e \u003cp\u003eIn Practice: Use and Abuse of Special Assessments 252\u003c\/p\u003e \u003cp\u003eIn Practice: What We Might Learn from “Net Investment in Capital Assets” 256\u003c\/p\u003e \u003cp\u003eWhy is Arbitrage a Concern of Governments? 256\u003c\/p\u003e \u003cp\u003eHow can Governments Benefit from Debt Refundings? 258\u003c\/p\u003e \u003cp\u003eExample: Debt Refundings 258\u003c\/p\u003e \u003cp\u003eExample: In-Substance Defeasance 260\u003c\/p\u003e \u003cp\u003eIn Practice: Current and Advance Refundings 261\u003c\/p\u003e \u003cp\u003eSummary 263\u003c\/p\u003e \u003cp\u003eKey Terms in This Chapter 264\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 264\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 265\u003c\/p\u003e \u003cp\u003eExercises 265\u003c\/p\u003e \u003cp\u003eContinuing Problem 270\u003c\/p\u003e \u003cp\u003eProblems 270\u003c\/p\u003e \u003cp\u003eQuestions for Research, Analysis, and Discussion 277\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 278\u003c\/p\u003e \u003cp\u003e\u003cb\u003e7 Capital Assets and Investments in Marketable Securities 281\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat Accounting Practices Do Governments Follow for General Capital Assets? 282\u003c\/p\u003e \u003cp\u003eAcquiring and Placing Value on Capital Assets 285\u003c\/p\u003e \u003cp\u003eExample: Trade-Ins 285\u003c\/p\u003e \u003cp\u003eWhy and How Should Governments Report Infrastructure? 287\u003c\/p\u003e \u003cp\u003eIn Practice: Nation’s Infrastructure Earns a Cumulative Grade of C-287\u003c\/p\u003e \u003cp\u003eIn Practice: Fair Values May (Or May not) Facilitate Sales Decisions 292\u003c\/p\u003e \u003cp\u003eHow Should Governments Account for Assets that Are Impaired? 294\u003c\/p\u003e \u003cp\u003eExample: Restoration Approach 294\u003c\/p\u003e \u003cp\u003eExample: Service Units Approach 295\u003c\/p\u003e \u003cp\u003eExample: Deflated Depreciated Replacement Cost Approach 296\u003c\/p\u003e \u003cp\u003eWhat Are the Critical Issues with Respect To Marketable Securities And Other Investments? 297\u003c\/p\u003e \u003cp\u003eInvestments Should Be Reported at Fair Values 297\u003c\/p\u003e \u003cp\u003eExample: Investment Income 300\u003c\/p\u003e \u003cp\u003eI n Practice: Some Governments May Make Suboptimal Investment Decisions in Order to Avoid Financial Statement Volatility 301\u003c\/p\u003e \u003cp\u003eExample: Interest Income 303\u003c\/p\u003e \u003cp\u003eIn Practice: One Common-Type Derivative 305\u003c\/p\u003e \u003cp\u003eIn Practice: Investment Debacles 305\u003c\/p\u003e \u003cp\u003eIn Practice: Common Sense Investment Practices 307\u003c\/p\u003e \u003cp\u003eSummary 307\u003c\/p\u003e \u003cp\u003eKey Terms In This Chapter 308\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 308\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 309\u003c\/p\u003e \u003cp\u003eExercises 309\u003c\/p\u003e \u003cp\u003eContinuing Problem 312\u003c\/p\u003e \u003cp\u003eProblems 313\u003c\/p\u003e \u003cp\u003eQuestions for Research, Analysis, and Discussion 320\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 320\u003c\/p\u003e \u003cp\u003e\u003cb\u003e8 Long-Term Obligations 321\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhy is Information on Long-Term Debt Important to Statement Users? 322\u003c\/p\u003e \u003cp\u003eCan Governments and Not-For-Profits Go Bankrupt? 322\u003c\/p\u003e \u003cp\u003eIn Practice: It is not So Easy to Declare Municipal Bankruptcy 323\u003c\/p\u003e \u003cp\u003eHow Do Governments Account for Long-Term Obligations? 325\u003c\/p\u003e \u003cp\u003eExample: Accounting for Bonds in Government-Wide Statements 327\u003c\/p\u003e \u003cp\u003eIn Practice: Valuing a Lottery Prize 328\u003c\/p\u003e \u003cp\u003eWhat Constitutes a Government’s Long-Term Debt? 329\u003c\/p\u003e \u003cp\u003eExample: Demand Bonds 331\u003c\/p\u003e \u003cp\u003eExample: Bond Anticipation Notes 332\u003c\/p\u003e \u003cp\u003eExample: Tax Anticipation Notes 333\u003c\/p\u003e \u003cp\u003eExample: Lessee Accounting 335\u003c\/p\u003e \u003cp\u003eExample: Lessor Accounting 336\u003c\/p\u003e \u003cp\u003eExample: Overlapping Debt 343\u003c\/p\u003e \u003cp\u003eIn Practice: 49Ers Score Big in the Financial Arena 346\u003c\/p\u003e \u003cp\u003eI n Practice: Tobacco Bonds Are Both Risky and Inconsistent with Government Policies 347\u003c\/p\u003e \u003cp\u003eWhat Other Information Do Users Want to Know About Outstanding Debt? 347\u003c\/p\u003e \u003cp\u003eExample: Debt Margin 349\u003c\/p\u003e \u003cp\u003eWhat are Bond Ratings, and Why are They Important? 351\u003c\/p\u003e \u003cp\u003eIn Practice: Bond Ratings 352\u003c\/p\u003e \u003cp\u003eSummary 352\u003c\/p\u003e \u003cp\u003eKey Terms in This Chapter 354\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 354\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 354\u003c\/p\u003e \u003cp\u003eExercises 355\u003c\/p\u003e \u003cp\u003eContinuing Problem 359\u003c\/p\u003e \u003cp\u003eProblems 359\u003c\/p\u003e \u003cp\u003eQuestions for Research, Analysis, and Discussion 365\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 366\u003c\/p\u003e \u003cp\u003e\u003cb\u003e9 Business-Type Activities 367\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat Types of Funds Involve Business-Type Activities? 368\u003c\/p\u003e \u003cp\u003eWhy Do Governments and Not-For-Profits\u003c\/p\u003e \u003cp\u003eEngage in Business-Type Activities? 368\u003c\/p\u003e \u003cp\u003eShould Business-Type Activities be Accounted for Differently than Governmental Activities? 369\u003c\/p\u003e \u003cp\u003eWhat are the Three Basic Statements of Proprietary Fund Accounting? 371\u003c\/p\u003e \u003cp\u003eWhat Accounting Issues are Unique to Enterprise Funds of Governments? 377\u003c\/p\u003e \u003cp\u003eExample: Revenue Bond Proceeds as Restricted Assets 380\u003c\/p\u003e \u003cp\u003eExample: Landfill Costs in an Enterprise Fund 382\u003c\/p\u003e \u003cp\u003eExample: Pollution Remediation Costs in an Enterprise Fund 385\u003c\/p\u003e \u003cp\u003eWhat are Internal Service Funds, and How are they Accounted For? 386\u003c\/p\u003e \u003cp\u003eExample: Internal Service Fund Accounting 390\u003c\/p\u003e \u003cp\u003eIn Practice: Full-Cost Pricing May Encourage Dysfunctional Decisions 392\u003c\/p\u003e \u003cp\u003eAccounting for Insurance Premiums 394\u003c\/p\u003e \u003cp\u003eExample: Insurance Premiums 395\u003c\/p\u003e \u003cp\u003eExample: Self-Insurance in a General Fund 396\u003c\/p\u003e \u003cp\u003eHow are Proprietary Funds Reported? 397\u003c\/p\u003e \u003cp\u003eExample: Eliminating Interfund Balances and Transactions 399\u003c\/p\u003e \u003cp\u003ePPPs and APAs 403\u003c\/p\u003e \u003cp\u003eExample: Public-Private Partnership (PPP) 404\u003c\/p\u003e \u003cp\u003eExample: PPP But Not a SCA 406\u003c\/p\u003e \u003cp\u003eIn Practice: Want to Own a Bridge? 409\u003c\/p\u003e \u003cp\u003eWhat Do Users Want to Know About Revenue Debt? 409\u003c\/p\u003e \u003cp\u003eSummary 411\u003c\/p\u003e \u003cp\u003eKey Terms in This Chapter 412\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 413\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 413\u003c\/p\u003e \u003cp\u003eExercises 414\u003c\/p\u003e \u003cp\u003eContinuing Problem 418\u003c\/p\u003e \u003cp\u003eProblems 418\u003c\/p\u003e \u003cp\u003eQuestions for Research, Analysis, and Discussion 424\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 425\u003c\/p\u003e \u003cp\u003e\u003cb\u003e10 Pensions and Other Fiduciary Activities 426\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhy is Pension Accounting so Important? 426\u003c\/p\u003e \u003cp\u003eIn Practice 428\u003c\/p\u003e \u003cp\u003eHow Do Defined Contribution Plans Differ from Defined Benefit Plans? 429\u003c\/p\u003e \u003cp\u003eIn Practice: Defined Benefit Plans Are More Efficient Than Defined Contribution Plans 430\u003c\/p\u003e \u003cp\u003eIn Practice: Can Defined Benefit Plans Be Saved? 431\u003c\/p\u003e \u003cp\u003eWhat is the Relationship Between An Employer and its Pension Plan? 432\u003c\/p\u003e \u003cp\u003eHow Should the Pension Expense in Full Accrual Statements be Determined? 435\u003c\/p\u003e \u003cp\u003eExample: The Pension Expense 437\u003c\/p\u003e \u003cp\u003eHow Should the Pension Expenditure In Governmental Funds be Determined? 441\u003c\/p\u003e \u003cp\u003eWhat Special Problems Do Multiple-Employer Cost-Sharing Plans Pose? 441\u003c\/p\u003e \u003cp\u003eHow Should The Pension Plan be Accounted for? 442\u003c\/p\u003e \u003cp\u003eWhat Types of Disclosures are Required? 444\u003c\/p\u003e \u003cp\u003eHow Should Post-Employment Benefits Other Than Pensions (OPEB) be Accounted for? 445\u003c\/p\u003e \u003cp\u003eWhat Are Fiduciary Funds? 446\u003c\/p\u003e \u003cp\u003eI n Practice: Difficulty of Determining Whether an Activity is Fiduciary or Governmental 451\u003c\/p\u003e \u003cp\u003eShould Investment Income of A Permanent Fund be Reported in the Permanent Fund Itself or The Beneficiary Fund? 454\u003c\/p\u003e \u003cp\u003eExample: Expendable Investment Income 455\u003c\/p\u003e \u003cp\u003eSummary 455\u003c\/p\u003e \u003cp\u003eKey Terms in This Chapter 457\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 457\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 458\u003c\/p\u003e \u003cp\u003eExercises 458\u003c\/p\u003e \u003cp\u003eContinuing Problem 461\u003c\/p\u003e \u003cp\u003eProblems 461\u003c\/p\u003e \u003cp\u003eQuestions for Research, Analysis, and Discussion 466\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 467\u003c\/p\u003e \u003cp\u003e\u003cb\u003e11 Issues of Reporting, Disclosure, and Financial Analysis 469\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eHow Can a Government Prepare Government-Wide\u003c\/p\u003e \u003cp\u003eStatements from Fund Statements? 469\u003c\/p\u003e \u003cp\u003eWhy is the Reporting Entity an Issue for Governments and Not-For-Profits? 471\u003c\/p\u003e \u003cp\u003eExample: The Reporting Entity 472\u003c\/p\u003e \u003cp\u003eWhat Criteria Have Been Established for Government Reporting Entities? 473\u003c\/p\u003e \u003cp\u003eExample: Financially Accountable Component Units 474\u003c\/p\u003e \u003cp\u003eExample: Fiscal Dependency 475\u003c\/p\u003e \u003cp\u003eExample: Blended Component Units 476\u003c\/p\u003e \u003cp\u003eExample: A Closely Affiliated Organization 479\u003c\/p\u003e \u003cp\u003eExample: Application of Current Standards 480\u003c\/p\u003e \u003cp\u003eWhat Other Elements Make Up the Annual Comprehensive Financial Report? 482\u003c\/p\u003e \u003cp\u003eWhat are the Reporting Requirements for Special-Purpose Governments?\u003c\/p\u003e \u003cp\u003e487\u003c\/p\u003e \u003cp\u003eHow Can A Government’s Fiscal Condition be Assessed? 488\u003c\/p\u003e \u003cp\u003eI n Practice: Balanced Budget Requirements Don’t Always Result in Balanced Budgets 497\u003c\/p\u003e \u003cp\u003eDrawing Conclusions 504\u003c\/p\u003e \u003cp\u003eSummary 509\u003c\/p\u003e \u003cp\u003eKey Terms in This Chapter 511\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 511\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 512\u003c\/p\u003e \u003cp\u003eExercises 512\u003c\/p\u003e \u003cp\u003eContinuing Problem 516\u003c\/p\u003e \u003cp\u003eProblems 516\u003c\/p\u003e \u003cp\u003eQuestions for Research, Analysis, and Discussion 520\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 521\u003c\/p\u003e \u003cp\u003e\u003cb\u003e12 Not-for-Profit Organizations 523\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWho’s in Charge? 523\u003c\/p\u003e \u003cp\u003eWhat Should be The Form And Content of Financial Statements? 524\u003c\/p\u003e \u003cp\u003eIn Practice 526\u003c\/p\u003e \u003cp\u003eWhat Is An Endowment? 527\u003c\/p\u003e \u003cp\u003eReporting Revenues and Expenses 529\u003c\/p\u003e \u003cp\u003eExample: Reporting Revenues and Expenses 530\u003c\/p\u003e \u003cp\u003eReporting Cash Flows 535\u003c\/p\u003e \u003cp\u003eWhat are The Main Types of Contributions, and How Should Pledges Be Accounted For? 538\u003c\/p\u003e \u003cp\u003eIn Practice: Even the Very Wealthy Sometimes Renege on Their Contributions 539\u003c\/p\u003e \u003cp\u003eExample: Pledges 540\u003c\/p\u003e \u003cp\u003eWhen Should Use-Restricted (Purpose-Restricted) Contributions Be Recognized? 542\u003c\/p\u003e \u003cp\u003eExample: Use-Restricted Contributions 542\u003c\/p\u003e \u003cp\u003eIn Practice: A Gift with Strings Attached 543\u003c\/p\u003e \u003cp\u003eShould Noncash Contributions be Recognized? 544\u003c\/p\u003e \u003cp\u003eExample: Noncash Contributions 545\u003c\/p\u003e \u003cp\u003eExample 545\u003c\/p\u003e \u003cp\u003eExample: Examples of Contributed Services 546\u003c\/p\u003e \u003cp\u003eIn Practice 546\u003c\/p\u003e \u003cp\u003eShould Receipts of Collection Items be Recognized As Revenues? 547\u003c\/p\u003e \u003cp\u003eWhen Should Conditional Promises be Recognized? 547\u003c\/p\u003e \u003cp\u003eExample: Conditional Promises 548\u003c\/p\u003e \u003cp\u003eHow Should “Pass-Through” Contributions Be Accounted For? 548\u003c\/p\u003e \u003cp\u003eExample: A Federated Fund-Raising Organization 549\u003c\/p\u003e \u003cp\u003eExample: A Foundation That Transfers Assets to a Specified Organization 549\u003c\/p\u003e \u003cp\u003eExample: A Foundation That Supports a Related Organization 549\u003c\/p\u003e \u003cp\u003eWhen Should Gains and Losses On Investments be Recognized? 551\u003c\/p\u003e \u003cp\u003eExample: Investment Gains 551\u003c\/p\u003e \u003cp\u003eShould Endowment Gains Be Considered Net Additions To Principal Or Expendable Income? 552\u003c\/p\u003e \u003cp\u003eExample: Investment Gains 553\u003c\/p\u003e \u003cp\u003eWhat Are Split Interest Agreements, and How Should They be Accounted For? 554\u003c\/p\u003e \u003cp\u003eHow Should Depreciation Be Reported? 555\u003c\/p\u003e \u003cp\u003eExample: Depreciation 555\u003c\/p\u003e \u003cp\u003eWhat Issues Does A Not-For-Profit\u003c\/p\u003e \u003cp\u003eFace In Establishing Its Reporting Entity? 556\u003c\/p\u003e \u003cp\u003eComprehensive Example: Museum of American Culture 558\u003c\/p\u003e \u003cp\u003eHow Should The Costs of Fund-Raising Activities Be Determined? 566\u003c\/p\u003e \u003cp\u003eCriteria for Allocating A Portion of Costs To Program or Management Functions 566\u003c\/p\u003e \u003cp\u003eExample: Allocating Charitable Costs 568\u003c\/p\u003e \u003cp\u003eHow Can A Not-For-Profit’s Fiscal Condition Be Assessed? 569\u003c\/p\u003e \u003cp\u003eIn Practice: Not-For-Profits, Like Corporations, Tainted by Scandals 571\u003c\/p\u003e \u003cp\u003eSummary 573\u003c\/p\u003e \u003cp\u003eKey Terms In This Chapter 574\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 574\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 577\u003c\/p\u003e \u003cp\u003eExercises 578\u003c\/p\u003e \u003cp\u003eProblems 582\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 586\u003c\/p\u003e \u003cp\u003e\u003cb\u003e13 Colleges and Universities 587\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat Unique Issues do Colleges and Universities Face? 587\u003c\/p\u003e \u003cp\u003eStandards for Public Colleges and Universities 589\u003c\/p\u003e \u003cp\u003eStandards for Private Not-For-Profit Colleges and Universities 590\u003c\/p\u003e \u003cp\u003eAccounting for Revenues and Expenses 597\u003c\/p\u003e \u003cp\u003eIn Practice: Which Set of Standards Do We Follow? 598\u003c\/p\u003e \u003cp\u003eIn Practice: From Public to Private 599\u003c\/p\u003e \u003cp\u003eIn Practice: How Should a University Classify a Gift that May not Be a Gift? 600\u003c\/p\u003e \u003cp\u003eExample: Tuition and Fee Revenues 600\u003c\/p\u003e \u003cp\u003eOther Issues 602\u003c\/p\u003e \u003cp\u003eExample: Grants 603\u003c\/p\u003e \u003cp\u003eExample: Student Loans 604\u003c\/p\u003e \u003cp\u003eIn Practice: How Auxiliary Enterprises Can Be Misused 605\u003c\/p\u003e \u003cp\u003eComprehensive Example: Mars University 606\u003c\/p\u003e \u003cp\u003eEvaluating The Fiscal Wherewithal of Colleges And Universities 610\u003c\/p\u003e \u003cp\u003eIn Practice: Colleges on the Brink 612\u003c\/p\u003e \u003cp\u003eSummary 613\u003c\/p\u003e \u003cp\u003eKey Terms In This Chapter 613\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 613\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 616\u003c\/p\u003e \u003cp\u003eExercises 616\u003c\/p\u003e \u003cp\u003eProblems 619\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 623\u003c\/p\u003e \u003cp\u003e\u003cb\u003e14 Health-care Providers 625\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIn Practice: Hospitals Face Economic Challenges While Also Implementing Policy Changes 626\u003c\/p\u003e \u003cp\u003eWhat Unique Issues do Health-Care Providers Face? 627\u003c\/p\u003e \u003cp\u003eWhat are the Basic Financial Statements? 628\u003c\/p\u003e \u003cp\u003eHow are Key Revenues and Expenses Recognized? 633\u003c\/p\u003e \u003cp\u003eExample: Patient Care Revenues 634\u003c\/p\u003e \u003cp\u003eExample: Implicit Price Concessions 635\u003c\/p\u003e \u003cp\u003eExample: Capitation Fee Revenues 636\u003c\/p\u003e \u003cp\u003eExample: Charity Care 637\u003c\/p\u003e \u003cp\u003eExample: Malpractice Claims 638\u003c\/p\u003e \u003cp\u003eExample: Retrospective Premiums 639\u003c\/p\u003e \u003cp\u003eComprehensive Example: Medical Center Hospital 639\u003c\/p\u003e \u003cp\u003eHow can the Fiscal Wherewithal of Health-Care Organizations be Evaluated? 645\u003c\/p\u003e \u003cp\u003eIn Practice: Financial Problems not Caused by Single Issue 646\u003c\/p\u003e \u003cp\u003eSummary 648\u003c\/p\u003e \u003cp\u003eKey Terms in This Chapter 649\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 649\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 649\u003c\/p\u003e \u003cp\u003eExercises 650\u003c\/p\u003e \u003cp\u003eProblems 654\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 658\u003c\/p\u003e \u003cp\u003e\u003cb\u003e15 Auditing Governments and Not-for-Profit Organizations 659\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eHow Do Audits Of Governments and Not-For-Profits\u003c\/p\u003e \u003cp\u003eDiffer from Those of Businesses? 660\u003c\/p\u003e \u003cp\u003eHow Has The Yellow Book Influenced Governmental and Not-For-Profit Auditing? 660\u003c\/p\u003e \u003cp\u003eWhat Types of Audits Do Governments Conduct? 662\u003c\/p\u003e \u003cp\u003eWhat Levels of Standards are Applicable To All Engagements? 662\u003c\/p\u003e \u003cp\u003eIn Practice: To Whom Should a City Auditor Report? 663\u003c\/p\u003e \u003cp\u003eWhat are Performance Audits? 667\u003c\/p\u003e \u003cp\u003eKey Differences Between Financial And Performance Audits 667\u003c\/p\u003e \u003cp\u003eIn Practice: Targeting Seemingly Trivial Activities 670\u003c\/p\u003e \u003cp\u003eExample: Evidence Gathering 673\u003c\/p\u003e \u003cp\u003eIn Practice: Findings Must Relate to Program Objectives 674\u003c\/p\u003e \u003cp\u003eHow Have The Single Audit Act and Other Pronouncements Influenced Auditing? 675\u003c\/p\u003e \u003cp\u003eWhat Approach Do Auditors Take In Performing Single Audits? 676\u003c\/p\u003e \u003cp\u003eWhat Reports Result From Single Audits? 679\u003c\/p\u003e \u003cp\u003eWhat Unique Ethical Issues Do Governmental and Not-For-Profit Accounting and Auditing Present? 682\u003c\/p\u003e \u003cp\u003eExample: Ethical Dilemma 684\u003c\/p\u003e \u003cp\u003eSummary 686\u003c\/p\u003e \u003cp\u003eKey Terms In This Chapter 687\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 687\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 688\u003c\/p\u003e \u003cp\u003eExercises 688\u003c\/p\u003e \u003cp\u003eProblems 690\u003c\/p\u003e \u003cp\u003eCases in Ethics 694\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 696\u003c\/p\u003e \u003cp\u003e\u003cb\u003e16 Federal Government Accounting 697\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhich Agencies are Responsible for Federal Accounting and Reporting? 700\u003c\/p\u003e \u003cp\u003eWhat Constitutes the Federal Budget? 703\u003c\/p\u003e \u003cp\u003eWhat Constitutes the Federal Government Reporting Entity? 705\u003c\/p\u003e \u003cp\u003eWhat are the Form and Content of Government-Wide Federal Statements? 707\u003c\/p\u003e \u003cp\u003eWhat Types of Accounts are Maintained by Federal Entities? 709\u003c\/p\u003e \u003cp\u003eWhat Statements are Required of Federal Agencies? 710\u003c\/p\u003e \u003cp\u003eWhat are Other Key Features of the FASAB Model? 712\u003c\/p\u003e \u003cp\u003eExample: Subsidized Loan 721\u003c\/p\u003e \u003cp\u003eExample: Loan Guarantees 722\u003c\/p\u003e \u003cp\u003eWhat Else Constitutes the Federal Government’s Reporting System 724\u003c\/p\u003e \u003cp\u003eWhat are the Key International Trends in Governmental Accounting? 725\u003c\/p\u003e \u003cp\u003eAn International Standard-Setting Agency 726\u003c\/p\u003e \u003cp\u003eSummary 727\u003c\/p\u003e \u003cp\u003eKey Terms in This Chapter 728\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 728\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 729\u003c\/p\u003e \u003cp\u003eExercises 730\u003c\/p\u003e \u003cp\u003eProblems 733\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 737\u003c\/p\u003e \u003cp\u003e\u003cb\u003e17 Managing for Results 739\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat Role Do Accountants Play in the Management Cycle of Governments and Not-For-Profits? 740\u003c\/p\u003e \u003cp\u003eHow Can the Limits of Traditional Budgets Be Overcome? 741\u003c\/p\u003e \u003cp\u003eWhat are the Characteristics of Sound Operational Objectives? 743\u003c\/p\u003e \u003cp\u003eWhat are the Perils of Establishing Operational Objectives? 746\u003c\/p\u003e \u003cp\u003eI n Practice: A Classic Case of Reliance on Misspecified Objectives (Two Perspectives of the Vietnam War) 747\u003c\/p\u003e \u003cp\u003eHow Do Program Budgets Relate Expenditures to Operational Objectives? 748\u003c\/p\u003e \u003cp\u003eAdvantages and Disadvantages of Program Budgets 753\u003c\/p\u003e \u003cp\u003eHow Should Service Efforts and Accomplishments Be Reported? 755\u003c\/p\u003e \u003cp\u003eHow are Capital Expenditures Planned and Budgeted Within a Framework of Operational\u003c\/p\u003e \u003cp\u003eObjectives? 762\u003c\/p\u003e \u003cp\u003eExample: Benefits Are Cash Savings 764\u003c\/p\u003e \u003cp\u003eExample: Choosing among Options with Similar Benefits 765\u003c\/p\u003e \u003cp\u003eIn Practice: September 11 Victim Compensation Fund 767\u003c\/p\u003e \u003cp\u003eSummary 769\u003c\/p\u003e \u003cp\u003eKey Terms in This Chapter 770\u003c\/p\u003e \u003cp\u003eExercise for Review and Self-Study 770\u003c\/p\u003e \u003cp\u003eQuestions for Review and Discussion 770\u003c\/p\u003e \u003cp\u003eExercises 771\u003c\/p\u003e \u003cp\u003eProblem 774\u003c\/p\u003e \u003cp\u003eSolution to Exercise for Review and Self-Study 778\u003c\/p\u003e \u003cp\u003eGlossary G-1\u003c\/p\u003e \u003cp\u003eValue Tables VT-1\u003c\/p\u003e \u003cp\u003eIndex I-1\u003c\/p\u003e","brand":"Thad D. 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