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Government Accounting

In: Business and Management

Submitted By selu
Words 300
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ANSWERS TO QUESTIONS

QUESTION 1-1

a. The similarities of accounting for profit-seeking and G&NP organizations include:

1. Double-entry system of accounts. 2. Most accounting mechanics, e.g., basic transaction documents, journals, ledgers, charts of accounts. 3. Where a G&NP organization has a business-type activity, e.g., a municipal electric utility, the accounting largely parallels that for a similar private business (e.g., electric utility).

b. Among the unique aspects of G&NP organization accounting are:

1. Fund accounting—designed to separate resources according to the purposes for which they may be used and to account for their uses and balances. 2. Budgetary control techniques—to help assure appropriations are not overexpended and all resources due the G&NP organization are received by it.

Question 1-2

a. A fund of a government organization is an independent fiscal and accounting entity. Each fund has a separate self-balancing set of accounts in which are recorded the resources segregated for specific purposes, the related liabilities and residual equity (fund balance or net assets), and the changes therein. Financial statements typically must be presented to report the financial position and operating activities of a fund of a government.

b. As the term is generally used in commercial accounting, a "fund" merely indicates that a portion of an organization's assets is set aside and/or restricted to certain uses, e.g., a petty cash fund or a bond sinking fund. Such "funds" are not separate accounting entities, but are accounted for by establishing appropriately titled asset and liability accounts within the organization's general ledger.

c. No, the creation of a fund does not constitute authority to spend or obligate its resources. In most not-for-profit organizations, particularly governments, authority to spend or...…...

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