Part 2: Test Bank: Chapter

Part 1: Solutions

Manual:

Chapter 1-14; Page 1-301 Part 2: Test Bank: Chapter

1-14: Page 302-824

Solu�ons Manual with Test Bank For Essen�als of Accoun�ng For Governmental and Not-for-Profit Organiza�ons 15th Edition By Paul Copley (All Chapters, 100% Original Verified A+ Grade) Solutions Manual Supplement Files Download link at the end of Part 1.Part 1: Solutions Manual: Chapter 1-14: Page 1-301 Part 2: Test Bank: Chapter 1-14: Page 302-824 Answers At The End Of Each Chapter 1 / 4

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organizations © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.1-2 CHAPTER 1 Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organizations

1-1.THE SOLUTION TO THIS AND THE FIRST EXERCISE OF CHAPTERS 2 THROUGH 9 WILL

DIFFER FROM STUDENT TO STUDENT ASSUMING EACH HAS A DIFFERENT ACFR.

1-2.

1)ORGANIZATIONAL PURPOSES: WHILE THE PURPOSE OF A COMMERCIAL BUSINESS

IS TO GENERATE A PROFIT FOR THE BENEFIT OF ITS OWNERS , GOVERNMENTS EXIST

FOR THE WELL BEING OF CITIZENS BY PROVIDING PUBLIC SERVICES – WHETHER OR

NOT THE SERVICES ARE PROFITABLE UNDERTAKINGS .

2)SOURCES OF REVENUES: GOVERNMENTS DERIVE MANY OF THEIR RESOURCES

FROM TAXES. INDIVIDUALS AND BUSINESSES PAY TAXES TO AVOID PENALTY , NOT

VOLUNTARILY BECAUSE THEY PERCEIVE GOVERNMENT SERVICES TO BE OF VALUE

AND FAIRLY PRICED. SINCE TAXES DO NOT INVOLVE AN EARNINGS PROCESS , THE

TIMING OF THE RECOGNITION OF TAX REVENUE IS NOT ALWAYS CLEAR .

3)POTENTIAL FOR LONGEVITY: BECAUSE THE U.S. AND STATE CONSTITUTIONS

GRANT STATE AND LOCAL GOVERNMENTS THE ABILITY TO TAX , GOVERNMENTS

VERY RARELY GO OUT OF BUSINESS. THIS LONG-TERM VIEW OF OPERATIONS

CHANGES THE FOCUS OF ACCOUNTING FROM ONE OF NEAR -TERM RECOVERY OF

AMOUNTS INVESTED IN ASSETS TO A LONGER -TERM FOCUS ON THE SUSTAINABILITY

OF SERVICES AND THE ABILITY TO MEET FUTURE DEMAND .

4)RELATIONSHIP WITH STAKEHOLDERS: TAXES ARE CREATED THROUGH THE

LEGISLATIVE PROCESS BY OFFICIALS ELECTED BY THE CITIZENS . BECAUSE CITIZENS

AND BUSINESSES ARE THEN REQUIRED TO PAY THESE TAXES , GOVERNMENTS HAVE

AN OBLIGATION TO DEMONSTRATE ACCOUNTABILITY FOR THESE PUBLIC FUNDS .

5)ROLE OF THE BUDGET: GOVERNMENT BUDGETS ARE EXPRESSIONS OF PUBLIC

POLICY AND OFTEN CARRY THE AUTHORITY OF LAW , PREVENTING PUBLIC OFFICIALS

FROM SPENDING OUTSIDE THEIR BUDGETARY AUTHORITY . THE INCREASED

IMPORTANCE OF BUDGETS IS REFLECTED IN GOVERNMENT FINANCIAL REPORTS BY A

REQUIRED REPORT COMPARING BUDGETED AND ACTUAL AMOUNTS .

1-3.THE THREE STANDARDS SETTING BODIES IN QUESTION ARE THE FEDERAL ACCOUNTING

STANDARDS ACCOUNTING ADVISORY BOARD (FASAB), THE GOVERNMENTAL

ACCOUNTING STANDARDS BOARD (GASB), AND THE FINANCIAL ACCOUNTING

STANDARDS BOARD (FASB). THE FASAB ESTABLISHES ACCOUNTING AND REPORTING

STANDARDS FOR THE FEDERAL GOVERNMENT AND ITS AGENCIES UNLESS OBJECTED TO

BY ONE OF THE "PRINCIPALS" (THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND

BUDGET, THE COMPTROLLER GENERAL OF THE UNITED STATES (GOVERNMENT

ACCOUNTABILITY OFFICE), AND THE SECRETARY OF THE DEPARTMENT OF THE

TREASURY). WHEN THE "PRINCIPALS" APPROVE, THE FASAB STANDARDS BECOME

GAAP. THE GASB SETS ACCOUNTING AND FINANCIAL REPORTING STANDARDS FOR

STATE AND LOCAL GOVERNMENTAL ORGANIZATIONS , INCLUDING THOSE NOT-FOR-

PROFIT ORGANIZATIONS THAT ARE DETERMINED TO BE STATE AND LOCAL

GOVERNMENTS. THE FASB SETS ACCOUNTING AND FINANCIAL REPORTING STANDARDS

Part 1: Solutions Manual: Chapter 1-14 2 / 4

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organizations © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.1-3

FOR PROFIT SEEKING BUSINESSES AND FOR NONGOVERNMENTAL , NOT-FOR-PROFIT

ENTITIES.

1-4.THE DEFINITION OF A GOVERNMENT, AS AGREED TO BY THE FASB AND THE GASB IS

AS FOLLOWS:

“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 ASSETS REVERTING TO A GOVERNMENT , OR

3. THE POWER TO ENACT AND ENFORCE A TAX LEVY .

FURTHERMORE, ORGANIZATIONS ARE PRESUMED TO BE GOVERNMENTAL IF THEY HAVE

THE ABILITY TO ISSUE DIRECTLY (RATHER THAN THROUGH A STATE OR MUNICIPAL

AUTHORITY) DEBT THAT PAYS INTEREST EXEMPT FROM FEDERAL TAXATION .

1-5.THE SOURCES OF AUTHORITATIVE GAAP FOR STATE AND LOCAL GOVERNMENTS ARE :

−CATEGORY A: GASB STATEMENTS (AND INTERPRETATIONS)

−CATEGORY B: GASB IMPLEMENTATION GUIDES, GASB TECHNICAL

BULLETINS AND LITERATURE OF THE AMERICAN INSTITUTE OF CERTIFIED

PUBLIC ACCOUNTANTS (AICPA) SPECIFICALLY CLEARED BY THE GASB

IF THE ACCOUNTING TREATMENT FOR A GIVEN TRANSACTION IS NOT SPECIFIED BY A

STATEMENT IN CATEGORY A, A STATE AND LOCAL GOVERNMENT SHOULD CONSIDER

WHETHER IT IS COVERED BY ONE OF THE SOURCES IDENTIFIED IN CATEGORY B. IF THE

ACCOUNTING TREATMENT IS NOT SPECIFIED WITHIN ONE OF THESE AUTHORITATIVE

SOURCES, THE GOVERNMENT SHOULD CONSIDER WHETHER THE TRANSACTION IS

SUFFICIENTLY SIMILAR TO ONES COVERED BY ONE OF THE AUTHORITATIVE SOURCES

THAT A SIMILAR ACCOUNTING TREATMENT CAN BE APPLIED . IF NOT, THE

GOVERNMENT MAY USE NONAUTHORIT ATIVE SOURCES FOR GUIDANCE, INCLUDING:

−GASB CONCEPT STATEMENTS,

−FASB, FASAB, OR INTERNATIONAL STANDARDS BOARD

PRONOUNCEMENTS,

−AICPA LITERATURE NOT SPECIFICALLY CLEARED BY THE GASB,

−OTHER SOURCES PROVIDED BY PROFESSIONAL ORGANIZATIONS ,

REGULATORY AGENCIES, TEXTBOOKS, AND PUBLISHED ARTICLES, OR

−PREVALENT PRACTICES THAT EVOLVED AMONG GOVERNMENTS WITHOUT

SPECIFIC AUTHORITATIVE ACTION. 3 / 4

Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organizations © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.1-4 1-6.

A.CONCEPTUALLY, THE MEASUREMENT FOCUS DETERMINES WHAT IS MEASURED; THE

BASIS OF ACCOUNTING DETERMINES WHEN SOMETHING IS MEASURED. THE ECONOMIC

RESOURCES MEASUREMENT FOCUS MEASURES ALL ECONOMIC RESOURCES , INCLUDING

CAPITAL ASSETS AND LONG-TERM DEBT. THE CURRENT FINANCIAL RESOURCES

MEASUREMENT FOCUS MEASURES PRIMARILY FINANCIAL RESOURCES (CASH, ASSETS

THAT ARE AVAILABLE TO BE CONVERTED TO CASH (INVESTMENTS AND CURRENT

RECEIVABLES) AND ASSETS THAT ARE CONSUMABLE IN LIEU OF CASH (PREPAID ITEMS

AND INVENTORIES) AND DOES NOT RECOGNIZE LONG-TERM ASSETS AND LIABILITIES.

THE ACCRUAL BASIS OF ACCOUNTING AS APPLIED TO THE ECONOMIC RESOURCES

MEASUREMENT BASIS RECOGNIZES REVENUES WHEN EARNED AND EXPENSES WHEN

INCURRED. THE MODIFIED ACCRUAL BASIS FOR CURRENT FINANCIAL RESOURCES OF

ACCOUNTING RECOGNIZES REVENUES WHEN MEASURABLE AND AVAILABLE TO FINANCE

THE EXPENDITURES OF THE CURRENT PERIOD . EXPENDITURES (NOT EXPENSES) ARE

RECOGNIZED IN THE PERIOD IN WHICH THE FUND LIABILITY IS INCURRE D.

B.THE GOVERNMENTAL FUNDS USE THE CURRENT FINANCIAL RESOURCES

MEASUREMENT FOCUS AND MODIFIED ACCRUAL BASIS OF ACCOUNTING IN THE FUND-

BASIS STATEMENTS. THE PROPRIETARY AND FIDUCIARY FUNDS USE THE ECONOMIC

RESOURCES MEASUREMENT FOCUS AND ACCRUAL BASIS OF ACCOUNTING IN THE

FUND-BASIS STATEMENTS. THE GOVERNMENT-WIDE STATEMENTS ARE PREPARED

USING THE ECONOMIC RESOURCES MEASUREMENT FOCUS AND ACCRUAL BASIS OF

ACCOUNTING.

1-7.PRIVATE SECTOR ORGANIZATIONS ARE ORGANIZATIONS THAT ARE NOT OWNED OR

CONTROLLED BY GOVERNMENTS AND INCLUDE BUSINESSES AS WELL AS PRIVATE NOT -

FOR-PROFIT ORGANIZATIONS. PUBLIC SECTOR ORGANIZATIONS ARE GOVERNMENTS OR

ORGANIZATIONS OWNED OR CONTROLLED BY GOVERNMENTS .

1-8.ACCORDING TO THE WEB SITE, “THE MISSION OF THE GASB AND FASB IS TO

ESTABLISH AND IMPROVE FINANCIAL ACCOUNTING AND REPORTING STANDARDS TO

PROVIDE USEFUL INFORMATION TO INVESTORS AND OTHER USERS OF FINANCIAL

REPORTS AND EDUCATE STAKEHOLDERS ON HOW TO MOST EFFECTIVELY UNDERSTAND

AND IMPLEMENT THOSE STANDARDS .

1-9.THE APPROPRIATE FUNDS ARE:

a)CAPITAL PROJECTS FUND: THESE FINANCIAL RESOURCES ARE TO BE USED TO

FINANCE CONSTRUCTION OF A CAPITAL ASSET . SINCE THE JAIL IS UNLIKELY TO

CHARGE FOR ITS SERVICES, IT WOULD NOT BE PART OF A PROPRIETARY FUND .

• / 4