Week 2 Ind assignment

1098 words 5 pages
CH. 1 Exercise 1-1
1. The traditional business model of accounting is inadequate for governments and not-for-profit organizations primarily because businesses differ from governments and not-for-profit organizations in that
A. They have different missions
CH. 1 Questions
1. What is the defining distinction between for-profit businesses and not-for-profit entities, including governments? What are the implications of this distinction for financial reporting?
The defining distinction is that for profit businesses focus on generating a profit every year, whereas government entities and not-for-profit organizations focus on improving and enhancing the quality of life in their communities.

3. How and why might the importance of the budget
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At the end of Year 1 that government has $100,000 of goods and services on order. At the start of Year 2 the government should
d. Debit encumbrances and credit fund balance
5. Which of the following accounts would a government be most likely to debit as part of its year-end closing process?
d. Revenues, appropriations, and fund balance
6. A government places an order for a particular item of equipment and encumbers $5,500. The item arrives accompanied by an invoice for $5,200. The entries that the government should make should include (but not necessarily be limited to):
c. A debit to expenditures for $5,200, a credit to encumbrances for $5,500, and a credit to accounts payable for $5,200
7. A primary virtue of an object classification budget is that it
b. Facilitates control by establishing detailed spending mandates
8. Per GASB Statement No. 34, governments must
c. Prepare a schedule that reconciles any differences between amounts reported on a GAAP basis and a budgetary basis
9. The amount that a government has available to spend for a particular purpose in a particular year would be indicated by
d. Appropriations minus the sum of expenditures, encumbrances, and net adjustments
10. For which of the following funds would a government be least likely to record its annual budget and thereby integrate it into its accounting system?
d. Enterprise fund
CH. 3 Questions
1. Why is it important that governments and

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