Week 2 Ind assignment
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 …show more content…
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