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LEARNING OBJECTIVES

After studying this chapter you should understand:

  • The characteristics that distinguish governments and not-for-profit organizations from businesses and the accounting and reporting implications of these characteristics
  • Why other characteristics of governments and not-for-profit entities may affect accounting and reporting practices
  • The features that distinguish governments from not-for-profit entities
  • The overall purpose of financial reporting in the government and not-for-profit sectors
  • The information requirements of the main users of the financial reports of governments and not-for-profit entities
  • The specific objectives of financial reporting, as established by the Governmental Accounting Standards Board for state and local governments, the Financial Accounting Standards Board for not-for-profits, and the Federal Accounting Standards Advisory Board for the federal government, and the obstacles to achieving these objectives within a set of financial statements prepared on a single basis of accounting
  • How differences in accounting principles affect financial reporting and thus can have economic consequences
  • The institutional arrangements for establishing accounting standards for these entities

Governments and not-for-profit organizations have much in common with businesses. However, the differences between the two environments are sufficiently pronounced ...

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