Government and Not For Profit Accounting: Concepts and Practices, 6th Edition

LEARNING OBJECTIVES

After studying this chapter you should understand:

• Why governments focus on current financial resources and use the modified accrual basis to account for their governmental funds
• Why governments focus on all economic resources and use the full accrual basis in their government-wide financial statements
• The key distinctions between the modified and full accrual bases of accounting
• The distinction between exchange and nonexchange transactions
• The main types of nonexchange transactions
• The impact of the “available” criterion on revenue recognition
• How each of the following types of revenues are accounted for:
  • Property taxes
  • Sales taxes
  • Income taxes
  • Licenses and permits
  • Fines
  • Grants and donations
  • Investment gains and losses
  • Sales of capital assets
  • On-behalf payments

We now turn to what are among the most intriguing questions of government and not-for-profit accounting: when should revenues and expenditures be recognized, and how should the related assets liabilities and deferred inflows and outflows of resources be measured?

In Chapters 4 and 5 we consider revenue and expenditure recognition in governments, and in Chapters 12, 13, and 14 we address revenue and expenditure recognition in not-for-profit entities. Most of the examples in this and the next chapter will implicitly be directed toward governments' general funds. However, the discussion is equally ...