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

LEARNING OBJECTIVES

After studying this chapter you should understand:

• Why and how governments use capital projects funds to account for resources accumulated to acquire capital assets
• Why and how governments use debt service funds to account for resources accumulated to repay debt principal and interest
• How governments account for special assessments
• What arbitrage is and why it concerns governments
• The nature of debt refundings, the circumstances in which governments can benefit from them, and the manner in which governments account for them

As indicated in previous chapters, both governments and other not-for-profits maintain separate funds (accounting and reporting entities) for resources to be used to acquire long-lived assets and to service debt. Governments classify these funds as governmental, as opposed to proprietary. In other not-for-profits, the resources in these funds are categorized as either unrestricted or temporarily restricted, depending on their source. For the most part, the principles of revenue and expenditure recognition presented in earlier chapters are applicable to these funds. Nevertheless, since these funds are used to account for transactions having unique features and involving sizable amounts of resources, they warrant special consideration.

Our concern in this chapter is with the resources to acquire assets and to service debts, not with the ...