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

LEARNING OBJECTIVES

After studying this chapter you should understand:

• What types of funds involve business-type activities
• Why governments and not-for-profits engage in business-type activities
• How governments distinguish between proprietary and governmental activities, and the reasons for and against different accounting practices
• The fundamental principles of proprietary fund accounting
• The unique accounting issues raised by the use of enterprise funds, including those pertaining to capital contributions, restricted assets, and landfills
• The special accounting issues relating to internal service funds
• How governments account for insurance activities
• The special problems of reporting proprietary funds in government-wide statements
• How investors assess revenue debt

Governments and not-for-profits engage in a variety of functions that are similar to those carried out by businesses. They range in size from the small gift shops of churches to multibillion-dollar regional power authorities.

Thus, in this chapter we will look at accounting principles applicable to business accounting. As shall soon be evident, the business-type activities of governments and not-for-profits are accounted for similarly to corresponding enterprises in the private sector. Their financial statements are on a full rather than a modified accrual basis, and their measurement focus is on all economic resources, ...