LEARNING OBJECTIVES
After studying this chapter you should understand:
- What is an endowment
- The distinction between permanent funds and fiduciary funds
- How investment gains and losses should be accounted for
- Why all nonexpendable funds should be accounted for on a full accrual basis, and why they are not
- Why should investment gains be added to principal or expendable income
- How can institutions protect against inflation, yet reap the benefits of current income
- How the main types of transactions are accounted for in fiduciary funds
- Why pensions are important
- The distinctions between defined contribution and defined benefit pension plans
- The relationships between an employer and its pension trust fund
- The main issues faced by government employers in accounting for pension plans and how the GASB has resolved them
- How pension plans are accounted for today and how they will be accounted for in the future
- How postemployment health care benefits are accounted for
- The accounting issues presented by agency funds
- The accounting issues presented by investment trust funds
When one thinks of the assets of either governments or not-for-profits, it is natural to conjure up images of highways, buildings, police cars, research laboratories, and so on. In fact, however, governments and not-for-profits represent some of the nation's largest holders of stocks, bonds, and similar securities. Indeed, ...
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