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Wiley CPAexcel Exam Review 2014 Study Guide, Financial Accounting and Reporting by O. Ray Whittington

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Module 21: Governmental (State and Local) Accounting

Overview

Governmental accounting has some similarities to commercial accounting. For example, governmental accounting uses the double-entry system, journals, ledgers, trial balances, financial statements, internal control, etc. However, differences arise due to the objectives and environment of government. The major differences include

1. The absence of a profit motive, except for enterprise activities, such as utilities
2. A legal emphasis that involves restrictions both in the raising and spending of revenues
3. An inability to “match” revenues with expenditures, as revenues are often provided by persons other than those receiving the services
4. An emphasis on accountability or stewardship of resources entrusted to public officials
5. The use of fund accounting and reporting, as well as government-wide reporting
6. The recording of the budget in governmental funds which legally adopt a budget (i.e., General Fund)
7. The use of modified accrual accounting rather than full accrual accounting in some funds (governmental fund types)

Before beginning the reading you should review the key terms at the end of the module.

A. The Governmental Accounting Standards Board

B. Governmental Accounting Concepts

C. The Governmental Reporting Model

D. The Reporting Entity

E. Management’s Discussion and Analysis

F. Government-Wide Financial Statements

G. Fund Financial Statements

H. Notes to the Financial Statements

I. Required Supplementary ...

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