tailieunhanh - Lecture note Government and not-for-profit accounting: Concepts and practices (7/e) – Chapter 4: Recognizing revenues in governmental funds
Chapter 4 - Recognizing revenues in governmental funds. After studying chapter 4, you should understand: Why focus on current financial resources and the modified accrual basis for governmental funds, why focus on economic resources and the full accrual basis for government-wide financial statements, distinction between the modified accrual and full accrual basis of accounting,. | Chapter 4 Recognizing Revenues in Governmental Funds © 2016 John Wiley & Sons, Inc. All rights reserved. 1 1 Thoughts to Ponder: Chapter 4 “The thing generally raised on city land is taxes.” - Charles Dudley Warner “For every benefit you receive a tax is levied.” - Ralph Waldo Emerson “Taxes are the sinews of the state.” - Cicero © 2016 John Wiley & Sons, Inc. All rights reserved. 2 2 Learning Objectives Why focus on current financial resources and the modified accrual basis for governmental funds Why focus on economic resources and the full accrual basis for government-wide financial statements Distinction between the modified accrual and full accrual basis of accounting Differentiate between exchange and non-exchange transactions Main types of non-exchange transactions © 2016 John Wiley & Sons, Inc. All rights reserved. 3 Measurement Focus and Basis of Accounting Entity’s measurement focus What is being reported upon? Which assets, liabilities, and deferrals are being . | Chapter 4 Recognizing Revenues in Governmental Funds © 2016 John Wiley & Sons, Inc. All rights reserved. 1 1 Thoughts to Ponder: Chapter 4 “The thing generally raised on city land is taxes.” - Charles Dudley Warner “For every benefit you receive a tax is levied.” - Ralph Waldo Emerson “Taxes are the sinews of the state.” - Cicero © 2016 John Wiley & Sons, Inc. All rights reserved. 2 2 Learning Objectives Why focus on current financial resources and the modified accrual basis for governmental funds Why focus on economic resources and the full accrual basis for government-wide financial statements Distinction between the modified accrual and full accrual basis of accounting Differentiate between exchange and non-exchange transactions Main types of non-exchange transactions © 2016 John Wiley & Sons, Inc. All rights reserved. 3 Measurement Focus and Basis of Accounting Entity’s measurement focus What is being reported upon? Which assets, liabilities, and deferrals are being measured? Basis of Accounting When transactions and other events are recognized? © 2016 John Wiley & Sons, Inc. All rights reserved. 4 Governmental Funds Measurement Focus: flow of current financial resources (focus is on expendable financial resources) Revenues must be available to pay liabilities of current period before they can be recognized. Current financial resources include cash, receivables, marketable securities, prepaid items, and supplies inventories Capital assets such as land, buildings, and equipment are NOT accounted for in governmental funds, but rather in governmental activities Basis: modified accrual accounting © 2016 John Wiley & Sons, Inc. All rights reserved. 5 Revenue Recognition GAAP for revenue recognition is GASB Stmt. No. 33 Under modified accrual basis, revenue cannot be recognized until they are both measurable and available to finance expenditures of fiscal period. Collection of cash must be reasonably assured before revenues can be recognized. “Available”: 60
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