You are the owner of a small business. In the last year, you have started to hire employees and you now have 5 employees. Each has his or her own personal computer and you have hired a consultant to establish a local area network for your business. You realize that you should draw up a […]

1.            The main objective of a typical governmental or not-for-profit entity is to earn a profit.   2.            A government’s budget may be backed by the force of law.   3.            Governmental entities have no need for an accounting system. […]

1.            Unlike individuals and businesses, governments cannot seek protection under the Federal Bankruptcy Code.   2.            General obligation debt is the obligation of the government at large and is thereby backed by the government’s general credit and revenue-raising powers.   3.          […]

1.            General capital assets are distinguished from the capital assets of proprietary funds and fiduciary funds.   2.            General capital assets are excluded from governmental funds, themselves, because of the funds’ measurement focus (current financial resources).   3.            In governmental […]

1.            The resources to service all general long-term debts of the governmental entity are typically accounted for in debt service funds.   2.            When governments establish capital projects funds, they may choose to maintain a separate fund for each major project, or they may choose […]

1.            Expenditures are generally recognized when resources are acquired; expenses when resources are consumed.   2.            Governmental fund liabilities are considered current only when they must be liquidated with expendable available financial resources—not, as in businesses and in the government-wide statements, when they must be […]

1.            Capital budgets focus on plans for the acquisition and construction of fixed assets.   2.            The accounting cycle for most governments is two to three years, consistent with the terms of elected officials.   3.            Most budgets are prepared […]

1.            If an entity elects to focus on all economic resources, then it should adopt a modified accrual basis of accounting.   2.            The budgetary measurement focus of governments is determined by applicable state or local laws.   3.            The […]

1.            Fund accounting promotes control and accountability over restricted resources.   2.            The basis of accounting determines when transactions and events are recognized.   3.            If an entity adopts a full accrual basis of accounting, its measurement focus will automatically […]

1.            The main objective of a typical governmental or not-for-profit entity is to earn a profit.   2.            A government’s budget may be backed by the force of law.   3.            Governmental entities have no need for an accounting system. […]