Question

1. How and why are governmental organizations different than for profit (businesses) organizations?

2. How and why are governmental organizations similar to for profit (businesses) organizations?

3. What or who governs governmental organizations?

4. Which organizations set accounting standards for state and local governments?

5. How many governmental units are in the United States?

6. What is interperiod equity? Give an example of interperiod equity.

7. What are the GASB financial reporting objectives?

Answer 1

Ans=1) A)The most fundamental difference between govt. and for-profit organizations is the reason they exist. For-profit companies are generally founded to generate income for entrepreneurs and their employees, while govt.organizations are generally founded to serve a humanitarian or environmental need.

Govt organizations channel all of their income into programs and services aimed at meeting people's unmet or under-met needs, such as food, water, shelter and education, or towards other issues such as deforestation and endangered species.

(B) Sales revenue, in the form of cash and receivables, is the life-blood of for-profit organizations. These companies rely on earned income and credit arrangements with lenders and suppliers to finance their operations. Nonprofits, on the other hand, rely almost entirely on donations and grants from individuals, government entities and organizations

Ans=2) Difference between government & profit making organization

Both non profit as well as for profit organizations have goals and missions which are well defined.

Their products or services are known by every one.

The govt organization should satisfy the objectives and needs of their various stakeholders just like a private company knows their customers and serve them accordingly.

Both govt. and for profit organizations have limited resources and the goals must be met with the limited funds.

Like private and commercial business corporations, many non profit organizations have boards, management and different levels of staff which help in the efficient working of the organization.

Ans=3) Government organizations are govern or control by central local or state governments itself .They are not like private organizations which are wholly control by enterprenuers.

Ans=4) The Governmental Accounting Standards Board (GASB) sets accounting standards for state and local governments.

Ans=5) Federal ,State and local Government are the three main govermental units in United state.

Ans=6) Interperiod Equity is a government's obligation to disclose whether current-year revenues were sufficient to pay for current-year benefits, or did current citizens defer payments to future taxpayers, i.e. it refers to whether current-year revenues are sufficient to pay for the services provided that year and whether future taxpayers will be required to assume burdens for services previously provided. Example - finding out as to whether country has fiscal deficit or income is more than its expenditure

Ans=7) Objectives of GASB financial reporting are:

(A)Financial reporting should assist in fulfilling government’s duty to be publicly accountable and

should enable users to assess that accountability.

(B)Financial reporting should assist users in evaluating the operating results of the governmental

entity for the year.

(C)Financial reporting should assist users in assessing the level of services that can be provided by

the governmental entity and its ability to meet its obligations as they become due.