Question

During chapters 9, 13, 15, and 16, the class was introduced to reconciling the fund financial statements to the government wide financial statements.  The class was also introduced to non profit accounting. From these chapters, please select one aspect of government wide financial statements, the reconciliation to the government wide financial statements, or non profit accounting standards to discuss.

Answer 1

Government-wide financial statements are your key to finding out how your state and local governments spend their money. These statements use standardized accounting guidelines set by the Government Accounting Standards Board to help you make across-the-board comparisons of publicly funded activities, from building roads to feeding schoolchildren.

Nonprofit organizations are entities that perform charitable services by accepting funds from the general public. To help regulate activities and encourage the proper use of funds, accounting standards are in place to assist management and auditors when preparing financial statements and performing engagements. Although the accounting standards are complex, the standards are necessary to promote comparability between organizations and protect the general public.

Significance

Accounting standards affect readers of financial statements by changing the presentation of statements for nonprofit organizations. As a result, the financial statements of nonprofit organizations differ from a for-profit entity, such as a corporation. For instance, the basic financial statements of an entity formed to produce income are the balance sheet, income statement and the statement of cash flows. While a nonprofit entity also has a statement of cash flows, the balance sheet is replaced with a statement of changes in net assets and the income statement is replaced with the statement of activities