Questions and Answers of Accounting Governmental Nonprofit Entities

In order to deliver and maintain quality medical services, hospitals should be in sound financial condition. The HFMA releases annually key hospital financial statistics and ratio medians for a
Community benefit is a critical factor in the determination of whether a hospital is granted 501(c)(3) status, which may result in significant savings in income and other taxes. IRC Section 501(r)
Distinguish among the two categories of restrictiveness into which the net assets of not-for-profit organizations must be separated for purposes of external reporting. By whom must these restrictions
What is the general rule for recognizing property taxes as revenues? How would property taxes be accounted for differently in the fund statements, as opposed to in the government-wide statements?
Explain tax abatements and how are they different from tax expenditures?
Inventory transactions can be derived from year-end balances. All the amounts shown relate only to supplies. All purchases during the year were paid in cash.Assume that the city uses the consumption
Can a government sell assets to itself to generate revenue?A city is having fiscal problems in 2021. It expects to report a deficit in its general fund, the only fund that is statutorily required to
Nonexchange expenditures are the mirror image of nonexchange revenues.A state government provided several grants to school districts and local governments during its fiscal year ending August 31.1.
The “In Practice” box on page 258 notes that tax-exempt advance refundings involving debt redemptions are no longer allowed under U.S. tax law and that, as a result, the cost of debt issuance
Governments may report substantially different amounts of interest on their government-wide and fund financial statements.Charter City issued $100 million of 6 percent, 20-year general obligation
A state acquired a large parcel of forest land, which at some time in the future, it expects to license to timber companies so that they can harvest and sell the trees. For now, however, the land is
If governments don’t preserve their infrastructure assets they must depreciate them.In 2020 Bantham County incurred $80 million in costs to construct a new highway. Engineers estimate that the
Why are bond ratings of vital concern to bond issuers?
What are the key distinguishing characteristics of fiduciary funds?
What is the rationale for the requirement that only resources held for the benefit of parties other than the government itself can be accounted for in a fiduciary fund?
As a general rule, when should a government recognize a fiduciary fund liability to the beneficiaries of the fund? More specifically when should a government that collects taxes on behalf of another
What are permanent funds used to account for? In light of the requirement that governmental funds can recognize revenues only when they are measurable and available, how can a permanent fund ever
In what two basic financial statements should a government report its fiduciary funds? On what basis of accounting should they be prepared?
What are investment pools? Why might a government maintain an investment pool? On what basis are the assets measured and reported?
What typically are the two main adjustments required to convert the government fund balance sheet to the government-wide statement of net assets?
Notes to the financial statements and required supplementary information (RSI) must both be included in a government’s CAFR. What, then, does it matter if information is provided in notes as
Extensive information about local charities can be obtained on the Internet. Visit GuideStar at www.guidestar.org. Select two not-for-profit health and welfare organizations that have a similar
A public university receives approximately 20 percent of its revenue from state appropriations. In which category of revenues (operating or nonoperating) should it report the state appropriations and
What is the primary role of the Treasury Department’s Bureau of Fiscal Service?
What are tax expenditures, and how must they be reported upon in the federal government’s consolidated financial report?
Accompanying this text, on its website, is a Comprehensive Annual Financial Report (CAFR) of the city of Austin, Texas. A CAFR includes an entity’s year-end financial statements; it is not the same
What are fiduciary funds? What are the four main types, and what are the distinctions between them?
What is a custodial fund? For what types of transactions is it used to account?
Utilizing the CAFR obtained for Exercise 1–17, answer these questions.a. General and Other Capital Assets:(1) Reporting of Capital Assets. Are capital assets reported as a line-item in the
The printout of the Revenues and Appropriations subsidiary ledger accounts for the General Fund of the City of Augusta for the first quarter of the fiscal year appeared as follows:RequiredAssuming
Review the computer- generated budgetary comparison report presented below for the Lincoln City Culture and Recreation Department as of July 1 of its fiscal year ending December 31, and respond to
Utilizing the comprehensive annual financial report (CAFR) obtained for Exercise 1–17, follow the instructions below.a. General Long-Term Liabilities.(1) Disclosure of Long-Term Debt. Does the
Utilizing the comprehensive annual financial report (CAFR) obtained for Exercise 1–17, follow these instructions:a. Internal Service Funds.(1) Use of Funds. What activities of the government are
Utilizing the annual report obtained for Exercise 1–17, follow these instructions:a. Custodial Funds. Note that depending on the CAFR fiscal year, agency funds rather than custodial funds may be
Utilizing the CAFR obtained for Exercise 1–17 and your answers to the questions asked in Exercise 1–17 and the corresponding exercises in Chapters 2 through 8, comment on the following:a.
Utilizing the CAFR obtained for Exercise 1–17 and your answers to the questions asked in Chapters 1 through 9, assess the economic condition of the government. For purposes of this project, the
Using the CAFR you obtained for Exercise 1–17, answer the following questions:a. Auditors. Was this CAFR audited by external certified public accountants (CPAs) or by state or local government
Obtain a copy of a government’s recent operating budget document from its website. Familiarize yourself with the organization of the operating budget document; read the letter of transmittal or any
The U.S. Centers for Medicare and Medicaid Services maintains the website https://www.medicare.gov/hospitalcompare/search.html, which provides an array of measures that report on individual hospitals
The Shannon Community Kitchen provides hot meals to homeless and low-income individuals and families; it is the organization’s only program. It is the policy of the community kitchen to use
How can the performance of colleges and universities be measured? What tools exist to assist with performance measurement?
Obtain the most recent copy of the annual report for your college or university (school). Using the annual report, answer the following.Requireda. Does your school follow GASB or FASB standards? Use
Following are the operating statements for a public and private college. The operating statements have been adapted from the annual reports of a public and a private university. As would be expected,
The U.S. Department of Education developed the college scorecard (www.collegescorecard .ed.gov) to assist students with finding the college or university that will give them the best chance for
Following are several transactions involving a university.1. In the current fiscal year, the university was notified by the federal government that next fiscal year it would receive a $500,000 grant
Utilizing the comprehensive annual financial report obtained for Exercise 1–17, follow these instructions.a. Governmental Activities, Government-wide Level. Answer the following questions. (1) Are
When property taxes become delinquent, governmental entities often accrue interest and penalties on the delinquent taxes or choose to sell the rights to collect such taxes, interest, and penalties to
Utilizing the CAFR obtained for Exercise 1–17, in Chapter 1, review the governmental fund financial statements and related data and government-wide financial statements. Note particularly these
Utilizing the CAFR obtained for Exercise/ Problem 1–17, examine the financial statements included in the financial section and answer the following questions. If the CAFR you have obtained does
In 2016, 21 of 24 CFO Act agencies received unmodified audit opinions. The Comptroller General disclaimed an opinion on two agencies, and one only had its balance sheet audited. Choose one of the
The Town of Bedford Falls approved a General Fund operating budget for the fiscal year beginning on July 1. The budget provides for estimated revenues of $2,700,000 as follows: property taxes,
During July, the first month of the fiscal year, the Town of Willingdon issued the following purchase orders and contracts (see Problem 3–22):General government
The Town of Willingdon adopted the following General Fund budget for the fiscal year beginning July 1:Estimated revenues:Taxes
In the space provided, indicate whether each of the following items should be classified as taxes (T), licenses and permits (LP), intergovernmental revenues (I), charges for services (CS), fines and
You are a government accountant for a large municipality, and you have recently been assigned to the budget office and charged with building a better budget document—one that will be of the highest
The complexity and uniqueness of the federal government makes it difficult to conduct a meaningful analysis of its financial condition. However, conducting a financial statement analysis does provide
During the current year, the City of Hickory Hills issued purchase orders to various vendors in the amounts shown for the following functions of the city:General Government
On July 1, 2020, the beginning of its fiscal year, Ridgedale County recorded gross property tax levies of $4,200,000. The county estimated that 2 percent of the taxes levied would be un-collectible.
For several years, Bay town Rehabilitative Camp for Disabled Children (hereafter referred to as the camp) has applied for an operating grant from the Bay town Area United Way. As the finance adviser
The Atkins Museum recently hired a new controller. His experience with managerial accounting and strong communication skills were extremely attractive. The new controller sent each member of the
INVOLVE was incorporated as a not-for-profit organization on January 1, 2020. During the fiscal year ended December 31, 2020, the following transactions occurred.1. A business donated rent-free
The Art League is a not-for-profit organization dedicated to promoting the arts within the community. There are two programs conducted by the Art League: (1) exhibition and sales of
The Center to Advance Student Learning has presented its statement of financial position for the 2020 fiscal year.CENTER TO ADVANCE STUDENT LEARNINGStatement of Financial PositionAs of December 31,
The Kare Counseling Center was incorporated as a not-for-profit organization 10 years ago. Its adjusted trial balance as of June 30, 2020, follows.1. Salaries and fringe benefits were allocated to
Private colleges and universities report net assets with donor restrictions. What, if any, comparable reporting is provided by public universities?
Choose the best answer.1. Colleges and universities look to which standard-setting body for GAAP?a. The GASB.b. The FASB.c. The NACUBO.d. It depends on whether the entity is public, private, or
Steiner College’s statement of financial position for the year ended June 30, 2019, is presented here. Steiner is a private college.STEINER COLLEGEStatement of Financial PositionJune 30,
Elizabeth College, a small private college, had the following transactions in fiscal year 2020.1. Gross tuition and fees revenue totaled $5,600,000. Tuition waivers and scholarships of $346,000 were
The Statement of Net Position of South State University, a government-owned university, as of the end of its fiscal year June 30, 2019, follows.The following information pertains to the year ended
The following is the pre-closing trial balance for Allen University as of June 30, 2020. Additional information related to net assets and the statement of cash flows is also provided.Additional
The board of trustees for Allen University would like to measure the performance of the university. Refer to Illustrations 15–7, 15–8, and 15–9 for assistance in calculating the CFI. The ratio
The following balances come from the trial balance of Wilson State College as of the end of the 2020 fiscal year.Requireda. Prepare a statement of revenues, expenses, and changes in net position for
How do health care organizations generate the majority of their revenue? What are the principal sources of this revenue?
How do the accounting treatments for charity services, patient discounts, contractual adjustments, and provision for bad debts differ in terms of their effects on patient service revenues and related
Tupper Memorial Hospital received from a donor a $50,000 contribution and a $50,000 pledge payable in one year. The donor required that the funds be used for heart research. Explain differences in
What is the Patient Protection and Affordable Care Act, and what impact has it had on NFP hospitals’ financial reporting and tax filing?
The local newspaper of a large urban area printed a story titled €œCharity Care by Hospitals Stirs Debate.€ The story quotes one legislator who wants €œto ensure that
In 2010, Congress passed and President Obama signed into law the Patient Protection and Affordable Care Act. The act provides for sweeping changes to health care and has been extremely controversial.
Choose the best answer.1. Which of the following entities would consider portions of the AICPA Audit and Accounting Guide: Health Care Entities category b authoritative guidance?a. A business-type
The Kyle Sports Medicine facility is a not-for-profit health care facility that is trying to determine what transaction information should be included in its calculation of the performance indicator
During its current fiscal year, Evanston General Hospital, a not-for-profit health care organization, had the following revenue-related transactions (amounts summarized for the year).1. Services
The following selected events and transactions were recorded by Milos County Hospital.1. Gross charges for hospital services, all charged to accounts and notes receivable, were as follows:Patient
The following is the pre-closing trial balance for Christina Rehabilitation Hospital as of September 30, 2020.Requireda. Prepare a statement of operations and a statement of changes in net assets for
The Edwards Lake Community Hospital balance sheet as of December 31, 2019, follows.Requireda. Record in general journal form the effect of the following transactions during the fiscal year ended
You have recently started work as the controller for a small community hospital. The financial statements for the just completed fiscal year have been provided for your review.RequiredAfter
According to the FASAB conceptual framework, there are four objectives for federal financial reporting. Discuss the four objectives and explain why the focus of the FASAB objectives differs from that
“Net position for a federal agency is similar to net position of a state or local government.” Do you agree or disagree? Explain.
Obtain the most recent audited annual financial report of the U.S. government. It is available from the Government Accountability Office (GAO) at www.gao.gov.Requireda. Did the GAO give the federal
Access the most recent Financial Report of the U.S. Government at the U.S. Treasury Department website, www.fms.treas.gov/fr and answer the following questions.Requireda. What are the amounts of the
Choose the best answer.1. Which of the following represents one of the roles of the Government Accountability Office in federal financial accounting and reporting?a. Providing an independent
One amount is missing in the following trial balance of proprietary accounts, and another is missing from the trial balance of budgetary accounts of the Save Our Resources Commission of the federal
Use the data from Problem 17–17 for this assignment. In completing the assignment, assume that all assets are entity assets, Fund Balance with Treasury is an intergovernmental asset, and all other
The Rural Assistance Agency operates three major programs as responsibility centers—the Food Bank, Housing Services, and Credit Counseling. Clients pay a fee for services on a sliding scale based
The trial balance of the Federal Antiquities Administration, as of August 31, 2020, follows:RequiredPrepare a statement of budgetary resources for the 11 months ended August 31, 2020, assuming that
Congress authorized the Flood Control Commission to start operations on October 1, 2020.Requireda. Record the following transactions in general journal form as they should appear in the accounts of
The statement of activities for the ECE Children€™s Learning Center for fiscal year 2020, prepared by a newly hired budget employee with no NFP experience, is presented below.Requireda.
Consider the following scenarios relating to activities that include a fund-raising appeal:1. The Green Group’s mission is to protect the environment by increasing the portion of waste recycled by
The following events were conducted for the benefit of an NFP organization:1. The Center for Nonprofit Excellence (CNE) is a charitable NFP with a mission to provide management and administrative
Indicate whether each of the following donated services situations would require a journal entry for contribution revenue and a related expense or asset by answering Y for yes or N for no.Y N 1.
Distinguish between an NFP merger and an NFP acquisition. Is the accounting for an acquisition made by an NFP similar to an acquisition made by a for-profit?

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