Unit 1 Assignment 2

.docx

School

Upper Iowa University**We aren't endorsed by this school

Course

ACCT 432

Subject

Accounting

Date

Dec 20, 2024

Pages

Uploaded by ChancellorElectronIbex43

ACCOUNTING NFP ORGANIZATIONSUnit 1 Assignment 2Upper Iowa University ACCT 432Accounting for Not For Profit Organization

ACCOUNTING NFP ORGANIZATIONS1–2.Identify and describe the five environmental differences between governments and for-profit business enterprises as identified in the Governmental Accounting Standards Board’s Why Governmental Accounting and Financial Reporting Is—and Should Be—Different.Fiver environmental differences between governments and for-profit business enterprises are:1.Organizational Purposes- The role of a profit business is to generate revenue for the organization whereas the role of governments is for the benefit of the wellbeing of citizens by providing public services. The role of accounting is similar in both because it aims to provide information to stakeholders so that they may make informed decisions. 2.Sources of Revenue- Net income is the universally accepted measure of business performance. For profit businesses rely on sales and net income to determine if the product they sell is valued and priced correctly. Government enterprises rely on taxes for sources of revenue. People and organizations mainly pay taxes because they must. The timing of tax revenue is not always clear. 3.Potential for Longevity- Governments can tax so they rarely go out of business. 4.Relationship with Stakeholders- Governments rely on tax dollars that are levied by officials. These tax dollars sometimes must go to specific funds or projects. A for profit entity can usually spend dollars where they want as they please. 5.Role of the budget- For profit businesses use budgeting for plan and control purposes thatdo not always have to be readily available to investors or creditors. Governments budgetsare usually policy and law driven. Officials can not typically exceed their budgeted amounts.

ACCOUNTING NFP ORGANIZATIONS1–3.Identify and briefly describe the three organizations that set standards for state andlocal governments, the federal government, and nongovernmental not-for-profit organizations.FASAB- Accounting and financial reporting standards set for the federal government. These standards are recommendations because the federal government cannot regulate authority to independent boards. The standards set by FASAB apply to financial reports issued by federal agencies and to the CFAR of the U.S. government. FASB- Sets accounting and financial reporting standards for both profit seeking businesses and for nongovernmental not for profit organizations. GASB- Accounting and financial reporting standards for state and local governments. The GASB also sets accounting standards for not for profit that are government related like libraries, museums, universities, and performing arts organizations.