Chapter 5 - Recognizing expenditures in governmental funds. In this chapter, the learning objectives are: Modified accrual basis of accounting for expenditures, difference between accrual and full accrual, accounting for particular expenditures, types of interfund activities and how they are reported, other financing sources and uses, limitations of the fund statement. | Chapter 5 Recognizing Expenditures in Governmental Funds © 2016 John Wiley & Sons, Inc. All rights reserved. 1 Image from: 1 Thoughts to Ponder: Chapter 5 “The same prudence which in private life would forbid our paying our own money for unexplained projects, forbids it in the dispensation of public moneys.” - President Thomas Jefferson “It is your tax which pays for public spending. The government have no money of their own. There is only taxpayers’ money.” - Margaret Thatcher “Hence as a private man has a right to say what wages he will give in his private affairs, so has a Community to determine what they will give and grant of their substance for the Administration of public affairs.” - Samuel Adams © 2016 John Wiley & Sons, Inc. All rights reserved. 2 Learning Objectives Modified accrual basis of accounting for expenditures Difference between accrual and full accrual Accounting for particular . | Chapter 5 Recognizing Expenditures in Governmental Funds © 2016 John Wiley & Sons, Inc. All rights reserved. 1 Image from: 1 Thoughts to Ponder: Chapter 5 “The same prudence which in private life would forbid our paying our own money for unexplained projects, forbids it in the dispensation of public moneys.” - President Thomas Jefferson “It is your tax which pays for public spending. The government have no money of their own. There is only taxpayers’ money.” - Margaret Thatcher “Hence as a private man has a right to say what wages he will give in his private affairs, so has a Community to determine what they will give and grant of their substance for the Administration of public affairs.” - Samuel Adams © 2016 John Wiley & Sons, Inc. All rights reserved. 2 Learning Objectives Modified accrual basis of accounting for expenditures Difference between accrual and full accrual Accounting for particular expenditures Types of interfund activities and how they are reported Other financing sources and uses Limitations of the fund statement © 2016 John Wiley & Sons, Inc. All rights reserved. 3 Financial Statements Two types of financial statements: Governmental Fund financial statements Basis of Accounting: Modified accrual basis Provides information relating to Inter-period equity Government-wide financial statements Basis of Accounting: Full accrual basis Presents revenues and expenses from the perspective of the entity as a whole and not of the individual funds. © 2016 John Wiley & Sons, Inc. All rights reserved. 4 GAAP GASB Codification, paragraphs through . The Codification asserts that the “accrual basis is the superior method of accounting for the economic resources of any organization,” and states that the “use of the accrual basis to the fullest extent practicable is recommended.” © 2016 John Wiley & Sons, Inc. All rights reserved. 5 Governmental Fund Statements Required .
