Assessment 5 instructions: government accounting

 

Complete two exercises in government accounting.

Introduction

Just as for-profit businesses must prepare financial statements for their stakeholders, state and local government entities must also assemble their financial data and report the results to their constituents. Readers of government financial statements have a wide variety of information needs; no single set of statements is able to meet the needs of all of the users. Accountability of government officials and control over public spending have always been essential elements of government accounting. The Governmental Accounting Standards Board (GASB) is the authority that is charged with setting accounting standards for state and local government entities.

In addition to the issues you examined in the previous assessment, there remain a number of other asset issues to deal with when governmental accounting procedures are involved. The first such issue involves obtaining assets through leasing arrangements. Government accounting applies the same criteria for identifying a capital lease as a for-profit organization.

These are some examples of governmental accounting situations:

  • Solid waste landfills creating large potential debts for a government due to costs related to closure and postclosure.
  • Future compensated employee absences due to holidays, sick leave, and vacations.
  • A state or local government obtaining a work of art or historical treasure

Preparation

The following resources are required to complete the assessment.

Complete the problems in the Assessment 5 Problems document using the related template, both of which are linked in the Required Resources for this assessment. All financial information and applicable instructions are provided.

In these problems you will:

  • Record basic journal entries for fund-based and government-wide financial statements.
  • Differentiate between encumbrances and expenditures.
  • Differentiate between government activities and business-type activities.
  • Determine the consequences of certain transactions for state and local governments.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:

  • Competency 4: Analyze accounting issues related to government.
    • Record basic journal entries for fund financial statements.
    • Record basic journal entries for government-wide financial statements.
    • Differentiate between encumbrances and expenditures.
    • Differentiate between government activities and business-type activities.
    • Determine the consequences of certain transactions for state and local governments.
  • Competency 5: Communicate in a manner that is professional and consistent with expectations for professionals in the field of accounting.
    • Communicate results from accounting calculations accurately and clearly.