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    Government Financing

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    1)Why are the basic financial statements of a government?more so than those of a business?inadequate as a basis for assessing the entity's fiscal health?

    2)Both notes to the financial statements and required supplementary information (RSI) must be included in the government's CAFR. What, then, does it matter if information is provided in notes as opposed to RSI?

    3)Many public universities are quite similar to their private counterparts. Indeed, some large state universities receive less than 25% of their resources from the state. How do you explain the substantial differences in their reporting practices?

    4)Which do you think enterprise funds should follow - FASB or GASB?

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    Solution Preview

    1) Governmental accounting records are reported using the modified accrual basis, which focuses on current financial resources. Long term assets and liabilities are largely ignored, which can lead to trouble when the governmental entity has lots of long term debt and no way to service it. This would not be apparent from a modified accrual basis statement.

    2) The notes should just be information ...

    Solution Summary

    Government financing is examined.