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Revenue for Government, Not-for-Profit; Method of Accounting

1. Name and describe the many types of revenue nonprofits and governments generate.

2. Talk about the use of modified accrual accounting in governments - why? How is revenue recognized under modified accrual accounting?

3. One of your problems deals with property taxes - what are the specific requirements for property tax revenue.

4. Discuss exchange and nonexchange transactions - What is the difference? What are the four eligibility requirements?

5. List the four categories of nonexchange, give an example of each and tell us what the asset and revenue recognition criteria are for each. See Statement 33.

6. What does restricted, unrestricted and temporary restricted mean in terms of revenue (FASB 116 might help here)?

7. Explain the difference between expenses and expenditures and list examples of each.

Solution Preview

1. Sources of revenue for non-profits include:
? Donations from individuals and corporations
? Support from government agencies
? Income from activities related to the organization's mission
? Income from fundraising activities, membership dues, and financial investments such as stock shares in companies

Sources of revenue for government include:
? Individual Income Taxes
? Corporate income taxes
? Payroll taxes
? Excise taxes
? Property tax
? Stamp Duty
? Duties

2. Modified accrual accounting combines accrual-basis accounting with cash-basis accounting. This method recognizes revenues when they become available and measurable and recognizes expenditures when liabilities are incurred. It is a preferred accounting method for government as it divides available funds into separate entities within the organization to ensure that the money is being spent where it was intended. The purpose of government accounting is different from accounting of for-profits and non-profits and hence a different accounting system is used.

For recognizing revenue, the revenue should be available which means that ...

Solution Summary

The solution discusses the revenue for government, not-for-profit, the method of accounting, funds and expenditures.