Chapter 1

Michael H. Granof
Saleha B. Khumawala

Granof & Khumawala -6e

Government and Not-for-Profit
Accounting: Concepts and
Practices, 6e
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CHAPTER 1

Granof & Khumawala -6e

Chapter 1

The Government and Not-for-Profit
Environment

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Thoughts to Ponder: Chapter 1

Chapter 1

“We make a living by what we get. We make a life by
what we give.”
Winston Churchill

Granof & Khumawala -6e

“Service to others is the rent you pay for your room
here on earth.”
Mohammed Ali

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Who, Why & What?
• Who are we?
Granof & Khumawala -6e Chapter 1

o Inspiring future leaders

• Why are we here?

be ed
To pir
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To be
Motivated

To

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Learning Objectives

• Understand the characteristics that distinguish governments and not-for-profit organizations from businesses (for-profit entities).
• Identify the features that distinguish governments from notfor-profits. • Identify authoritative bodies responsible for setting GAAP and financial reporting standards for different governmental and not-for-profit entities.

Granof & Khumawala -6e Chapter 1

After studying Chapter 1, you should be able to:

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• Compare and contrast the objectives of financial
reporting for:
(1) State and local governments
(2) Not-for-profit organizations
(3) The federal government

• Distinguish Management Discussion & Analysis
(MD&A), basic financial statements, and Required
Supplementary Information (RSI) of state and local
governments in their comprehensive annual
financial reports (CAFR).

Granof & Khumawala -6e Chapter 1

Learning Objectives, continued

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• No direct and proportional relationship between
resources provided and the benefits received.
• Absence of a profit motive.
• Absence of transferable ownership rights.
• Collective ownership by constituents.
• Policy-setting process.

Granof & Khumawala -6e Chapter 1

How Do Governmental and Not-For-Profit
Organizations differ from Business
Organizations?

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How Do Governmental and Not-For-Profit
Organizations differ from Business
Organizations? – Cont’d
o Budget is the culmination of the political process.
o The budget is the key fiscal document.

• Ensure inter-period equity for most GNPs.
• Revenues may not be linked to constituent demand or
satisfaction.
• No direct link between revenues and expenses.
• The matching concept has different meaning for
governments and not-for-profits.

Granof & Khumawala -6e Chapter 1

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