Governmental and Non Profit
Chapter 2 Questions

1. Certain core services are provided by most general purpose governments – those related to the protection of life and property, public works, parks and recreation facilities, and cultural and social services. Governments must also incur costs for general administrative support of its service departments. Core governmental services, together with general administrative support, comprise the major part of what GASB refers to as governmental activities. The measurement focus and basis of accounting for these activities is on the flow of current financial resources on the modified accrual basis in the governmental funds and on the flow of economic resources on the accrual basis in the Governmental Activities column of the government-wide financial statements. 2. The business-type activities of a government include public utilities, transportation systems, toll road and bridges, hospitals, parking garages and lots, liquor stores, golf courses, airports, and swimming pools, among other activities. Many of thses activities are intended to be self-supporting by charging users for the services they receive. Focusing financial reporting on economic resources recognized on the accrual basis of accounting allows the government to determine whether charges for services are sufficient to cover the full cost of the activity. This measurement focus and basis of accounting allows the government to determine whether charges for services are sufficient to cover the full cost of the activity. This measurement focus and basis of accounting is the same used for reporting governmental activities in the government-wide financial statements, but quite different from the current financial resources measurement focus and modified accrual basis of accounting used in the governmental funds. 3. Fiduciary activities of a government involve the government’s discharge of its fiduciary responsibilities, either as an agent or trustee,

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