Measurement focus and basis of accounting: the concept of measurement focus and basis of accounting are very important in understanding accounting for various governmental funds.
The measurement focus refers to the flows that should be measured for operations. The basis of accounting refers to the timing of recognizing a transaction for financial reporting purposes. For the purpose of recognition of funds the modified accrual basis is used that includes some aspects of accrual accounting and some aspects of cash basis accounting.
Expenditures for inventory: most governmental units maintain small amount of inventory in office supplies. Inventory is not an expendable asset; that is it may not be spent as the governing entity wishes NCGA 1 inventory should be recognized based on the materiality of the amount.
To explain: why do some governmental units not report small amounts of supply on inventories in their balance sheets?
Want to see the full answer?
Check out a sample textbook solutionChapter 17 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
- Why does balance of payments contain an account called statistical discrepancy?arrow_forwardWhat are some errors and frauds that can occur in the revenue cycle?arrow_forwardExplain two methods that an organization could use to monitor its balances of : Cash Accounts receivable Inventory Explain two ways that an organization could reduce its balance of: Cash Accounts receivable Inventoryarrow_forward
- How is independent verification carried out in a manual revenue system, and give an example?arrow_forwardWhich statement is NOT correct for an expenditure system with proper internal controls?a. Cash disbursements maintain the check register.b. Accounts payable maintains the accounts payable subsidiary ledger.c. Accounts payable is responsible for paying invoices.d. Accounts payable is responsible for authorizing invoices.arrow_forwardWhat is the purpose of the following control procedures (i.e., what threats is it designed to mitigate)? c. Direct deposit of paychecks.arrow_forward
- what is stale checks in accountingarrow_forwardWhat type of basis is it called when we report only the amounts actually collected and/or spent? Answer:arrow_forwardUnder a system of good internal control, which of the following departments issues a voucher? Question 41 options: The accounts payable department The shipping department The purchasing department The billing departmentarrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning