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Introduction and Background

4 important questions on Introduction and Background

Define the concept of interperiod equity:

This concept means that the current citizens should pay for the services they are currently receiving.

To what entities do governmental generally accepted accounting principles apply? (GAAP)

State and local governments, public authorities, governmental colleges and universities, school districts, public hospitals.
General-purpose governments (states, cities, towns, countries, villages).
Special-purpose governments (water & other utilities, airport authorities).
Not-for-profit organizations (not covered by GAAP for govts, follow FASB (commercial) accounting principles).
State university (GAAP for govts accounting principles).
Private university (FASB accounting principles).

As a rule, not-for-profit organizations are not covered by generally accepted accounting principles for governments. Not-for-profit organizations follow accounting principles prescribed by the FASB. The AICPA (Audit and Accounting Guide) defines governmental organizations as:

Public corporations and bodies corporate and politic.

Public corporations are created for the administration of public affairs and include instrumentalities created by the state, formed and owned in the public funds, and governed by managers deriving their authority from the state.

Define three characteristics of Guide's definition of a governmental organization:

Popular election of officers or appointment of a controlling majority of the members of the organization's governing body by officials in one or more state or local government.
The potential for unilateral dissolution by a government with net assets reverting to the government.
The power to enact or enforce a tax levy.