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Financial Accounting vs. Governmental/Not-for-Profit Accounting

In: Business and Management

Submitted By loulucy57
Words 250
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Please explain the difference between financial and governmental/not-for-profit accounting -- due on or before June 8th. If you have any questions, please let me know.

Under the oversight of the Financial Accounting Foundation (FAF), Financial Accounting and Governmental/Not-for-Profit Accounting are regulated by the accounting and financial reporting standards set forth by the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB) respectively.

Financial Accounting is the process that culminates in the preparation of financial reports on the enterprise for use by both internal and external parties of profit-seeking businesses and for nongovernmental not-for profit organizations. Users of these financial reports include investors, creditors, mangers, unions, and government agencies.

Since governments exist for the well being of citizens by providing public services, not for the purpose of generating returns to the owner(s), Governmental/Not-for-Profit Accounting lacks a residual ownership claim and the organization’s purpose is something other than to provide goods and services at a profit; it emphasizes on budgets, legal compliance, and efficiency and effectiveness measures other than income. These governmentally related not-for-profit organizations may include colleges and universities, health care entities, museums, libraries, and performing arts organizations that are owned or controlled by governments.

References

Copley, P. A. (2011). Essentials of accounting for governmental and not-for-profit organizations
(10th ed.). New York: McGraw-Hill/Irwin.

Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2007). Intermediate accounting (12th ed.).
Hoboken, NJ: Wiley.

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