Government and Not For Profit Accounting: Concepts and Practices, 6th Edition

LEARNING OBJECTIVES

After studying this chapter you should understand:

• What is an endowment
• The distinction between permanent funds and fiduciary funds
• How investment gains and losses should be accounted for
• Why all nonexpendable funds should be accounted for on a full accrual basis, and why they are not
• Why should investment gains be added to principal or expendable income
• How can institutions protect against inflation, yet reap the benefits of current income
• How the main types of transactions are accounted for in fiduciary funds
• Why pensions are important
• The distinctions between defined contribution and defined benefit pension plans
• The relationships between an employer and its pension trust fund
• The main issues faced by government employers in accounting for pension plans and how the GASB has resolved them
• How pension plans are accounted for today and how they will be accounted for in the future
• How postemployment health care benefits are accounted for
• The accounting issues presented by agency funds
• The accounting issues presented by investment trust funds

When one thinks of the assets of either governments or not-for-profits, it is natural to conjure up images of highways, buildings, police cars, research laboratories, and so on. In fact, however, governments and not-for-profits represent some of the nation's largest holders of stocks, bonds, and similar securities. Indeed, ...