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Government and Not For Profit Accounting: Concepts and Practices, 6th Edition by Michael H. Granof

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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, ...

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