FREE ACCT QUIZ ANSWER

ACCT 350 Quiz 1

Question 1 (25 points)

An agency has single-year, multi-year and no-year appropriations.  On October 15, 2014, the agency tried to create several transactions.  Is the agency authorized (allowed legally) for the following?  Why or why not?  Please list YES or NO for each of the following item, and then list your reasons.  (e.g., YES, this is allowable because XYZ...)

Question 4 (23 points)

Are rules by FASAB considered GAAP at this point?   If so, are FASAB rules considered GAAP for state & local governments, federal or non-profit/for-profit entities?  If FASAB does not create state/local and for-profit entity rules, which group(s) creates the rules for state/local and for-profit/non-profit entities  (list the rules maker for 1) for-profit/not-for-profit, 2) state/local government and 3) federal, and 4) international?  

Has FASAB always been a source of GAAP (if FASAB is a source of GAAP), or was there a date at which point FASAB become a source of GAAP?  What was the date?   Where were rules by FASAB considered before the rules were considered GAAP (if applicable)

Question 5 (25 points)

A)    Since 2005, have the statements been the same, or have statements been added (or deleted)? If so, which statement was added/deleted?  Please note that the statements are the required financial statements, not the SFFAS standards.

B)    Which of the statements is similar to the private sector (e.g., a publicly traded company, such as Facebook or IBM).  List the statements that are similar to the private sector.

C)    Which statements are unique for government? List the specific statement similar/different (if applicable) from for-profit entities. 

Question 5 options:

ACCT Quiz

Question One

Fiscal year appropriations are offered in October 1st to September 30th of the following year. After the expiry of the funds according to the indicated period, annual appropriations only retain the fiscal year identity and are only made available for adjusting, recording, and liquidating existing liabilities and obligations. Notably, two years after expiry, funds are no longer available for expenditure or obligation and are returned to the U.S treasury. The same is applicable for multi-year appropriations. However, when it comes to no year appropriations, no limitations or expiry exist thereby making funds available for obligations and expenditure until they are exhausted (McCann, 2016, 11-137).

Part Two

Yes, an agency is legally authorized to create several transactions for multi-year appropriations. In multi-year appropriations, an agency is provided appropriations for more than one year after which funds expire and are no longer available on the based extended period of time. However, an agency can conduct transactions for multi-year and no year appropriations as funds are still available to conduct new obligations and expenditures.  For multi-year appropriation time is still available for new obligations, whereas in the no year appropriations, there is no limitation to appropriations made. However in the case where the goods costs more than the amount remaining in the appropriation, an agency can use a multiple year appropriation for needs that arise any time during the period of availability.

Part Three

In the aspect of the no year appropriation, yes, an agency is legally authorized to start a new obligation. In a no year appropriation, there is no definite time for the expiry of an appropriation.  In this manner, funds are available without any limitation until they are used up as they are available to conduct new obligations and expenditures.  For a no year appropriations, there is no limitation to appropriations made.

Question Two

Yes. Rules by FASAB are considered GAAP at this point because FASAB was recognized as a body responsible for accounting standard setting and reporting in addition to the already established FASB and GASB .FASAB is responsible for setting the GAAP rules and standards for federal reporting entities. The sources of the accounting principles of GAAP come from the FASAB. In this manner a federal entity that is preparing financial reports that are GAAP-based is expected to implement FASAB standards.

Rule makers for Profit and non-profit entities: The FASB is mandated with the responsibility of setting accounting and reporting standards for the profit and non-profit business entities.

State/local government: state and local governments utilize rules created by the GASB

Federal: federal agencies and departments use the accounting and reporting standards of the FASAB

International: the International Accounting Standards Board is responsible for setting accounting and reporting standards across borders in the international arena. IAS operates under the international Financial Reporting Standards (IFRS).

Although the FASAB is currently the source of the GAAP as ruled by the AICPA, the case has not been so historically. The significance of FASAB became more apparent since 1997 when the GAO began auditing financial statements for a number of federal agencies. An evolution has taken place in the last thirty years in the accounting standards setting system. Initially the Accounting Principles Board (APB) was responsible for establishing accounting standards for the GAAP. Later on, in 1972, FASB replaced APB. Afterwards, the GASB was created to cater for accounting standard setting for state and municipal entities. In 1990 FASAB was established to set standards for federal entities. Then in October 1999, FASAB was recognized by the AICPA Council as a body responsible for establishing GAAP for federal entities. The selection was based on the Rule 203 of the AICPA’s Code of Professional conduct (Tschopp & Huefner, 2015, 565-567).

Question Three

The IAS is responsible for providing guidelines on the presentation and structuring of financial statements and operates in accordance to the International Financial Reporting Standards. Various changes have been made to the distribution of non-cash assets to owners which includes the presentation of financial statements since 2005. Furthermore, additions have been done on the presentation of financial statements in 2007. The above changes are applicable to the entity making a distribution and not the recipient. Additionally, these changes are applicable to pro rata distributions of non-cash assets (Johnston & Petacchi, 2017).

Secondly, additions have been made on consolidated and separate financial statements in 2008. Accordingly, this amendment provides guidelines for the preparation and presentation of financial statements for a group that operates under a single parent. Furthermore, the changes to this amendment are applicable in the aspect of accounting for investments in subsidiaries, or jointly controlled entities where an entity is required to present separate financial statements. According to these changes, financial statements of a parent and its subsidiaries should all be prepared on the same reporting date. Exceptions include when it is impracticable to do so. In the same fashion, various changes have been made various statements that are similar to the private sector. They include; on share-based payment, business combinations, insurance contracts, financial instruments and financial instruments disclosures, disclosures of interests in other entities, joint arrangements, fair value measurements, and operating segments. On the other hand changes have been made to these statements, unique for government. They include; revenue from contracts with consumers, leases, regulatory deferral accounts, and exploration and evaluation of mineral assets.

Reference

Johnston, R., & Petacchi, R. (2017). Regulatory oversight of financial reporting: Securities and Exchange Commission comment letters. Contemporary Accounting Research.

McCann, A. (2016). Forms of Appropriation: A Typology. Public Budgeting & Finance, 36(2), 111-137.

Tschopp, D., & Huefner, R. J. (2015). Comparing the Evolution of CSR Reporting to that of Financial Reporting. Journal of Business Ethics, 127(3), 565-577.