LESSON Learning Objective 241 Adjusting Entries for a
LESSON Learning Objective 241 Adjusting Entries for a General Fund LO 1 Prepare adjusting entries for a general fund. © 2015 Cengage Learning. All Rights Reserved.
Lesson 24 -1 Preparing Adjusting Entries LO 1 ● A not-for-profit organization’s financial statements are designed to provide information for the following purposes: 1. To make decisions about the use of resources. 2. To assess services provided and the ability to provide those services. 3. To assess management’s financial accountability and performance. 4. To determine the assets, liabilities, and fund equity of the organization. © 2015 Cengage Learning. All Rights Reserved. SLIDE 2
Lesson 24 -1 Preparing an Unadjusted Trial Balance LO 1 General Ledger Accounts Other Than Encumbrances Column Totals Encumbrances Accounts with a Balance © 2015 Cengage Learning. All Rights Reserved. SLIDE 3
Lesson 24 -1 Adjustment for Inventory of Supplies LO 1 A restricted fund equity account titled Reserve for Inventory of Supplies. © 2015 Cengage Learning. All Rights Reserved. SLIDE 4
Lesson 24 -1 Adjustments for Interest Revenue and Reserve for Encumbrances LO 3 Journal entry 1: Interest earned but not yet collected amounts to $3, 200, but experience shows that about 40% will not be collected. Journal entry 2: When goods are delivered that were encumbered against the preceding year’s appropriations, the amount should not be recorded as an expenditure of the current period. © 2015 Cengage Learning. All Rights Reserved. SLIDE 5
Lesson 24 -1 Audit Your Understanding 1. How do the measures of performance differ between businesses and not-for-profit organizations? ANSWER A business measures performance primarily through determining the amount of net income. A not-for-profit organization’s performance is measured primarily by the services provided and the efficiency with which resources are used. © 2015 Cengage Learning. All Rights Reserved. SLIDE 6
Lesson 24 -1 Audit Your Understanding 2. Which accounts are not included on the unadjusted trial balance of a general fund? ANSWER Encumbrance accounts with zero balances. © 2015 Cengage Learning. All Rights Reserved. SLIDE 7
Lesson 24 -1 Audit Your Understanding 3. What adjusting entries for expenses are made by a general fund? ANSWER None. A governmental fund has expenditures rather than expenses. © 2015 Cengage Learning. All Rights Reserved. SLIDE 8
Lesson 24 -1 Audit Your Understanding 4. In what account would a general fund record the amount of interest on delinquent taxes that it expects to collect? ANSWER Interest Revenue. © 2015 Cengage Learning. All Rights Reserved. SLIDE 9
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