Government accounting

Government accounting
3 pairs of journal entries with notes

You are believer that new employees should practice their accounting skills before “throwing them into the fire.” Therefore, you have listed a series of transactions that require journal entries and updating of T-Accounts.

You know that preparing nonprofit journal entries are easy, so you ask the new employee to

prepare, side by side, the correct journal entry for the identical transaction:
once for a nonprofit entity
once for a for-profit company
include notes for each transaction
Transaction 1: Assume a nonprofit has a restricted fund for capital asset purchases. Compare the journal entries for the cash purchase of a $10,000 computer by the nonprofit, to how the journal entry would look for this for-profit.
Transaction 2: Assume that a nonprofit has a need for $80,000 for a particular new marketing expenditure, and a for-profit entity needs to raise an additional $80,000 to pay for some unanticipated marketing expenses. How would the journal entities look at the acquisition of the funds and the subsequent spending of the funds?
Transaction 3: The for-profit entity sells $120,000 with net 30-day terms, while the nonprofit entity has a fund raising drive for which they receive pledges of $120,000. How do the two journal entries look?

200 words
Being that you are an inquisitive person and wish to add to your knowledge base, you ask your new accountant to teach you about fund accounting that is used in nonprofit financial accounting. Specifically, you asked her the following:

Explain how fund accounting principles for nonprofit organizations affect routine revenue type journal entries.
Do you think that nonprofits should continue to abide by the wishes of contributors who donated on the basis of a specific use of their donation, or, during tough economic times, should they ask these contributors to relax any restrictions they placed on the use of these funds?

 
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