Questions 1-3, 1-4, 1-5, 1-6, 1-8, and 1-10
1-3. The GASB has responsibility for setting accounting and reporting standards for both state and local governments and governmental not-for-profit organizations. The FASB has responsibility for setting accounting and reporting standards for business organizations and nongovernmental not-for-profit organizations. The FASAB has the responsibility of setting accounting and reporting standards for the agencies and departments of the federal government.

1-4. The museum’s accountant is wrong because the Fayette Rodeo Museum is a nongovernmental not-for-profit organization which means that it is independent of governments which means it can only follow FASB standards. Governmental not-for-profit organizations are the ones who follow the standards established the GASB.

1-5. Interperiod equity refers to the concept of measuring whether current year revenues are sufficient to pay for the services that provided in the current year. It is significant because it helps to assess whether future taxpayers will have to pay for the burdens that were previously provided. If revenues are not sufficient, then someone has to pay.

1-6. Operational accountability uses government-wide financial statements, along with those of proprietary funds and fiduciary funds. Fiscal accountability uses governmental fund financial statements. Operational accountability’s measurement focus is based on the flow of economic resources, while fiscal is based on the flow of current financial resources. Lastly operational is accrual based, while fiscal is modified accrual based.

1-8. The three sections of a comprehensive annual financial report are an introductory section, financial section, and statistical section. An introductory section includes a title page, a contents page, a description of the government, and other items as seen appropriate by management. The financial section contains an auditor’s report, a management’s discussion and analysis, basic financial statements, required supplementary information, and other supplementary information like the combining of statements or individual fund statements and schedules. The statistical section contains a statistical section which presents tables and charts showing demographic and economic data. Minimum requirements are basic financial statements, management’s discussion and analysis, and required supplementary information.

1-10. The three required categories of net assets are permanently restricted, temporarily restricted, and unrestricted.