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Accounting For Governmental & Nonprofit Entities
18th Edition
ISBN: 9781259917059
Author: RECK, Jacqueline L., Lowensohn, Suzanne L., NEELY, Daniel G.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 10, Problem 1Q
The GASB indicates that economic condition is composed of three components. Identify and define the three components of economic condition.
Expert Solution & Answer
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To determine
Describe the three components of Economic condition as described by GASB.
Explanation of Solution
Government Accounting Standards Board (GASB): Government accounting standards board (GASB) is an independent board that establishes reporting standards for the local and state government, and also for government not-for-profit organizations that has to adhere to the generally accepted accounting principles (GAAP).
The three components of Economic condition as described by GASB are:
- Financial Position: The financial position aims at determining the value of the assets or liabilities shown in the balance sheet of government.
- Fiscal Capacity: The fiscal capacity refers to the ability and willingness of the government to pay the financial obligations once they become due.
- Service Capacity: The service capacity refers to the ability and willingness of the government to serve the society and meet the several needs of the society.
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