Lesson Plan 7.3 Governmental Accounting
Course Title – Accounting II
Lesson Title – Governmental Accounting
Specific Objective – Understand and apply concepts and procedures related
to accounting for not-for-profit governmental organizations.
Performance Objectives:





Prepare a budget for a governmental organization;
Prepare a work sheet for a governmental organization;
Prepare financial statements for a governmental organization;
Record adjusting and closing entries for a governmental organization;
Define accounting terms related to the lesson.
TEKS: 130.167.c.
6.A.-C – process preliminary budget detail; prepare budget reports; and
determine relevant cost and revenue data for decision-making purposes.
TAKS: R1, M9, M10
Preparation
Materials Needed:



Projection system
Century 21’s Textbook, Chapters 23 and 24.
Accounting software and spreadsheet software
Sponge/Focus Activity:

Explain that a vast majority of workers in this country work for the
government; therefore they deal with accounting procedures for governmental
agencies.

Accounting in Your Career, in Century 21’s Textbook
Lesson Content:
See Century 21’s Textbook, Chapters 23 and 24. Here is an outline:
I.
Budgeting and Accounting for a Not-for-Profit Governmental
Organization
A. Purpose of governmental organizations
1.
Characteristics of governmental accounting systems
2.
Fund accounting balance sheets
i.
Modified accrual accounting
Lesson Plan 7.3 – Governmental Accounting
opyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
II.
3.
Difference between expenses and expenditures
4.
Financial reporting emphasis
5.
Budgeting
6.
Chart of accounts for a governmental organization
7.
Developing an annual governmental operating budget
8.
Procedures to prepare annual operating budget
9.
Journalizing an approved annual operating budget
B. Journalizing revenues
1.
Journalizing current property tax revenues
2.
Collection of current property taxes
3.
Other revenue
4.
Accounting for delinquent property taxes
C. Journalizing expenditures, encumbrances and other transactions
1.
Journalizing expenditures
2.
Journalizing encumbrances
3.
Journalizing expenditures for amounts encumbered
4.
Journalizing expenditures benefiting future periods
5.
Journalizing the issuance of liabilities
6.
Journalizing the payment of liabilities
7.
Investing in short-term investments
8.
Receiving cash from short-term investments
Financial reporting for a governmental organization
A. Preparing a work sheet for a governmental organization
1.
Recording a trial balance on a work sheet
2.
Adjustment for inventory of supplies
3.
Adjustment for interest revenue and reserve for
encumbrances
4.
Extending amounts to revenues/expenditures and balance
sheet columns
5.
Calculating the excess of revenues over expenditures
6.
Completing the work sheet
B. Preparing financial statements for a government organization
1.
Statement of revenues, expenditures, and changes in fund
balance—budget and actual
2.
Balance sheet
C. Recording adjusting and closing entries for a governmental
organization
1.
Adjusting and closing entries
2.
Closing entries
3.
Preparing a post-closing trial balance for governmental
organization
Teaching Strategies:


Discuss with students the types of revenue collected by your local
governments, state governments, and the U.S. government also explain how
these revenues are collected.
With the Century 21 textbook, complete the Work Together problems with
Lesson Plan 7.3 – Governmental Accounting
opyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
your class, then give students the On Your Own problems to complete by
themselves and go over the answers as a class.
Assessment:

For problems you can use Peachtree Accounting from Glencoe, Glencoe
Accounting Software, Century 21 Accounting Software, or a spreadsheet.

From Century 21’s Textbook
o Guided Practice
 Work Together: Journalizing governmental operating
budgets
 On Your Own: Journalizing governmental operating budgets
 Work Together: Journalizing governmental revenue
transactions
 On Your Own: Journalizing governmental revenue
transactions
 Work Together: Journalizing governmental encumbrances,
expenditures, and other transactions
 On Your Own: Journalizing governmental encumbrances,
expenditures, and other transactions
 Work Together: Preparing a work sheet for a governmental
organization
 On Your Own: Preparing a work sheet for a governmental
organization
 Work Together: Preparing financial statements for a
governmental organization
 On Your Own: Preparing financial statements for a
governmental organization
 Work Together: Journalizing adjusting and closing entries
for a governmental organization
 On Your Own: Journalizing adjusting and closing entries for
a governmental organization
o Independent Practice
 23-1 Journalizing governmental operating budgets
 23-2 Journalizing governmental revenue transactions
 23-3 Journalizing governmental encumbrances,
expenditures, and other transactions
 23-4 Journalizing governmental transactions
 23-5 Journalizing governmental transactions
 24-1 Preparing a work sheet for a governmental organization
 24-2 Preparing financial statements for a governmental
organization
 24-3 Journalizing adjusting and closing entries for a
governmental organization
 24-4 Completing the end-of-fiscal-period work for a
governmental organization
 24-5 Completing the end-of-fiscal-period work for a
Lesson Plan 7.3 – Governmental Accounting
opyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II

governmental organization
o Additional Activities: Applied Communication, and Cases for
Critical Thinking
o Open Notes and textbook Quiz: Study Guide for Chapters
This lesson is also assessed through the Unit Test at the end of the Unit.
Additional Resources:
Textbooks:
Ross, Kenton E., CPA, Mark W. Lehman, CPA, Claudia Bienias Gilbertson, CPA,
Robert D. Hanson, Century 21 Accounting Advanced, Anniversary Edition,
Thomson South-Western: Mason, OH, 2003.
Multimedia:
Century 21’s Teacher Resource CD
Websites:
http://accounting.swpco.com
Lesson Plan 7.3 – Governmental Accounting
opyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II