Some Governments and Most Not-For-Profit Entities Do Not Integrate Their

question 3

Essay

Some governments and most not-for-profit entities do not integrate their budgets into their accounting systems or encumber the cost of goods or services for which they are committed. Are such practices justifiable? Explain.

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Definitions:

Absorption Costing

An accounting method that includes all of the costs associated with manufacturing a product in the product's cost.

Closing Inventory

The value of the goods remaining unsold at the end of an accounting period, which becomes the opening inventory for the next period.

Finished Goods

Goods that have gone through the entire manufacturing cycle and are prepared for customer acquisition.

Standard Costs

Preset costs for materials, labor, and overhead used to measure the performance of manufacturing activities against planned costs.