Southern New Hampshire University

ACC-322: Governmental and Non-Profit Accounting

A study guide to ACC-322 at SNHU, covering fund accounting and the reporting rules for governments and not-for-profit organizations.

Updated October 2026 · 5 min read

ACC-322 at Southern New Hampshire University is Governmental and Non-Profit Accounting.

As the title shows, it covers two sectors that do not exist to earn profit for owners: state and local governments, and not-for-profit organizations such as charities, hospitals and universities.

Both answer to different readers from a business (taxpayers, donors, grantors, oversight bodies), and both follow reporting rules designed around accountability for resources rather than profit.

Students who have just finished intermediate accounting often find this course disorienting. Governments use separate funds, a different basis of accounting for some of them, and budgetary entries that are recorded in the books.

Not-for-profits classify net assets by donor restriction. The logic is consistent once you see the purpose behind it, but the vocabulary is new.

Course at a Glance

ItemDetails
UniversitySouthern New Hampshire University (SNHU)
Course codeACC-322
LevelUndergraduate, upper level
Subject areaGovernmental and not-for-profit accounting
Standard settersGASB (state and local governments); FASB (private not-for-profits)
Typical workFund journal entries, workbook projects, statements and reports to stakeholders

Check SNHU's catalog for the current description and prerequisites for your catalog year.

What ACC-322 Covers

TopicWhat it involves
Fund structureGovernmental, proprietary and fiduciary fund categories
Basis of accountingModified accrual for governmental funds; accrual for proprietary funds
Budgetary accountingRecording budgets, encumbrances and appropriations
Government-wide statementsStatement of net position and statement of activities
Capital assets and long-term debtHow they are reported at fund and government-wide level
Not-for-profit reportingNet assets with and without donor restrictions; contributions

Key Concepts Explained

Modified Accrual Basis

Governmental funds focus on current financial resources. Revenues are recognized when measurable and available to pay current-period liabilities; most expenditures are recognized when the liability is incurred.

Example: A city's general fund buys a $40,000 vehicle. Under modified accrual, the fund records a $40,000 expenditure, not an asset. At the government-wide level (full accrual), the vehicle is reported as a capital asset and depreciated.

Encumbrances

When a government places an order, it may record an encumbrance to set aside part of its appropriation, so managers can see how much budget remains.

Example: A department orders supplies estimated at $5,000 and records an encumbrance of $5,000. When the invoice arrives for $4,900, it reverses the encumbrance and records an expenditure of $4,900, freeing $100 of the appropriation.

Donor Restrictions

Private not-for-profits report net assets with donor restrictions and without donor restrictions. When a restriction is met, the amount is reclassified ("released") to net assets without donor restrictions.

Typical Assignments and How to Approach Them

Assignment typeWhat it testsHow to approach it
Fund journal entriesChoosing the fund and basisName the fund first, then the basis, then the entry
Workbook projectsBuilding fund and entity statementsKeep a separate tab per fund and reconcile to the totals
Reports to stakeholdersExplaining public sector resultsWrite for taxpayers or managers, not accountants
Concept questionsUnderstanding GASB and FASB differencesCompare the two frameworks in a short table

Linking Fund Statements to Government-Wide Statements

Governments present two views: fund statements on the modified accrual basis for governmental funds, and government-wide statements on the full accrual basis. Because the bases differ, a reconciliation explains how fund balance becomes net position.

Typical reconciling items include capital assets (expensed in funds, capitalized government-wide), long-term debt (not a fund liability, but a government-wide one) and revenues that were not available in the current period.

Assignments that ask you to prepare or explain this reconciliation are testing whether you understand why the two bases exist. A short list of reconciling items with amounts and one-line reasons is often the clearest way to present it.

When the scenario asks for a report to taxpayers or council members, translate the reconciliation into plain terms: what the government owns and owes overall, and whether this year's resources covered this year's services. Readers outside accounting care about those answers far more than the mechanics of the two bases.

Where Students Get Stuck

Study Tips for ACC-322

How We Help with ACC-322

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Frequently Asked Questions

Who sets the rules for governmental accounting?

The Governmental Accounting Standards Board (GASB) sets standards for US state and local governments. Private not-for-profits follow FASB standards.

What is a fund?

A self-balancing set of accounts used to track resources set aside for a particular purpose.

Why do governments use modified accrual?

Governmental funds focus on whether current resources cover current spending, which suits budget accountability.

What is an encumbrance?

A commitment of budget for an order not yet fulfilled, recorded so managers know how much appropriation remains.

How is ACC-322 different from ACC-325?

ACC-322 covers both governments and not-for-profits; ACC-325, by its title, focuses on not-for-profit organizations.

Can you help with a fund accounting workbook?

Yes. We prepare models or review your workbook and explain each entry.