The balance sheet of the Hillcrest Home Care Service a
The balance sheet of the Hillcrest Home Care Service, a not-for-profit organization providing assistance to the elderly, is presented here:

1. As best as you can tell from the balance sheet, what are Hillcrest’s measurement focus and basis of accounting? Explain.
2. What is the most likely reason that some assets are classified as temporarily restricted and others as permanently restricted?
3. Suppose you are the independent CPA who audited the financial statements of Hillcrest. The comptroller of a town, also one of your clients, reviews the financial statements of Hillcrest and observes that they look remarkably like those of private businesses. He wonders why:
a. The statements of his town are so seemingly complex, consisting of not one, but several, separate fund balance sheets and statements of operations.
b. The financial report consists of two separate sets of statements, each from a different perspective on a different basis of accounting.
c. The statements of his town can’t be more like those of Hillcrest. What would be your most likelyresponse?
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