Chap 016

Chapter 16 Accounting For State and Local Governments (Part One)
CHAPTER 16 ACCOUNTING FOR STATE AND LOCAL GOVERNMENTS (PART ONE)

Chapter Outline
I. State and local government units produce two complete and distinct sets of financial statements which are presented together in a comprehensive annual financial report. A. User needs for governmental financial information are so diverse that GASB requires two sets of statements to be prepared. The fund-based statements are more for the citizens whereas the government-wide statements are more for investors, such as bondholders. B. Fund-based financial statements are designed primarily to present information about the General Fund and other major activities. This approach stresses the governments fiscal accountability over its financial resources. a. For governmental funds, all current financial resources and claims to those financial resources are presented using modified accrual accounting for timing purposes. b. For proprietary funds and fiduciary funds, all economic resources are reported using accrual accounting for timing purposes. C. Government-wide financial statements (a statement of net assets and a statement of activities) are designed to present an overview of the government as a whole and emphasizes operational accountability. a. In these statements, all economic resources are measured using accrual accounting for timing purposes. b. The governmental funds and most of the internal service funds are combined and reported together as governmental activities. c. The enterprise funds and any remaining internal service funds are combined and reported as business-type activities. d. Because the government does not have control over the use of the assets held in the fiduciary funds, they are excluded from the government-wide financial statements.
II. For internal purposes, governmental accounting records its individual activities within a number of self-balancing sets of accounts known as funds. A. Governmental funds account for activities where service to the public is the main emphasis. a. General fund b. Special revenue funds c. Capital projects funds d. Debt service funds e. Permanent funds B. Proprietary funds account for activities of the government where a user charge is assessed. a. Enterprise funds b. Internal service funds C. Fiduciary funds account for assets held in a trustee capacity for external parties. a. Investment trust funds b. Private-purpose trust funds c. Pension trust funds
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d.
Agency funds
III. Governmental accounting has traditionally stressed establishing control over current financial resources to ensure appropriate usage of the publics money. A. Budgetary entries are recorded for a number of the activities within the governmental funds. a. The entry is recorded at the start of the year and is then reversed to remove it at the end of the year. b. The initial and amended budget figures are reported along with actual figures for the period as required supplemental information in the comprehensive annual financial report. As an alternative, this information can be shown as a separate statement within the fund-based financial statements. B. Financial commitments (such as contracts and purchase orders) are recorded as encumbrances. a. These entries help avoid overspending of appropriated amounts. b. The encumbrances are removed from the records when the commitment becomes a liability. IV. In government-wide financial statements, acquiring a capital asset is reported as a capital asset and incurring an expense is reported as an expense in the same manner as a forprofit business. However, in reporting the governmental funds within the fund-based financial statements, the purchase of a capital asset, incurrence of an expense, and payment of a long-term debt are all reported as expenditures to reflect the reduction in current financial resources. Through this reporting, the statements report the usage made of the resources held by the government activity (and often generated from taxes, tolls, and the like). A. On the fund-based statements, supplies and prepaid items can be reported by either the consumption method or the purchases method although the consumption method is required for the government-wide statements. B. On the government-wide financial statements, the recording of the acquisition of infrastructure itemssuch as bridges and sidewalksas capital assets is required. V. Governments often have nonexchange transactions where revenues such as taxes and grants are received without a corresponding earning process. To guide the recognition of such transactions, four separate categories have been identified. A. Derived tax revenuessuch as income taxes and sales taxesare recognized when the underlying event occurs. B. Imposed nonexchange transactionssuch as property taxes, fines, and penaltiesare recognized as revenues when the resources are required to be used or in the first period when use is permitted. C. Government-mandated nonexchange transactions, usually a government grant to fulfill a legally required objective, are recognized when all eligibility requirements have been met. D. Voluntary nonexchange transactionssuch as most grants and giftsare recognized when all eligibility requirements have been met. VI. Governments often raise significant amounts of financial resources by issuing long-term bonds.
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A. In the government-wide financial statements, the debt is simply recorded. B. In the fund-based financial statements for the governmental funds, the inflow of financial resources is reported as an other financing source. Payment of the debt is shown as an expenditure. Long-term debts are not shown in the fund-based financial statements for the governmental funds. VII. Transfers are separated into three categories: intra-activity transactions, interactivity transactions, and internal exchange transactions.
Answer to Discussion Question

Is it an Asset or a Liability? Even after more than 20 years, Mautzs comments go straight to the problem posed by government accounting. State and local governments are just fundamentally different than forprofit businesses. Some students seem to believe that the unique features of government financial reporting are more arbitrary than substantive. To them, accounting is accounting and the specific type of reporting entity should not be an important consideration. For that reason, this discussion question is placed early in the coverage of governmental accounting to point out that governments do not necessarily view transactions in the same manner as for-profit businesses. Discussing the construction of a new high school building is an excellent example of the essential accounting problems created by a governments unique perspective. The decision to build this facility virtually assures the government that it will incur significant cash outflows for years to come. Whereas a business constructs a building in hopes of generating cash inflows, government officials are aware that the maintenance, heating, etc. of the school will far outweigh any direct cash inflows. Hence, Mautzs questionis it an asset or a liabilityis not easy to answer. Governmental accounting now solves this issue in a very unique way. In the fund-based financial statements, construction costs are reported as expenditures whereas, in the government-wide financial statements, the high school is reported as a capital asset. The reduction in current financial resources is the focus on one statement whereas the cost of construction is still shown as an asset in the other set of statements. Prior to class discussion, students can be asked to read Mautzs entire article as additional background information. In class, students can be encouraged to discuss whether showing this high school building in two such different ways is misleading or actually provides the information needed. Students should be asked their opinion as to the benefit of having two completely different sets of financial statements. A quality, in-depth discussion can certainly result from the article described here.
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Answers to Questions
1. Individuals and groups who seek information about a state or local government have needs that are often complex and contradictory. Specific procedures in the governmental reporting process are an outgrowth of those needs. GASB Concepts Statement No.1, Objectives of Financial Reporting, has identified three primary user groups: citizenry, legislative and oversight bodies, and investors and creditors. The needs of these users are broad and no single set of financial statements and accounting principles can satisfy all expectations. The satisfaction of diverse user needs is a constant focus (and challenge) of governmental accounting. This has lead to the dual-perspective model which leads to the production of two distinct types of financial statements. 2. Accountability and control have been a constant goal of governmental accounting. Governmental accounting provides the citizenry of a democracy with a method for evaluating the essential government actions of raising and allocating resources. Elected and appointed officials have authority over the publics money. They should be held accountable for generating and using those resources wisely in meeting the publics needs. Control should be established to prevent waste and theft. The accounting system should be structured to help citizens evaluate these officials based on the honesty, wisdom, and stewardship of their actions. 3. The traditional approach of government accounting places its priority on individual accountability for the various separate government activities. Unfortunately, the resulting information has not necessarily met all user needs. Today, government reporting still focuses on current financial resources in the fund-based financial statements (for the governmental funds), but also provides extensive additional data about all assets and all liabilities in the government-wide financial statements. Thus, a broader range of user needs are met. 4. Two financial statements make up the government-wide financial statements: The Statement of Net Assets and The Statement of Activities. There are a number of fundbased financial statements. The two fundamental financial statements covered here in the current chapter were the Balance Sheet for the governmental funds and the Statement of Revenues, Expenditures, and Other Changes in Fund Balances for the governmental funds. Additional fund-based financial statements will be introduced in the following chapter. 5. In fund-based accounting, governmental funds use the current resources measurement focus and the modified accrual basis for the timing of revenue and expense recognition. Current financial resources focus include assets such as cash, receivables, and investments that can be used for spending purposes and the liabilities to be paid out of these current resources. The modified accrual basis recognizes revenues when they become available and measurable. Expenditures are recorded when they cause a reduction in current financial resources. Governments must disclose the length of time being used to determine availability. A period of 60 days is common although not required except for property tax revenues.
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Proprietary and Fiduciary funds generally use the economic resources measurement focus and the accrual basis for the timing of revenue and expense recognition. The economic resources measurement focus reports all assets (including capital and other noncurrent assets) as well as all liabilities (including long-term obligations). 6. Government-wide financial statements use the economic resources measurement focus and accrual accounting for the timing of revenue and expense recognition. The accounting is very similar to that of for-profit organizations. 7. Current financial resources are primarily cash, investments, and receivables because they can be quickly turned into cash for spending purposes. These resources are expected to be used to meet the current period spending needs of the governmental funds. 8. Liabilities are recognized under the current financial resources focus when a claim against current financial resources is created. In many cases, that means that a debt is owed and payment will be made during the current period or a short time into the subsequent period. Disclosure is required for the number of days being applied. Often, 60 days is used, a time period that is mandated for property taxes. 9. Governmental Funds: Account for activities with a service orientation a. General Fund b. Special Revenue Fund c. Capital Projects Fund d. Debt Service Fund e. Permanent Fund Proprietary Funds: Account for functions that are financed (at least in part) by user charges. a. Enterprise Fund b. Internal Service Fund Fiduciary Funds: Account for monies held by the government in a trustee capacity. a. Investment Trust Fund b. Private-Purpose Trust Fund c. Pension Trust Fund d. Agency Fund 10. The following fund types fall within the governmental funds classification: a. The General Fund is used to account for ongoing activities such as public safety and sanitation. More specifically, the General Fund records any activities that do not fall under one of the other fund types. b. Special Revenue Funds account for financial resources that have been restricted as to expenditure for a specified operating purpose other than debt service and capital asset construction or acquisition. This money can come from sources such as grants, taxes, and gifts. c. Capital Projects Funds account for monies (and their eventual expenditure) that have been designated (either externally or internally) for the acquisition or construction of government facilities or other capital assets. d. Debt Service Funds account for the accumulation of resources that will be used to pay the principal and interest of long-term debts incurred by the service activities.
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e. Permanent Funds account for assets conveyed to a government (often by an external donor) with the stipulation that the principal cannot be spent but any income should be used by the government, often for a designated purpose. 11. The following fund types fall within the proprietary funds classification: a. An Enterprise Fund accounts for any governmental activity that is open to the public and financed in whole or in part by user charges, such as a subway system or a toll road. b. An Internal Service Fund is used to record any activity that provides service to other departments or agencies within the government on a cost-reimbursement basis. A motor pool, a centralized computer operation, or a print shop can be accounted for as Internal Service Funds if a user fee is charged and they only exist to serve the other functions of government. 12. Fiduciary Funds: Account for monies held by the government in a trustee capacity. a. Investment Trust Fund. Accounts for the outside portion of investment pools where the reporting government has accepted funds from other governments resulting in a larger investment and hopefully a higher return. b. Private-Purpose Trust Fund. Accounts for money held in a trustee capacity, for example, money confiscated from illegal operations. c. Pension Trust Fund. Accounts for the employee retirement system. d. Agency Fund. Accounts for resources held by the government as an agent for individuals, private organizations, or other government units. 13. In government-wide financial statements, financial figures are shown as either governmental activities or business-type activities. All governmental funds and most internal service funds appear in the governmental acitivities. All enterprise funds and any remaining internal service funds are lumped into the business-type activities. Internal service funds are grouped in governmental activities or business-type activities based on the funds that are primarily serviced. Fiduciary funds are not shown in the government-wide financial statements. 14. In fund-based financial statements, for the governmental funds, a separate column must be shown for (a) the General Fund, (b) any other fund that qualifies as major, and (c) all other funds accumulated as a whole in a single column. 15. The physical recording of a budget is viewed as a method of expressing public policy and financial intent, providing a financial plan for the period. The budget establishes spending limitations, which enhances financial planning and control. The adoption of the budget for each activity anticipates the inflow of financing resources and sets approved expenditure levels. Subsequently, comparisons can be drawn between actual and budgeted figures at any time during the fiscal period, thus evaluating the performance of the government. 16. Comparisons between the original budget, the final budget (as amended), and actual figures must be reported in the required supplemental information presented after the notes to the financial information in the comprehensive annual financial report. Alternatively, the information can be presented as a separate statement within the governments fund-based financial statements.
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17. An encumbrance is the recording of a purchase commitment (such as a contract or a purchase order). The encumbrance entry is recorded at the time the commitment is made prior to incurring a liability. This recording supports the spending control emphasis of the fund-based financial statements. A summation of the Expenditures account and the Encumbrances balance provides the total amount of current financial resources spent and committed to date. Thus, the chance of an over-commitment of resources is decreased. The encumbrance is removed when this commitment becomes a legal liability. Until then, no transaction has taken place so encumbrances are not included in government-wide financial statements. 18. Encumbrances (commitments) that remain outstanding at the end of a fiscal year are reversed from the records since no transaction has taken place. No liability is reported. However, if the commitment is going to be honored, a portion of the fund balance should be labeled as restricted, committed, or assigned depending on the level of decision-making required for the commitment to be made. In this way, readers can see that this amount of the funds net assets will be used to satisfy the terms of the commitment. 19. Expenditures include outflows or reductions of net current financial resources from the acquisition of goods or services (or the payment of a long-term liability). Modified accrual accounting recognizes these expenditures when a claim against current financial resources is incurred that will be paid from resources that are available. Fund-based accounting for the governmental funds records expenditures instead of expenses and capital assets as a way of disclosing the use made of a funds resources during the current period. 20. Modified accrual accounting recognizes expenditures when a claim against the current financial resources is incurred that will be paid from resources that are available. Governments must disclose the length of time (often 60 days) used to determine availability. 21. Within the governmental funds, fund-based financial statements focus on expenditures rather than expenses or capital assets. Expenditures should be recorded when the related liability is incurred. Therefore, the entire cost of capital assets is treated as an expenditure when the liability is incurred. Government-wide financial statements record capital assets in a manner similar to that used by for-profit organizations. The cost of buildings, machines, and other capital assets are capitalized and depreciated to expense over their useful lives. 22. Traditionally, in government accounting, the purchase method has been used for prepaid expenses and supplies. The cost is recorded immediately as an expenditure when the liability is incurred. Any remaining assets are put into the records at the end of the period along with an offsetting increase to the fund balance-nonspendable.
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Another method has been developed and is known as the consumption method. It is similar to the approach used by for-profit organizations and is basically used in the governmentwide financial statements and by the proprietary and fiduciary funds. Supplies and prepayments are recorded as assets when acquired even though they are not technically current financial resources. As they are then consumed, they are recorded as expenditures matching them with the appropriate fiscal period. At the end of the period, an amount equal to the remaining assets is reclassified from fund balance-unassigned to fund-balancenonspendable. On fund-based financial statements for the governmental funds, either method can be selected. 23. The four classifications of nonexchange revenues that a state or local government can recognize are: a. Derived tax revenues. A tax assessment is imposed because an underlying exchange takes place. The revenue is recorded at the time of the underlying event. For example, revenues are recognized for a sales tax when a sale occurs and the tax is imposed. b. Imposed nonexchange revenues. An assessment is imposed but no underlying transaction takes place. Examples include property taxes and fines or penalties that are levied. Revenues are recognized in the period when resources are required to be used or in the first period in which use is permitted. c. Government-mandated nonexchange transactions. Monies are provided from one government to another to help pay for legally required programs or actions. Examples include grants from the federal government to a city that must be used to help achieve a mandated legal requirement such as an improvement in the school system. Revenues are recognized when all eligibility requirements have been met. d. Voluntary nonexchange transactions. Monies conveyed willingly to a state or local government by an individual, another government, or an organization usually for a specific purpose but without legally mandated requirements. Revenues are recognized when all eligibility requirements have been met. An example would be money donated to the city for the beautification of the local parks. 24. A receivable is not recorded for property taxes until the demand for money represents an enforceable legal claim, which is normally specified by state or local laws. Many governments encourage early payment of property taxes (by sending out bills early or by giving some type of a cash discount). Thus, cash can actually be reported before the government even records the initial receivable. Revenue from the property tax should be reported net of estimated uncollectible amounts in the period in which the money is supposed to be used or the first period in which it can be used. For example, property taxes assessed to finance the government's costs in 2010 should be reported as revenue in 2010. Because the receivable and the revenue recognition are split, it is possible to record the receivable (or cash, if collected early) before the revenue. In that case, a Deferred Revenue account is established which is reclassified when revenue recognition is appropriate.
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25. No revenues are recognized in either set of financial statements because the proceeds of bonds must be repaid. In fund-based financial statements, Cash is increased along with an Other Financing Sources figure. For example, if the bonds were issued for a construction project, this entry is recorded in the Capital Project Fund. Payments of both interest and debt are then recorded when they come due, becoming a claim on current financial resources. An Expenditure account is recognized for the debt and for the related interest and is usually shown in the Debt Service Fund. In government-wide financial statements, the cash and debt are both increased and payment of debt is reported in a manner similar to that of a for-profit enterprise. 26. A special assessment is an improvement made to property by the government, which is paid for in part or in whole by the owners of the property being benefited. Adding curbing and sidewalks to a local street is an example of a special assessment if the residents of that street are required to pay a portion of the cost. Typically, the government places a lien on the property to insure payment. The accounting for special assessment projects depends on the liability being incurred by the government. If the government is in no way liable for the work done and any debt incurred, an Agency Fund is used to record the monetary inflows and outflows. The government is simply serving as a conduit to get the project completed and the debt paid. If the government is responsible (even secondarily responsible) for the cost of the project, a more elaborate method of accounting is necessary. In the government-wide financial statements, both the debt and the infrastructure asset are recorded. The taxes are assessed, reported as revenues, collected, and used to pay the debt. The infrastructure asset and long-term debt are not recorded in the fund-based financial statements. Instead, the expenditures for the work are recorded in a Capital Projects Fund while cash collected from citizens is recorded as revenue and accumulated in a Debt Service Fund. 27. In fund-based financial statements, interfund transactions are recorded in both funds simultaneously at the time of authorization. For example, monetary transfers from the General Fund to another fund such as the Debt Service Fund are recorded in both funds. The recipient records this transfer as an Other Financing Source and the party making the transfer records an Other Financing Use. If the transfer is being made to a proprietary fund, it is often shown in the statement of revenues, expenses, and other changes in net assets for that fund as a capital contribution or as a transfer in. 28. Intra-activity transactions occur totally within the governmental activities or totally within the business-type activities so that no net effect is created for that group of funds. Therefore, these transfers do not appear within government-wide financial statements.
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Interactivity transactions occur between a governmental activity and a business-type activity so that they affect the balances in each. Consequently, they are reported in both columns on the government-wide financial statements but are then offset so that no figure is reported in the total column. 29. An internal exchange transaction is a transfer within the government that is recorded as if the transaction had actually occurred with an outside party. Such transactions occur between one of the governments activities and an internal service or enterprise fund and are normally to pay for work or services rendered. These exchanges are reported as revenues and as either expenditures or expenses. An example would be a payment from a police department to the citys motor pool for vehicle maintenance. This exchange is included by both departments in the fund-based financial statements as if it were a transaction with an outside party. On government-wide financial statements, any such transactions between a government activity and a related internal service fund is considered an intra-activity transaction because both fund types are classified as government activities and, therefore, there is no impact on overall figures.
Answers to Problems 1. 2. 3. 4. 5. 6. 7. 8. 9. B A D D A C D A D
10. C 11. B 12. C 13. B
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14. B 15. C 16. A 17. C 18. C 19. B 20. A 21. C 22. D 23. C 24. D 25. A 26. B 27. D 28. C 29. (5 Minutes) (Budgetary entries) Beginning of Year-Recording of budget GENERAL FUND Estimated Revenues Control......................................... 1,000,000 Estimated Other Financing SourcesBond Proceeds 400,000 Appropriations Control............................................. Appropriations-Other Financing UsesOperating Transfers Out........................................................ (Budgetary) Fund Balance........................................ End of Year-Removal of budget GENERAL FUND
900,000 300,000 200,000
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Appropriations Control............................................. 900,000 Appropriations-Other Financing UsesOperating Transfers Out........................................................ 300,000 (Budgetary) Fund Balance........................................ 200,000 Estimated Revenues Control.............................. 1,000,000 Estimated Other Financing SourcesBond Proceeds 400,000 30. (7 Minutes) (Order and receipt of capital asset) GOVERNMENT-WIDE FINANCIAL STATEMENTS GOVERNMENT ACTIVITIES Computer Vouchers (or Accounts) Payable Vouchers (or Accounts) Payable Cash
89,400 89,400 89,400 89,400
In the end, the capital assets have gone up by the cost of the computer and cash has been reduced by the same amount. FUND-BASED FINANCIAL STATEMENTS GENERAL FUND Encumbrances Control Fund BalanceReserved for Encumbrances Fund BalanceReserved for Encumbrances Encumbrances Control Expenditures Control Vouchers Payable Vouchers Payable Cash
88,000 88,000 88,000 88,000 89,400 89,400 89,400 89,400
On the statement of revenues, expenditures, and other changes in fund balance, an expenditure of $89,400 will be shown. Cash will also decrease by that amount. 31. (7 Minutes) (Issuance of bond to finance construction project) GOVERNMENT-WIDE FINANCIAL STATEMENTS GOVERNMENT ACTIVITIES (Intra-activity transfer from the General Fund to the Capital Projects Fund is not reported)
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Issuance of Bonds Cash Bonds Payable Completion of Construction Buildings Cash
1,800,000 1,800,000 1,890,000 1,890,000
On the statement of net assets, for the governmental activities, the Buildings account goes up by $1,890,000, the Bonds Payable go up by $1.8 million, and cash goes down by $90,000. FUND-BASED FINANCIAL STATEMENTS To Record Transfer GENERAL FUND Other Financing UsesTransfers Out Cash CAPITAL PROJECTS FUND Cash Other Financing SourcesTransfers In Sale of Bonds Cash Other Financing SourcesBond Proceeds Completion of Construction Expenditures Cash 90,000 90,000 90,000 90,000
1,800,000 1,800,000 1,890,000 1,890,000
On the statement of revenues, expenditures, and other changes in fund balance, the General Fund will report an other financing uses transfer out of $90,000. On its balance sheet, it will report $90,000 less cash. For the capital projects fund, there will be an expenditure of $1,890,000 and two other financing sources: $90,000 as a transfer-in and $1.8 million from bond proceeds. 32. (17 Minutes) (Recording of basic journal entries) FUND-BASED FINANCIAL STATEMENTS
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a. General Fund Estimated Revenues Control Estimated Other Financing Sources Control (Budgetary) Fund Balance Appropriations Control b. Capital Projects Fund (could also be recorded in the General Fund with a transfer to the Capital Projects Fund) Cash Other Financing SourcesBond Proceeds c. General Fund Encumbrances Fund BalanceReserved for Encumbrances d. General Fund Fund BalanceReserved for Encumbrances Encumbrances Expenditures Control Vouchers Payable e. General Fund Vouchers Payable Cash f. General Fund Other Financing UsesTransfers OutCapital Projects Due to Capital Projects Fund (Special Assessment) Capital Projects Fund Due from General Fund Other Financing SourcesTransfers InGeneral Fund g. General Fund Other Financing UsesTransfers OutMotor Pool Cash Internal Service Fund Cash Contributed Capital
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h. General Fund Property Taxes Receivable RevenuesProperty Taxes Allowance for Uncollectible Taxes i. The following entries are made on the assumption that the appropriate payment of the supplement is an eligibility requirement for the grant. Special Revenue Fund Cash Deferred Revenue j. ExpendituresSalaries Cash Deferred Revenue RevenuesGrant GOVERNMENT-WIDE FINANCIAL STATEMENTS a. No entry b. Governmental Activities Cash Bonds Payable c. No entry d. Governmental Activities Equipment Vouchers Payable e. Governmental Activities Vouchers Payable Cash f. No entry (it is an intra-activity transfer within the governmental activities) g. No entry (assuming the internal service fund is treated as a governmental activity so that this is an intra-activity transaction) h. Governmental Activities Property Taxes Receivable RevenuesProperty Taxes Allowance for Uncollectible Taxes i. Governmental Activities Cash
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Deferred Revenues j. Governmental Activities ExpensePublic Safety Cash Deferred Revenue Revenue 33. (14 Minutes) (Recording of basic journal entries) FUND-BASED FINANCIAL STATEMENTS a. General Fund Encumbrances Control Fund BalanceReserved for Encumbrances b. General Fund Expenditures (or Supplies) Due to Internal Service Fund c. Capital Projects Fund Cash Other Financing SourcesBonds Proceeds d. General Fund Other Financing UsesTransfers Out Swimming Pool Cash e. General Fund Fund BalanceReserved for Encumbrances Encumbrances Control Expenditures Vouchers Payable f. General Fund Other Financing UsesTransfers Out Cash 94,000 94,000 1,200 1,200 11,000,000 11,000,000
140,000 140,000
94,000 94,000 96,000 96,000 32,000 32,000
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Capital Projects Fund Cash Other Financing SourcesTransfers In g. Special Revenue Fund Cash Deferred Revenues h. Special Revenue Fund Deferred Revenues Revenues Expenditures Cash GOVERNMENT-WIDE FINANCIAL STATEMENTS a. No entry
32,000 32,000 30,000 30,000 5,000 5,000 5,000 5,000
b. No entry (Assuming print shop is a governmental activity.) Governmental Activities c. Cash Bonds Payable Governmental Activities d. Transfers OutSwimming Pool Cash Business Type Activities Cash Transfers InGeneral Fund e. Governmental Activities EquipmentTrucks Vouchers or Accounts Payable f. No entry intra-activity transfer g. Governmental Activities Cash Deferred Revenues 30,000 30,000 11,000,000 11,000,000 140,000 140,000 140,000 140,000 96,000 96,000
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h. Governmental Activities ExpensePublic Service Cash Deferred Revenues Revenues 34. (12 Minutes) (Prepare basic journal entries) FUND-BASED FINANCIAL STATEMENTS
5,000 5,000 5,000 5,000
a. Capital Projects Fund (could also be recorded in the General Fund followed by a transfer into the Capital Projects Fund) Cash 900,000 Other Financing SourcesBonds Proceeds 900,000 b. Capital Projects Fund (this entry depends on whether encumbrances are being recorded in the governments Capital Projects Fund.) Encumbrances 1,100,000 Fund BalanceReserved For Encumbrances 1,100,000 c. General Fund Other Financing UsesTransfers Out Cash Debt Service Fund Cash Other Financing SourcesTransfers In d. General Fund Fund BalanceReserved for Encumbrances Encumbrances Expenditures ControlMachinery and Equipment Vouchers Payable e. General Fund Inventory of Supplies Cash f. Special Revenue Fund Cash Deferred Revenues g. General Fund Taxes Receivable Revenues Property Taxes
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130,000 130,000 130,000 130,000 11,800 11,800 12,000 12,000 2,000 2,000 90,000 90,000 600,000 576,000
Allowance for Uncollectible Current Taxes GOVERNMENT-WIDE FINANCIAL STATEMENTS a. Governmental Activities Cash Bonds Payable b. No entry c. No entry (this is an intra-activity transfer) d. Governmental Activities Machinery and Equipment Vouchers or Accounts Payable e. Governmental Activities f. Inventory of Supplies Cash f. Governmental Activities Cash Deferred Revenues g. Governmental Activities Taxes Receivable Revenues Property Taxes Allowance for Uncollectible Current Taxes 35. 2,000 12,000 900,000
24,000
900,000
12,000
2,000 90,000 90,000 600,000 576,000 24,000
(25 Minutes) (Answer questions about ledger account balances) a. As the Appropriations account balance in the General Fund shows a total of $171,000, that amount of money has been authorized for expenditure during this fiscal period. Thus, only that total can be expended or committed. To date, a total of $119,000 has been spent or committed ($110,000 of expenditures and $9,000 in encumbrances). The remaining $52,000 is still available. Of course, if the budget is amended, additional amounts could be spent. b. The governmental funds are all designed to monitor current financial resources and their inflows and outflows. Therefore, the Capital Projects Fund records expenditures made to acquire or construct capital assets. These assets are recorded directly in the government16-19
wide financial statements but not in the fund-based statements for the governmental funds. c. The Appropriations balance represents the amount that government officials have authorized to be spent on a particular construction project. The amount was established by the passage of the annual budget. d. At the end of the year, any remaining commitments will be removed from the accounting records by reversing the original encumbrance entry (which eliminates both the encumbrance and the fund-balance reserved for encumbrance). In creating a balance sheet for the governmental funds, if this amount has already been set up as a fundbalance restricted, committed, or assigned, no further action is needed. However, if no amount has been set up in the fund balance, then this balance should be reclassified from fund balance-unassigned to either fund balance-committed or fund balance-assigned depending on the level of authority that made the commitment. e. Money does not get into any of the governmental funds (except for the General Fund) without some reason. It comes from a tax, perhaps, or a gift or grant. Often, the amounts are set up because government officials make a monetary transfer. Thus, a fund balance-unassigned is not possible in any fund other than the General Fund. Whether the fund balance is restricted, committed, or assigned depends on the nature of the inflow of resources into that fund. f. Two possible reasons are likely for the $150,000 Other Financing Sources balance. First, a bond may have been issued to finance construction. Since the debt itself is not recorded in the fund-based financial statements, the governmental fund must record the receipt by means of an Other Financing Sources designation. Second, the $150,000 may have come from a transfer (most likely from the General Fund). Such transfers are not considered revenue by the recipient and, therefore, the inflow of current financial resources is recorded as an Other Financing Source. g. The Debt Service Fund is utilized to accumulate money to pay off the principal and interest of any long-term liability incurred by the governmental funds. Payment of the debt and interest is made from the Debt Service Fund and those payments are recorded as expenditures. The debt itself is not maintained in the fund-based financial statements but does appear in the government-wide financial statements. h. Special assessment projects are undertaken by a government to benefit particular properties with the owners bearing part (or all) of the cost.
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Curbing, as an example, or the installation of lights can be special assessment projects. If the government has no responsibility for the costs, recording of all financial resources inflows and outflows is made in an Agency Fund. However, if the government does maintain some responsibility (if, for example, the government is secondarily liable for any debts incurred), the construction is recorded in a Capital Projects Fund. Thus, the receivable balance shown here would indicate that this project is being recorded in this manner. Collection of the receivable will be made from the citizens being benefited; the money will be used in paying for the construction. i. This designation indicates that the government is reporting an asset that is not free to be spent for future expenditures. In the asset section, a $4,000 balance is being reported as the governments Inventory of Supplies. That figure is being reported but is not available to be spent. Thus, that portion of the fund balance is shown as nonspendable. j. Budgetary entries are optional for Debt Service Funds and are not typically used. Expenditure levels (for principal and interest) are set contractually by the debt indenture. Thus, additional financial control is not obtained by the inclusion of budgetary amounts. 36. (25 Minutes) (Analyzing and reporting government transactions for fundbased financial statements) a. Estimated Revenues Appropriations Budgetary Fund Balance $232,000 225,000 $ 7,000
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Because estimated revenues exceed the appropriations, a surplus is anticipated which is mirrored through a credit balance in the Budgetary Fund Balance account. b. Initially, all of the school supplies are recorded in an asset account such as Inventory of Supplies. As the supplies are used, the cost is reclassified into an Expenditures account. On the balance sheet, a portion of the Fund Balance-Unassigned should be separated and reported as nonspendable to show that this amount of the reported assets does not represent current financial resources that can be spent. c. At the end of the year, the encumbrance balance as well as the Fund Balance-Reserved for Encumbrance are removed from the financial records. They do not represent actual transactions. In creating a balance sheet for the governmental funds, if this amount has already been set up as a fund-balance restricted, committed, or assigned, no further action is needed. This shows that this money cannot be freely spent but must be held to meet the commitment. However, if no amount has been set up in the fund balance, then the expected monetary amount should be reclassified from fund balanceunassigned to either fund balance-committed or fund balance-assigned depending on the level of authority that made the commitment. Fund balance-restricted cannot be established internally. d. FUND-BASED FINANCIAL STATEMENTS General Fund Fund BalanceReserved for Encumbrances Encumbrances Expenditures Control Vouchers Payable e. General Fund Other Financing UsesTransfers Out Cash Debt Service Fund Cash Other Financing SourcesTransfers In f. REVENUES: Government grant appropriately expended
111,000 111,000 120,000 120,000 33,000 33,000 33,000 33,000 $ 24,000
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Property taxes to be received Business licenses and parking meters Total revenues g. EXPENDITURES: Salary for police officers Rent on equipment (assuming payments from from current financial resources) City hall acquisition Salary for ambulance drivers Supplies (60% of $16,000) Ambulance acquisition School bus acquisition Total expenditures
190,000 14,000 $228,000 $ 21,000 3,000 1,044,000 24,000 9,600 120,000 40,000 $1,261,600
h. FUND-BASED FINANCIAL STATEMENTS Capital Projects Fund(or this could have been recorded in General Fund with the money then transferred to the Capital Projects Fund) Cash 300,000 Other Financing Sources 300,000 37. (20 Minutes) (Prepare basic journal entries for both fund-based financial statements and government-wide financial statements) FUND-BASED FINANCIAL STATEMENTS a. General Fund Estimated Revenues Control Appropriations Control Estimated Other Financing Uses Operating Transfers Budgetary Fund Balance
834,000 540,000 242,000 52,000
b. Capital Projects Fund (encumbrances for these types of contracts are usually optional but are more likely to be made when budgetary entries are being used) Encumbrances Control 8,000,000 Fund BalanceReserved for Encumbrances 8,000,000 c. Capital Projects Fund Cash Other Financing Sources Control d. Capital Projects Fund 8,000,000 8,000,000
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Fund BalanceReserved for Encumbrances Encumbrances Control Expenditures Control Contracts Payable Contracts Payable Cash e. General Fund Other Financing Uses Control Cash Debt Service Fund Cash Other Financing Resources f. Debt Service Fund Expenditures ControlBonds Expenditures ControlInterest Cash g. General Fund Property Taxes Receivable Revenues Property Taxes Allowance for Uncollectible Taxes (4%) h. Special Revenue Fund Cash Revenues Control i. Permanent Fund Investments Contribution Revenue GOVERNMENT-WIDE FINANCIAL STATEMENTS a. No entry b. No entry c. Governmental Activities Cash
8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 8,000,000 1,000,000 1,000,000 1,000,000 1,000,000 900,000 100,000 1,000,000 800,000 768,000 32,000 120,000 120,000 300,000 300,000
8,000,000
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Bonds Payable d. Governmental Activities Buildings Cash e. No entry f. Governmental Activities Bonds Payable Interest Expense Cash g. Governmental Activites Proprety Taxes Receivable Revenues Property Taxes Allowance for Uncollectible Taxes 900,000 100,000 8,000,000
8,000,000
8,000,000
1,000,000 800,000 768,000 32,000
h. This entry is made in the Governmental Activities unless the toll road is reported as an Enterprise Fund in which case it is recorded as a business-type activity. Cash 120,000 RevenuesReserved for Highway Maintenance 37. (continued) i. Government Activities Investments RevenuesDonations 38. (15 Minutes) (Prepare fund-based financial statements) CITY OF JENNINGS GENERAL FUND Statement of Revenues, Expenditures, and Other Changes in Fund Balance (Condensed) Year Ending December 31, 2010 Revenues Expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): $ 740,000 (510,000) $ 230,000 300,000 300,000 120,000
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Bond proceeds Transfers in Transfers out Total Other Financing Sources and Uses Change in Fund Balance Fund Balance, Beginning Fund Balance, Ending 38. (continued) CITY OF JENNINGS GENERAL FUND Balance Sheet (condensed) December 31, 2010 Assets Cash Investments Taxes receivable Due from Capital Projects Fund Total Assets Liabilities Accounts payable Vouchers payable Contracts payable Due to Debt Service Fund Deferred revenues Total Liabilities Fund Balances Unassigned Total Fund Balance Total Liabilities and Fund Balances 39. 280,000
$300,000 50,000 (470,000) (120,000) $110,000 170,000 $280,000
$ 30,000 410,000 220,000 60,000 $720,000 $ 90,000 180,000 90,000 40,000 40,000 $440,000
280,000 $720,000
(30 Minutes) (Prepare government-wide and fund-based financial statements) The most difficult aspect of this problem is gathering the information for both the government-wide financial statements and the fund-based
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financial statements. One way to overcome this difficulty is to make the journal entries for the transactions that are described in the question. Government-wide financial statements: 1 Property Tax Receivable Cash General RevenuesProperty Taxes 2 Salary Expense Rent Expense Equipment Land Maintenance Expense Cash Depreciation Expense Accumulated DepreciationEquipment 3 Building Long-Term Liability 80,000 320,000 400,000 100,000 70,000 50,000 30,000 20,000 270,000 10,000 10,000 200,000 200,000
Neither depreciation nor interest is recognized here since this transaction took place on the last day of the year. 4 Computers Vouchers Payable 8,000 8,000
No depreciation is recognized since this transaction occurred on the last day of the year. 5 Cash Program RevenuesStudent Fees 39. (continued) Fund-based financial statements: 1 3,000 3,000
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Property Tax Receivable Cash RevenuesProperty Taxes Deferred Revenues
80,000 320,000 370,000 30,000
The $30,000 is not viewed as revenue in 2010 because it will not be available within 60 days to pay claims against current financial resources. 2 ExpendituresSalaries ExpendituresRent ExpendituresEquipment ExpendituresLand ExpendituresMaintenance Cash 100,000 70,000 50,000 30,000 20,000 270,000
3 No entry is made on the building acquisition since there was no impact on current financial resources. 4 ExpendituresComputer Vouchers Payable 4,000 4,000
The second computer is not included here because payment will not be made within 60 days so there is no impact on current financial resources. 5 Cash RevenuesStudent Fees 39. (continued) 3,000 3,000
Part a GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2010 Governmental Activities Direct Expenses Program Revenues (net expense) Governmental Activities: School System $200,000 $3,000 $(197,000)
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General Revenues: Property Taxes Change in Net Assets Beginning Net Assets Ending Net Assets STATEMENT OF NET ASSETS December 31, 2010
400,000 $ 203,000 -0$ 203,000
Governmental Activities Assets Cash Property Tax Receivable Computers Building Equipment Less: Accumulated Depreciation Land Total Assets Liabilities Vouchers Payable Long-Term Liabilities Net Assets Invested in capital assets, net of debt Unrestricted 39. (continued) $53,000 80,000 8,000 200,000 $ 50,000 (10,000) 40,000 30,000 $411,000
$ 8,000 200,000 $ 78,000 125,000
$208,000
$203,000
Part b -- FUND-BASED FINANCIAL STATEMENTS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE For the Year Ended December 31, 2010 General Fund Revenues Property Taxes Student Fees Total Revenues Expenditures Salaries $370,000 3,000 $373,000 $100,000
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Rent Equipment Land Maintenance Computer Total Expenditures Change in Fund Balance Fund BalanceBeginning of Year Fund BalanceEnd of Year BALANCE SHEET December 31, 2010
70,000 50,000 30,000 20,000 4,000 $274,000 $ 99,000 - 0$ 99,000
General Fund Assets Cash Property Tax Receivable Total Assets Liabilities Voucher Payable Deferred Revenue Total Liabilities Fund Balance Unassigned Total Liabilities and Fund Balance 40. $ 53,000 80,000 $133,000 $ 4,000 30,000 $ 34,000 $ 99,000 $133,000
(22 Minutes) (Prepare a statement of revenues, expenditures, and changes in fund balance) One way to approach this problem is to make the journal entries for the transactions that are described as the basis for gathering the information needed for the financial statement to be produced. In this problem, the journal entries are prepared based on the rules for creating fund-based financial statements for the General Fund. a. Cash Property Taxes Receivable RevenuesProperty Taxes 700,000 100,000 750,000
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Deferred Revenues
50,000
The $50,000 is not viewed as revenue in 2010 because it will not be available within 60 days to pay claims against current financial resources. b. ExpendituresPolice Cars Cash 200,000 200,000
If previously recorded, an encumbrance would also have to be removed. However, this entry would not affect the statement of revenues, expenditures, and other changes in fund balance. No depreciation is recorded on the police cars because fund-based financial statements are being produced for the General Fund. c. Other Financing UsesTransfers Out 90,000 Cash
90,000
Because the statements being prepared here are only for the General Fund, the entry for the Debt Service Fund is not included. d. Cash 200,000 Other Financing SourcesBond Proceeds
200,000
No interest is accrued because it will not require the use of current financial resources. e. Encumbrances 40,000 Fund BalanceReserved for Encumbrances f. ExpendituresSalaries Cash Salary Payable g. Fund BalanceReserved for Encumbrances Encumbrances 40,000 30,000 10,000
40,000
40,000 40,000
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ExpendituresComputer Vouchers Payable h. ExpendituresSupplies Cash i. Supplies Fund BalanceNonspendable FUND-BASED FINANCIAL STATEMENTS
41,000 41,000 10,000 10,000 2,000 2,000
CITY OF LOST ANGEL STATEMENT OF REVENUES, EXPENDITURES AND OTHER CHANGES IN FUND BALANCE For the Year Ended December 31, 2010 General Fund Revenues Property Taxes $750,000 Total Revenues Expenditures Police cars Salaries Computer Supplies Total Expenditures Excess of revenues over expenditures Other Financing Sources (Uses) Transfer to Debt Service Fund Issued Long-Term Bond Net Other Financing Sources Change in Fund Balance Fund BalanceBeginning of Year Fund BalanceEnd of Year $750,000 $200,000 40,000 41,000 10,000 $291,000 $459,000 $(90,000) 200,000 $110,000 $569,000 180,000 $749,000
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41.
(22 Minutes) (Prepare a statement of net assets for governmental activities)
One way to approach this problem is to make the journal entries for the transactions that are described as the basis for gathering the information for the financial statement to be produced. Here the journal entries are prepared based on the need to create government-wide financial statements for the General Fund (a governmental activity). a. Cash Property Taxes Receivable Property Tax Revenue b. Police Cars Cash Depreciation Expense Accumulated Depreciation 700,000 100,000 800,000 200,000 200,000 10,000 10,000
c. No entry is needed since there is no change in the total net assets of the governmental activities. It is an intra-activity transaction. d. Cash Bonds Payable Interest Expense Interest Payable 200,000 200,000 10,000 10,000
e. No entrythis is only a commitment and not a transaction. f. Salary Expense Cash Salary Payable g. Computer 40,000 30,000 10,000 41,000
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Vouchers Payable Depreciation Expense Accumulated Depreciation h. Supplies Cash i. Supplies Expense Supplies 4,100
41,000 4,100 10,000 10,000 8,000 8,000
This problem indicates that the General Fund held $180,000 in cash at the start of the year GOVERNMENT-WIDE FINANCIAL STATEMENTS CITY OF LOST ANGEL STATEMENT OF NET ASSETS December 31, 2010 Assets Cash Property Tax Receivable Supplies Computers Less: Accumulated Depreciation Police Cars Less: Accumulated Depreciation Total Assets Liabilities Vouchers Payable Salary Payable Interest Payable Bonds Payable Net Assets Invested in capital assets, net of debt Unrestricted $41,000 10,000 10,000 200,000 $226,900 681,000 Governmental Activities $840,000 100,000 2,000 $ 41,000 (4,100) 200,000 (10,000) 36,900 190,000 $1,168,900
261,000
$907,900
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The total net asset figure of $907,900 can be found by taking the opening balance of $180,000 and then adding the revenues for the period and subtracting the expenses. 42. (10 Minutes) (The budgetary process) A. TrueThe initial approval of spending was $380,000 and that amount should be recorded immediately. The budgetary entry debits Estimated Revenues and credits Appropriations. B. FalseThe budgetary information is normally presented as required supplemental information in the comprehensive annual financial report. However, it can also be shown as a separate statement within the fund-based financial statements. The government has that choice. C. TrueAt one time, only the final budget and the actual figures for the period were reported. That was considered somewhat misleading since the budget could be revised near the end of the year to establish agreement. GASB 34 required the original budget also to be disclosed. D. FalseA Budgetary Fund Balance account has to be set up as part of the budget entry to indicate that a surplus (or deficit) is anticipated. However, an expected surplus requires a credit to the Budgetary Fund Balance rather than a debit. E. FalseBudgetary information only relates to fund-based financial statements and has no impact on the government-wide financial statements. 43. (12 Minutes) (The recording of grants) A. FalseRevenue should be recognized when all eligibility requirements have been met. Here, the eligibility requirements, if any, could have been met during 2010. It is certainly possible that the eligibility requirements have not been met but that is not necessarily the case. B. FalseIf there are no eligibility requirements, the revenue should be recognized immediately in December 2010 when the award is made. C. FalseA grant is a government-mandated nonexchange transaction when the award was made to help the recipient government meet legal requirements. That is not specified here. However, if the state
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government had passed a law whereby all school children had to receive hot lunches and had then furnished this grant to help meet that requirement, it would have been a government-mandated nonexchange transaction. D. TrueCash is recognized because it had been received but no revenue can be reported because all eligibility requirements have not yet been met. Thus, deferred revenue should be established for the amount received. E. FalseRevenue recognition rules for nonexchange transactions were set up by GASB Statement No. 33. 44. (15 Minutes) (Impact of various government transactions) a. Fund-based financial statements the fund balance goes up by $6 million because of the inflow of current financial resources. Government-wide financial statements the net asset balance does not change. Both assets (cash) and liabilities (bonds payable) go up by the same $6 million amount. No increase in net assets. b. Fund-based financial statements the fund balance goes down by $149,000 because of the outflow of current financial resources. Government-wide financial statements the net asset balance does not change. One asset (truck) goes up while a second asset (cash) goes down. c. Fund-based financial statements the fund balance goes down for the General Fund by $17,000 because of the outflow of current financial resources. Government-wide financial statements the net asset balance does not change. This is an internal exchange transaction within the governmental activities so that no net change is created. The motor pool is an internal service fund that is part of governmental activities because it services the vehicles of the fire and police departments. d. Fund-based financial statements the fund balance is not affected because the resources will not be collected quickly enough to be available in the current period. An asset (receivable) is recognized along with a liability (deferred revenue) so that the size of the fund
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balance is not affected. Government-wide financial statements A $75,000 receivable and revenue are recognized so that the net asset balance goes up by that amount.
e.
Fund-based financial statements the fund balance is not affected. The money is not recognized as revenue until all eligibility requirements have been met. Because that does not appear to be the case, the cash will go up along with a liability for the deferred revenue. Government-wide financial statements the net asset balance does not change. The accounting is the same as explained for the fund-based financial statements.
f. Fund-based financial statements the fund balance should go up by $1 million. The sale took place in the current year and the resources will all be received within the 75 day period being used to define available resources. Government-wide financial statements the net asset balance goes up by $1 million because the sale was made in the current period.
g.
Fund-based financial statements the fund balance is not affected. Although an encumbrance may be recorded to avoid spending more than the appropriated amount, that has no impact on the total amount of the fund balance. It may well change the way the fund balance is labeled but not the total. Government-wide financial statements a purchase order or other commitment has no impact on the net asset balance.
h.
Fund-based financial statemetns the fund balance for the General Fund goes down by $18,000 because the transfer has been approved and will remove current financial resources. Government-wide financial statements there is no impact on the net asset balance of the governmental activities because this is an intraactivity transfer from one Governmental Fund to another. There is no net effect.
45.
(10 Minutes) (The financial impact of fund transfers) A. FalseA transfer out will be shown by the governmental activities and a
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transfer in will be reported by the business-type activities. Those two figures will be netted together so that no overall impact is shown in the total column for the government as a whole. However, both figures do appear in their own separate columns. B. TrueBecause only funds within the governmental activities are involved, the transfer creates no difference in the overall total. This is an intra-activity transfer. C. TrueThe General Fund reports the resource outflow as an other financing use. Financial resources were reduced but it was not for an expenditure. D. FalseThe General Fund will report the transfer out as an other financing use and the column for "all other funds" will show the transfer-in as an other financing source. E. FalseThe General Fund does not report expenses in the fund-based financial statements but rather expenditures. 46. (15 Minutes) (Special assessment project) A. Correct change is a $40,000 increaseAccording to the preliminary information, the Capital Projects Fund reported an increase in its fund balance for the year of $40,000. In arriving at that figure, a $10,000 revenue and the related expenditure were recorded in that fund for this sidewalk construction. Because the government had no obligation, these cash flows should actually have all been reported in the Agency Fund. The auditing firm will remove both the revenue of $10,000 and the expenditures of $10,000 from the Capital Projects Fund. Because they are of the same amount but have an opposite effect on current financial resources, this removal leaves the overall change in the fund balance unchanged at $40,000. B. Correct change is $140,000 increaseAccording to the preliminary information, the overall change in the net assets of the city on the government-wide financial statements was a $150,000 increase. Here, revenue of $10,000 was reported within the government-wide statements. However, because the city had no obligation, that revenue should have been reported as a liability to the contractor in an Agency Fund. Removing this revenue (and the asset that was recorded at the same time) reduces the net asset increase for the city from $150,000 to $140,000.
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47.
(5 Minutes) (Issuance of short-term note) Correct change is a $10,000 increaseAccording to the preliminary information, the General Fund reported an increase in its fund balance for the year of $30,000. However, this particular $20,000 should have been reported as a debt since it is due in just 60 days rather than as an other financing source (which serves to increase the fund balance). Reclassifying the $20,000 to a debt reduces the overall increase in the fund balance for the period to only $10,000.
48.
(15 Minutes) (Reclassifying an activity as an enterprise fund) A. Correct change is a $66,000 increaseAccording to the preliminary information, the General Fund reported an increase in its fund balance during the year of $30,000. However, the $9,000 revenue and $45,000 in expenditures were erroneously recorded in that fund. Together, those transactions had caused the fund to go down by a net of $36,000. Removing them (in order to record them within an enterprise fund) will remove this $36,000 reduction from the General Fund and cause the increase in the fund balance to rise from $30,000 to $66,000. B. Correct change is a $150,000 increaseAccording to the preliminary information, the overall change in the net assets of the city during the year (on the government-wide financial statements) was a $150,000 increase. An error has been made in that this display was reported in the governmental activities (General Fund) rather than the business-type activities (Enterprise Fund). That increases one column in the statement of assets (the business-type activities) and decreases the other (the governmental activities) by exactly the same amount. Moving the transactions does not change the overall records for the government as a whole. C. Correct change is a $54,000 increaseAccording to the preliminary information, the overall change in the net assets of the Enterprise Fund on the fund-based financial statements was a $60,000 increase. However, the art display was not included as it should have been. Proprietary funds are accounted for like government-wide financial statements (and for-profit businesses). Adding in the $9,000 revenue and the $15,000 expense creates a $6,000 net reduction that drops the positive change from the reported $60,000 to $54,000. The acquisition of the land increases one asset and decreases another so that there is no impact on net assets.
49.
(12 Minutes) (Property tax assessments) A. Correct change is a $42,000 increaseAccording to the preliminary information, the increase in net assets on the government-wide financial statements was $150,000. The government, though, has recognized
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revenue for the amount received in the current period. The amount of the assessment received is $300,000 times 40% or $120,000. However, the discount reduces that figure by $12,000 (10 percent) to $108,000. This money cannot be spent until 2011 and must be reported in 2010 as deferred revenue and not as revenue. Removing this revenue reduces the overall increase in net assets by $108,000 from $150,000 to $42,000. B. Correct change is a $78,000 decreaseAccording to the preliminary information, the General Fund reported an increase in its fund balance for the year of $30,000. The government, though, had recognized revenue for the amount of cash received. As shown in A above, the amount received should have been $300,000 times 40% or $120,000. However, the discount reduces that figure by $12,000 to $108,000. This money cannot be spent until 2011 and, so, must be reported in 2010 as deferred revenue and not as revenue. Removing this $108,000 revenue reduces the overall change in the fund balance from an increase of $30,000 to a decrease of $78,000. 50. (12 Minutes) (Property tax assessments) A. Correct change is a $42,000 increaseAccording to the preliminary information, the overall change in the net assets of the city on the government-wide financial statements was a $150,000 increase. However, as shown above in 49 (part A), $108,000 was received that should have been recorded as deferred revenue until the period when it can be used (2011). Incorrectly, the city recorded the $108,000 as revenue. When removed, the increase in net assets drops from $150,000 to $42,000. Recognition (and the removal) of the receivable and the deferred revenue cause no change in net assets since one is an asset and the other is a liability. B. Correct change is a $78,000 decreaseAccording to the preliminary information, the General Fund reported an increase in its fund balance for the year of $30,000. However, as shown above, $108,000 was received that should have been recorded as a deferred revenue until the period when it can be used (2011). The city incorrectly recorded the $108,000 as revenue. When removed, the increase in net assets drops from an increase of $30,000 to a decrease of $78,000. Recognition of the receivable and the deferred revenue cause no change in net assets since one is an asset and the other a liability. 51. (12 Minutes) (Recording of grant money) A. Correct change is $290,000 decreaseAccording to the preliminary information, the General Fund reported an increase in its fund balance for the year of $30,000. However, $320,000 was recognized here as revenue although an eligibility requirement does remain (lowering air pollution by 25 percent). No revenue can be recognized until all
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eligibility requirements have been met. Changing the $320,000 from revenue to deferred revenue reduces the $30,000 increase in the fund balance to a $290,000 decrease. B. Correct change is a $170,000 decreaseAccording to the preliminary information, the change in net assets of the city on government-wide financial statements was a $150,000 increase. However, $320,000 was recognized as revenue although an eligibility requirement remains (lowering air pollution by 25 percent). No revenue can be recognized until that time. Changing $320,000 from revenue to deferred revenue reduces the $150,000 increase in the fund balance to a $170,000 decrease. Depreciation of the machine is being handled properly. 52. (8 Minutes) (Reporting of program revenues) A. Correct change is a $150,000 increaseAccording to the preliminary information, the overall change in the net assets of the city on the government-wide financial statements was a $150,000 increase. Changing revenue from general revenue to program revenue does not affect the overall change in net assets. B. Correct amount of net expenses is $90,000According to the preliminary information, the parks reported net expenses of $100,000. The net expense figure is computed as direct expenses less any program revenues. The $10,000, though, should have been program revenue. If this revenue had been appropriately included, net expenses would have only been $90,000 rather than $100,000.
Develop Your Skills

Research Case 1
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No textbook is ever going to cover all of the many areas discussed within complex authoritative pronouncements. The subtle nuances of such rules can only be experienced and appreciated through the study of the actual document. The student needs to be aware of the extent of the official guidance that is available and gain confidence by working directly with these pronouncements. Here, an issue has been raised in connection with the handling of several unusual transactions. In real life, no better method of resolving such questions exists than to actually study the official standard itself. A review of the Contents of GASB 34 indicates that when working with government-wide financial statements "Reporting Contributions to Term and Permanent Endowments, Contributions to Permanent Fund Principal, Special and Extraordinary Items, and Transfers" is covered in paragraph 53. Apparently, additional information about "Special and Extraordinary Items" is to be found at paragraphs 55-56. For fund-based financial statements, "Special and Extraordinary Items" are explained at paragraph 89. Paragraph 55 then defines extraordinary items as "transactions or other events that are both unusual in nature and infrequent in occurrence." The paragraph directs the reader to APB Opinion No. 30 for further information on the exact nature of the terms "unusual in nature" and "infrequent in occurrence." Paragraph 56 defines special items as "significant transactions or other events within the control of management that are either unusual in nature or infrequent in occurrence." Paragraph 53 indicates that a number of balances, including special and extraordinary items, should be reported on the government-wide statement of activities "separately from, but in the same manner as, general revenues. That is, these sources of financing the net cost of the government's programs should be reported at the bottom of the statement of activities to arrive at the all-inclusive change in net assets for the period." Following that, in paragraph 54, an illustration is presented of a statement of activities that shows the handling of special items (but not extraordinary items). Paragraph 89 provides instruction on the handling of these two items within fund-based financial statements by first saying that the definitions are the same here as for government-wide financial statements. The placement of these items, though, "should be reported separately after 'other financing sources and uses."' In this case, GASB 34 provides clear guidance as to the identity of these two
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accounts as well as their placement in the financial statements. In practice, accountants rarely refer to textbooks when official guidelines are available. Students, therefore, need to become comfortable with locating the source of authoritative information about a topic in order to become proficient at reading and understanding the material provided. Research Case 2 Here, the accountants and officials of the City of Danmark are looking for assistance in classifying a revenue as either a program revenue (reported directly with a specific activity) or a general revenue (shown for the government as a whole). 1. A study of GASB 34 provides extensive assistance in this case in paragraph 48 by spelling out that "program revenues derive directly from the program itself or from parties outside the reporting government's taxpayers or citizenry, as a whole; they reduce the cost of the function to be financed from the government's general revenues. The statement of activities should separately report three categories of program revenues: (a) charges for services, (b) program-specific operating grants and contributions, and (c) program-specific capital grants and contributions. 2. Examples of program revenues are then given that include: Revenue collected for garbage collection. Building permits. A state grant for the sheriffs department to participate in a drug awareness program. Earnings on endowments if the money is restricted to a program specifically identified in the endowment agreement 3. In contrast, general revenues are defined in the negative in paragraph 52: "all revenues are general revenues unless they are required to be reported as program revenues." Thus, if any revenue does not meet the specific definition of a program revenue, it is automatically labeled as a general revenue. 4. Taxes are included in this category as well as any other revenues of the government that do not meet the program revenue criteria. Analysis Case 1 1) Here is the independent auditors report for the financial statements
INDEPENDENT AUDITORS REPORT Mayor and Members of the City Council City of Minneapolis
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We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Minneapolis, Minnesota, as of and for the year ended December 31, 2008, which collectively comprise the Citys basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the Citys management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of Meet Minneapolis, which represents less than 1 percent, a negative 3 percent, and 10 percent, respectively, of the assets, net assets, and revenues of the aggregate discretely presented component units. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Meet Minneapolis component unit, is based solely on the report of the other auditor. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The financial statements of Meet Minneapolis were not audited in accordance with Government Auditing Standards. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinions. In our opinion, based on our audit and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Minneapolis as of December 31, 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1.O to the financial statements, the City of Minneapolis changed its reporting entity. Due to a merger of the Library Board with Hennepin County Library systems, the Library Board is no longer a discretely presented component unit of the City of Minneapolis. The Managements Discussion and Analysis and the required supplementary information listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding
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the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Minneapolis basic financial statements. The other supplementary information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly presented in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we will issue our report dated July 28, 2009, on our consideration of the City of Minneapolis internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. It does not include Meet Minneapolis which was audited by other auditors. REBECCA OTTO STATE AUDITOR July 28, 2009 GREG HIERLINGER, CPA DEPUTY STATE AUDITOR
Some aspects of this independent auditors report look very much like an audit of a for-profit business. Other parts are quite different. In an audit of a state or local government, the extent of the independent auditor's report is enlarged based on Government Auditing Standards (issued by the Comptroller General of the United States) from that of a for-profit company as it
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also mentions reports that are available about the government's internal control procedures as well as its compliance with laws and regulations. This information could be provided in the audit report or through separate reports. In addition, the mention of the supplemental information is not typically found in the audit report of a for-profit business. 2) A number of items are shown in order to reconcile the net changes in fund balances for the governmental funds and the changes in net assets. These typically include --Internal service funds that are included within the Governmental Activities --Recognition of expenses under accrual accounting that are not recognized under modified accrual accounting --Recording capital assets as expenditures in the fund-based financial statements --Differences in the reporting of long-term debt issuance and payment 3) The largest sources of general revenues for many cities are property taxes and sales taxes. However, a wide variety of revenue sources are possible. 4) The amount of expenditures will vary widely based on the size of the government. Classifications usually include public safety, sanitation, and the like. 5) The General Fund primarily shows current financial resources as its assets: cash and investments, various receivables, and amounts due from other funds. Although not current financial resources, prepaid expenses and an inventory of supplies are also included 6) Most governments will indicate in the note to their financial statements that payables and receivables are viewed as available if collected within 60 days of the end of the year. Other lengths of time, though, can be used. 7) This question focuses on interperiod equity: Is the government spending more than it takes in so that future generations may have to suffer or is the government taking in more than it spends so future generations will have the benefit of an inherited surplus. Analysis Case 2 Students need to continue updating their education throughout their careers. One method for doing this is to become familiar with the information available on the GASB website. This assignment directs the students to look at any Exposure Drafts (EDs) currently being studied by the GASB for the possibility of becoming an official statement. By looking at this site on a regular basis, an accountant can
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keep up with all issues being studied by the Board as well as the authoritative evolution of accounting pronouncements as new standards are produced. At the time of this writing, six items are listed under the Exposure Drafts heading on the GASB website. Four are actually Exposure Drafts: Accounting and Financial Reporting for Service Concession Arrangements, Financial Instruments Omnibus, Accounting and Financial Reporting for Chapter 9 Bankruptcies, and OPEB Measurements by Agent Employers and Agent MultipleEmployer Plans. One (titled SEA Performance Information) is a Proposed Suggested Guidelines for Voluntary Reporting and another (titled Pension Accounting and Financial Reporting) is an Invitation to Comment. Students can download any of these documents and read them as a way to help them understand the evolutionary nature of financial accounting. For example, the Exposure Draft on Accounting and Financial Reporting for Chapter 9 Bankruptcies is less than 20 pages long and establishes accounting and financial reporting standards for all governments that have petitioned for relief under Chapter 9 of the U.S. Bankruptcy Code or have been granted relief under the provisions of Chapter 9, including governments that enter into bankruptcy and are not expected to emerge as a going concern. To a student, such readings can seem tedious and difficultat least initially. However, any person who is involved actively in the financial reporting of a state or local government is probably willing to expend much time and energy in order to be aware of possible financial reporting changes and their consequences. It is important to remember, though, that all of these documents may eventually be rejected outright, accepted, or may undergo either slight or radical revisions. An exposure draft and an invitation to comment are certainly evidence that an authoritative pronouncement is under serious consideration but, over the decades, many proposals have gotten to these levels without the Board's being able to reach sufficient consensus to establish an authoritative principle. Communication Case 1 Most accountants and accounting students understand that the GASB sets official standards for the accounting and financial reporting to be carried out by state and local government organizations. However, probably only a very small portion of either of these groups truly knows what the established goals and mission of the GASB actually is. The following information comes from the current strategic plan of GASB: GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB)
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STRATEGIC PLAN 20082012 VISION Greater accountability and well-informed decision making through excellence in public-sector financial reporting. MISSION To establish and improve standards of state and local governmental accounting and financial reporting that will: ---Result in useful information for users of financial reports, and ---Guide and educate the public, including issuers, auditors, and users of those financial reports. CORE VALUES INDEPENDENCE: The autonomy to pursue the best answer for all constituents, free from undue influence or pressure. INTEGRITY: Honest, ethical, and forthright behavior in relationships with all constituents. OBJECTIVITY: Impartial decisions informed by credible research and thorough deliberations, including due consideration of the views of constituents and the work of other standards setters. TRANSPARENCY: An open process that encourages and values public participation. GOALS STANDARDS SETTING: Establish high-quality standards that improve public accountability and result in useful information for making decisions. CONSTITUENT RELATIONS AND COMMUNICATIONS: Foster constructive relationships with constituents to ensure that the GASB considers their needs and views. EDUCATION: Promote the development of informed and competent financial report users, preparers, and auditors. ORGANIZATIONAL EFFECTIVENESS: Improve the GASBs organizational
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capacity to pursue its vision, mission, and goals in a timely and sustainable manner. Communication Case 2 Students do not always appreciate the amount of discussion, debate, and compromise that FASB and GASB must usually go through to arrive at an official accounting pronouncement. Because of their inexperience, students sometimes see the creation of accounting standards as a quest for the one true and correct path: One way of accounting is right for each situation and all other ways are necessarily wrong. In practice, though, many possible "right" ways usually exist as potential solutions to any accounting problem. Because of the public debate created by many of these issues, the official bodies often receive numerous recommendations when any new standard is discussed and proposed. The Board has to study each and then arrive at the one approach that best fits in with the members' conceptual understanding of accounting and reporting. Furthermore, there are political ramifications to consider as the Board attempts to arrive at a final solution that pacifies the qualms of all the various interested parties. However, the Board does help to explain its standards by presenting extensive background information. This assignment is designed to give students the opportunity of looking at some of the alternatives examined by GASB prior to establishing its Statement No. 34. The paragraphs assigned here present a number of different approaches that were suggested by members of the public and considered by the GASB. In all cases, individuals who had some interest in government accounting felt that these alternatives were better solutions than the dual system of government-wide financial statements and fund-based financial statements mandated by GASB 34.
Many respondents preferred a single set of financial statements rather than the dual approach finally chosen. However, GASB found that there was no consensus that any one set of statements was preferable or provided the needed information by itself. Others simply felt that no significant change was necessary in government accounting and that the system in use at that time (very similar to the current fund-based financial statements) was adequate. The GASB justifies its decision to move away from the previous model by stating (in paragraph 245) that "some of the information that today's users need surpasses the capabilities of the previous reporting model, particularly for
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governmental activities." The suggestion was also made that the fund-based financial statements for governmental funds not be based on measuring and reporting current financial resources. Rather, each government would use the basis of accounting utilized for budgetary purposes (such as a cash system or a modified cash system). The logic of this argument was that these fund-based financial statements are created to provide control and financial accountability which is established by the budgetary process and should, therefore, reconcile with the budget. GASB rejected this idea because the wide variety of possible budgetary methods would eliminate consistency and comparability. Another solution put forth was to leave the current model as it is but make significant changes to it. Basically, GASB responded that one set of statements could simply not expand to suit the wide array of user needs that had arisen over the years. Other suggestions encompassed trying to adapt the basis of accounting utilized for the governmental funds to be more useful to a wider array of financial statement users. In other words, significant changes were recommended for this portion of the fund-based financial statements. GASB indicated here that the Board felt that useful information was being provided by the previous model which focused on current financial resources and that such information should not be lost by the creation of a new model.
Communication Case 3 One of the truly significant additions to state and local government accounting resulting in recent years has been the addition of the Managements Discussion and Analysis. This written report is meant to be a discussion of the financial information reported by the government in a verbal rather than a purely quantitative fashion. Students often do not understand the range of information that can be uncovered within an MD&A by a careful reader. Here, the student can read the MD&A for an actual city. The information that is provided is quite extensive and can cover a wide range of subjects such as the following:
An explanation of fund-based financial statements. An explanation of government-wide financial statements. An explanation of governmental funds, proprietary funds, and fiduciary funds.
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The purpose of the various funds such as the general fund and the debt service fund. A comparison of the governmental activities and the business-type activities. The method by which the government generates revenues. The diversity of expenditures made within the governmental funds. The bond rating for the government. A discussion of the budgetary process. Information about both capital assets and long-term liabilities. The reporting of infrastructure assets that were acquired before the adoption of GASB 34. Information about proprietary operations.
Excel Case 1 This type of spreadsheet would appear to be very helpful in budget planning because city officials could plug in various increase and decrease rates and see the impact on the fund balance over time. There are a number of different ways that a spreadsheet could be created to solve this particular problem. Here is one possible approach: Create Column Headings: In Cell A4, enter label text "Year" In Cell B4, enter label text "Revenue Change" In Cell C4, enter label text "Revenues" In Cell D4, enter label text "Expenditures Change" In Cell E4, enter label text "Expenditures" In Cell F4, enter label text "Ending Fund Balance" In Cell G4, enter label text "Projected Change in Revenue" In Cell H4, enter label text "Projected Change in Expenditures" Click and drag across Cells A4 to H4. Select Format, Cells, Alignment, and click the "Wrap Text" box. Click OK. If needed, place the cursor on the line between the Column Letters and drag the boundary on the right side of the column headings until the columns are the width you want. In Cell A5, enter label text "2009" for first year. In Cell C5, enter Revenues of $1,400,000. In Cell E5, enter Expenditures of $1,480,000. In Cell F5, enter beginning Fund Balance of $400,000 In Cell G5, enter -2% for Projected Change in Revenue Per Year. In Cell H5, enter +3% for Projected Change in Expenditures Per Year.
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In Cell A6, enter label text "2010." Perform Calculations: In Cell B6, enter formula to calculate Revenue Change (Revenue times Projected Revenue Change): =+C5*$G$5. Note here that adding the $ symbol to Column and Row addresses creates an "absolute" reference which will remain static throughout the spreadsheet. In Cell C6, enter formula to adjust Revenues by Revenue Change: =+C5+B6 In Cell D6, enter formula to calculate Expenditures Change (Expenditures times Projected Expenditures Change): =+E5*$H$5 In Cell E6, enter formula to change Expenditures by Expenditures Change: =+E5+D6 In Cell F6, enter formula to calculate the new ending Fund Balance (initial Fund Balance plus Revenue minus Expenditures): =+F5+C6-E6 Copy formulas to adjacent rows: Click and drag across Cells A6 through F6 and release. Place cursor on Fill Handle (small black box in lower right corner of selection box) and click and drag down through Row 8. At that point, you should see that the city will have a negative fund balance of $277,539 at the end of 2012. Simply, by changing cells G5 and H5, the impact of any different level of rate changes can be ascertained. For example, if revenues decrease 5% and expenditures decrease 3% each year, changing those two cells will show that the fund balance will be a positive $14,937 at the end of 2013. Or, by assuming revenues increase by 4% and expenditures increase by 7%, the fund balance will be a negative $146,066 at the end of 2012. Any other combination of changes can be examined in the same way.
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Chapter 16 Accounting For State and Local Governments (Part One)

CHAPTER 16 ACCOUNTING FOR STATE AND LOCAL GOVERNMENTS (PART ONE)

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Answer to Discussion Question

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

10. C 11. B 12. C 13. B

Chapter 16 Accounting For State and Local Governments (Part One)

900,000 300,000 200,000

Chapter 16 Accounting For State and Local Governments (Part One)

89,400 89,400 89,400 89,400

88,000 88,000 88,000 88,000 89,400 89,400 89,400 89,400

Chapter 16 Accounting For State and Local Governments (Part One)

Issuance of Bonds Cash Bonds Payable Completion of Construction Buildings Cash

1,800,000 1,800,000 1,890,000 1,890,000

1,800,000 1,800,000 1,890,000 1,890,000

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

94,000 94,000 96,000 96,000 32,000 32,000

Chapter 16 Accounting For State and Local Governments (Part One)

32,000 32,000 30,000 30,000 5,000 5,000 5,000 5,000

Chapter 16 Accounting For State and Local Governments (Part One)

5,000 5,000 5,000 5,000

Chapter 16 Accounting For State and Local Governments (Part One)

2,000 90,000 90,000 600,000 576,000 24,000

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

111,000 111,000 120,000 120,000 33,000 33,000 33,000 33,000 $ 24,000

Chapter 16 Accounting For State and Local Governments (Part One)

834,000 540,000 242,000 52,000

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

1,000,000 800,000 768,000 32,000

Chapter 16 Accounting For State and Local Governments (Part One)

$300,000 50,000 (470,000) (120,000) $110,000 170,000 $280,000

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Property Tax Receivable Cash RevenuesProperty Taxes Deferred Revenues

80,000 320,000 370,000 30,000

Chapter 16 Accounting For State and Local Governments (Part One)

400,000 $ 203,000 -0$ 203,000

$ 8,000 200,000 $ 78,000 125,000

Chapter 16 Accounting For State and Local Governments (Part One)

70,000 50,000 30,000 20,000 4,000 $274,000 $ 99,000 - 0$ 99,000

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

41,000 41,000 10,000 10,000 2,000 2,000

Chapter 16 Accounting For State and Local Governments (Part One)

(22 Minutes) (Prepare a statement of net assets for governmental activities)

Chapter 16 Accounting For State and Local Governments (Part One)

41,000 4,100 10,000 10,000 8,000 8,000

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)

Chapter 16 Accounting For State and Local Governments (Part One)