This document provides answers to questions about governmental entities' special funds and government-wide financial statements. It discusses:
1. The differences between special revenue funds, capital projects funds, debt service funds, and internal service funds, including their purpose, accounting basis, and required financial statements.
2. The accounting for donations, capital assets, long-term debt, and component units in governmental fund statements versus government-wide statements.
3. Reconciliation requirements between governmental fund statements and government-wide statements. It also covers major funds determination and required supplementary information like budgetary comparisons.
The document is intended to help students understand specialized accounting topics for governmental and not-for-profit entities. It provides definitions
Solution Manual Advanced Financial Accounting by Baker 9th Edition Chapter 16Saskia Ahmad
Solution Manual, Advanced Accounting, Thomas E. King, Cynthia Jeffrey, Richard E. Baker, Valdean C. Lembke, Theodore Christensen, David Cottrell, Richard Baker, Advanced Financial Accounting, Advanced Financial Accounting by Baker Chapter 18, Advanced Financial Accounting by Baker Chapter 18 9th Edition, 9th Edition,
Solution Manual Advanced Financial Accounting by Baker 9th Edition Chapter 16Saskia Ahmad
Solution Manual, Advanced Accounting, Thomas E. King, Cynthia Jeffrey, Richard E. Baker, Valdean C. Lembke, Theodore Christensen, David Cottrell, Richard Baker, Advanced Financial Accounting, Advanced Financial Accounting by Baker Chapter 18, Advanced Financial Accounting by Baker Chapter 18 9th Edition, 9th Edition,
Solution Manual Advanced Accounting by Baker 9e Chapter 16Saskia Ahmad
Solution Manual, Advanced Accounting, Thomas E. King, Cynthia Jeffrey, Richard E. Baker, Valdean C. Lembke, Theodore Christensen, David Cottrell, Richard Baker, Advanced Financial Accounting, Advanced Financial Accounting by Baker Chapter 18, Advanced Financial Accounting by Baker Chapter 18 9th Edition, 9th Edition,
Solution Manual Advanced Financial Accounting by Baker 9th Edition Chapter 18Saskia Ahmad
Solution Manual Advanced Financial Accounting by Thomas E. King, Cynthia Jeffrey, Richard E. Baker, Valdean C. Lembke, Theodore Christensen, David Cottrell, Richard Baker 9th Edition Chapter 18
Solution Manual Advanced Accounting Chapter 15 9th Edition by BakerSaskia Ahmad
Solution Manual, Advanced Accounting, Thomas E. King, Cynthia Jeffrey, Richard E. Baker, Valdean C. Lembke, Theodore Christensen, David Cottrell, Richard Baker, Advanced Financial Accounting, Advanced Financial Accounting by Baker Chapter 18, Advanced Financial Accounting by Baker Chapter 18 9th Edition, 9th Edition,
Solutions Manual for Advanced Accounting 11th Edition by BeamsZiaPace
Full download : https://downloadlink.org/p/solutions-manual-for-advanced-accounting-11th-edition-by-beams/ Solutions Manual for Advanced Accounting 11th Edition by Beams
Solution Manual Advanced Accounting by Baker 9e Chapter 16Saskia Ahmad
Solution Manual, Advanced Accounting, Thomas E. King, Cynthia Jeffrey, Richard E. Baker, Valdean C. Lembke, Theodore Christensen, David Cottrell, Richard Baker, Advanced Financial Accounting, Advanced Financial Accounting by Baker Chapter 18, Advanced Financial Accounting by Baker Chapter 18 9th Edition, 9th Edition,
Solution Manual Advanced Financial Accounting by Baker 9th Edition Chapter 18Saskia Ahmad
Solution Manual Advanced Financial Accounting by Thomas E. King, Cynthia Jeffrey, Richard E. Baker, Valdean C. Lembke, Theodore Christensen, David Cottrell, Richard Baker 9th Edition Chapter 18
Solution Manual Advanced Accounting Chapter 15 9th Edition by BakerSaskia Ahmad
Solution Manual, Advanced Accounting, Thomas E. King, Cynthia Jeffrey, Richard E. Baker, Valdean C. Lembke, Theodore Christensen, David Cottrell, Richard Baker, Advanced Financial Accounting, Advanced Financial Accounting by Baker Chapter 18, Advanced Financial Accounting by Baker Chapter 18 9th Edition, 9th Edition,
Solutions Manual for Advanced Accounting 11th Edition by BeamsZiaPace
Full download : https://downloadlink.org/p/solutions-manual-for-advanced-accounting-11th-edition-by-beams/ Solutions Manual for Advanced Accounting 11th Edition by Beams
TF QUESTION1Under the modified accrual basis of accounting, t.docxjohniemcm5zt
T/F QUESTION
1
Under the modified accrual basis of accounting, there is no matching principle and no attempt to amortize costs that benefit multiple periods.
2
In fund accounting, expenditures may be classified in different ways, such as by program or activity.
3
When government funds reimburse one another, the expenditure of the fund paying for the cost is increased and the expenditure of the fund reimbursed is decreased.
4
Loans between funds are handled in account receivable and account payable accounts.
5
GASB requires disclosures about capital asset impairment if the decline in service is minimal.
6
Government accounting principles dictate that interest received on investments be treated as cash inflow from investing activities.
7
Payments received by a city utility fund would appear on a statement of cash flows for government funds.
8
Revenues for government funds include taxes, assessments, proceeds from bonds, and fines.
9
The general fund recognizes revenue when earned by the enterprise recognizes revenue when available.
10
Capital assets related to specific proprietary funds should be accounted for in the government wide statements only.
11
A major difference between fund statements and proprietary statements is the treatment of transactions that impact cash balances in the bank.
12
The basic criterion used to determine the reporting entity (fund) for a govt. unit is its geographical boundaries.
13
GASB requires fund balances to be reported as restricted when constraints are placed on the use of resources either externally imposed by creditors or those imposed by taxpayers.
14
Agency funds take in monies that are used to invest in order to make the fund a profit.
15
GASB does not require the notes to financial statements to address significant subsequent events.
16
Since the general fund is a catch-all fund, a government agency typically uses several general funds to record different types of transactions.
17
Revenue is generally included in fund statements if received within 60 days after the year end.
18
Inter-fund transactions are eliminated on the Statement of Activities, when they are between the primary government and business type activities.
19
Trust and agency funds use accrual basis of accounting.
20
Major funds are reported on separately if management believes it is useful to present them separately in the financial statements.
.
#TF QUESTION1Under the modified accrual basis of acco.docxjoney4
#
T/F QUESTION
1
Under the modified accrual basis of accounting, there is no matching principle and no attempt to amortize costs that benefit multiple periods.
2
In fund accounting, expenditures may be classified in different ways, such as by program or activity.
3
When government funds reimburse one another, the expenditure of the fund paying for the cost is increased and the expenditure of the fund reimbursed is decreased.
4
Loans between funds are handled in account receivable and account payable accounts.
5
GASB requires disclosures about capital asset impairment if the decline in service is minimal.
6
Government accounting principles dictate that interest received on investments be treated as cash inflow from investing activities.
7
Payments received by a city utility fund would appear on a statement of cash flows for government funds.
8
Revenues for government funds include taxes, assessments, proceeds from bonds, and fines.
9
The general fund recognizes revenue when earned by the enterprise recognizes revenue when available.
10
Capital assets related to specific proprietary funds should be accounted for in the government wide statements only.
11
A major difference between fund statements and proprietary statements is the treatment of transactions that impact cash balances in the bank.
12
The basic criterion used to determine the reporting entity (fund) for a govt. unit is its geographical boundaries.
13
GASB requires fund balances to be reported as restricted when constraints are placed on the use of resources either externally imposed by creditors or those imposed by taxpayers.
14
Agency funds take in monies that are used to invest in order to make the fund a profit.
15
GASB does not require the notes to financial statements to address significant subsequent events.
16
Since the general fund is a catch-all fund, a government agency typically uses several general funds to record different types of transactions.
17
Revenue is generally included in fund statements if received within 60 days after the year end.
18
Inter-fund transactions are eliminated on the Statement of Activities, when they are between the primary government and business type activities.
19
Trust and agency funds use accrual basis of accounting.
20
Major funds are reported on separately if management believes it is useful to present them separately in the financial statements.
...
For governments that implement GASB Statement No. 34, the fund finan.pdfanujmkt
For governments that implement GASB Statement No. 34, the fund financial statements will
accompany Management\'s Discussion and Analysis and the government-wide statements. The
fund financial statements are used to report additional detailed information about the primary
government not found in the government-wide statements and focus on major funds of the
primary government.
The GWFS are reported using the economic resources measurement focus and the full accrual
basis of accounting. GWFS report information about the government as a whole without
displaying individual funds or fund types. Distinctions should be made in the GWFS between the
primary government and its discretely presented component units, as well as between
governmental activities and business-type activities. Fiduciary activities are not included in the
GWFS.
GWFS include:
The Government-wide Financial Statements and Fund Financial Statements have a different
measurement focus and basis of accounting. To help the user understand and assess the
relationship between fund-based and government-wide financial statements, local governments
will be required to present a summary reconciliationthat will show the interplay between the two
types of statements.
Balance sheet - The basic statement of position for governmental funds reports the difference
between assets and liabilities as fund balance. Fund balance is divided into reserved and
unreserved components. This is the same statement that is contained in the AUD and ST3.
Statement of revenues, expenditures and changes in fund balance-The basic statement of
activities for governmental funds reports revenues by source and expenditures by function just as
they are currently reported. Since long-term liabilities and capital assets have been incorporated
into the government-wide statements the accounts groups will no longer be reported in the
statements. A revised supplemental schedule will be included in the AUD and ST3 to continue to
accumulate this information. Statement of net assets- The basic statement of position for
proprietary funds reports the difference between assets and liabilities as net assets. Net assets are
divided into invested in capital assets, restricted and unrestricted.Statement of revenues,
expenses and changes in fund net assets- The basic statement of activities for proprietary funds
distinguishes operating and non-operating revenues and expenses.Statement of cash flows - This
statement will now be required to be prepared on the direct method where operating cash flows
will be reported by source. This is not a change for local governments since OSC has already
required this method.
Solution
For governments that implement GASB Statement No. 34, the fund financial statements will
accompany Management\'s Discussion and Analysis and the government-wide statements. The
fund financial statements are used to report additional detailed information about the primary
government not found in the government-wide statement.
2
Name:
Instructor:
Course:
Date:
Institution Affiliation:
Governmental funds are used to report the accounting records of the government. The government uses the statement of financial position and the operating statements to report to the tax payers. This is because most of the government finances are received from the taxes paid by the taxpayers and the government thus owes a responsibility to the taxpayers of accountability.
The financial statements are comprised of the balance sheet and statement of operations which include all the revenues, expenditure and changes in the fund balances. Prepaid items and inventories are reported as assets during their purchase. The expenditures are deferred in their recognition till the period in which the assets are consumed or used.
The government fund generally focuses on the primary sources, uses and balances of current financial resources in a budget. The government fund includes the following:
· General fund
· Special revenue funds
· Capital projects funds
· Debt service funds
· Permanent funds
Proprietary funds involve the different sectors that a government is divided into for instance state governments. The proprietary funds account are presented by the statement of net position, the cash flows and also the statement of operating expenditures, incomes or revenues and changes in the net position. Individual proprietary funds should be recorded in separate columns. Proprietary funds include enterprise funds and internal service funds. The function of these enterprises is to provide goods and services to the general public at a fee. Internal service funds account for goods and services provided by one department to another department of the governmental unit on a cost-reimbursement basis.
Fiduciary funds are used to account for the assets held in trust by the government for the benefit of the different government departments or entities or individuals. For instance the employees receiving their retirement benefits is an example of the fiduciary fund held by the government. The fiduciary fund includes:
· Agency funds
the agency fund involve the receipt, temporary investment and remittance of the fiduciary resources to their specifics, be they individuals, private governments, or other governments. The statement of net position requires that assets be equal to the liabilities. The statement of the changes in assets and liabilities reports the beginning balances, additions, deductions and ending balances.
· Pension and other employee benefit trust funds
the division is required to hold and report the resources which are held in trust for the beneficiaries of pension plans, contribution plans, postemployment benefit plans, or other employee benefit plans. The requirements of the accounting of the different pension fund are stipulated in the GAAP and require maintaining of separate distinct accounts for the different entities.
· External investment trust funds
it requires the reporting of ...
ACCT 410 Quiz 3TF questions are worth .5 point each1.A fund in.docxrhetttrevannion
ACCT 410 Quiz 3
T/F questions are worth .5 point each:
1.A fund in itself is a separate legal entity that is established to comply with laws that require that certain transactions be segregated and accounted for as a separate "fund."
F
2.The Financial Accounting Standards Board (FASB) sets generally accepted accounting principles (GAAPs) for non-government not-for-profit organizations, while government non-profit organizations must follow GASB.
T
3.The size of a government's operations does not necessarily coincide with the number of funds it establishes.
T
4.The MDA section of the basic financial statements is an introduction of events that have occurred in the organization as well as the possible effects of events that might happen.
T
5.The government wide financial statements are presented in addition to fund financial statements and include the entity's fiduciary activities.
6.The budget of an NFP organization is not integrated into the record-keeping procedures and the applicable financial statements, as it is for governmental entities.
7.Certain revenues are precluded by GAAP from being recorded in special revenue funds. Revenues that are earmarked for expenditures for major capital projects should be recorded in special revenue funds.
8.NFP organizations adjust the value of their long-term debt for discounts or premiums on issuance of the debt, whereas governments list their long-term debt in the General Long-term Liabilities accounts at face value even though it may have been issued at a discount or at a premium.
9.Because they use full accrual accounting, NFPs account for depreciation. There is an exception, however, in regard to certain assets that have collection value which are preservable in their current condition, and have a claim on resources sufficient to preserve them indefinitely.
10. Proprietary funds use the accrual basis of accounting and the economic resources measurement focus. Accordingly, proprietary funds recognize revenues when they are earned and recognize expenses when a liability is incurred.
11.The basis of accounting describes when transactions are recorded, not what transactions are recorded. Accordingly, allocations such as depreciation and amortization are not recorded as expenditures of governmental funds, nor are long-term liabilities.
12.Governmental funds use the current financial resources measurement focus, which recognizes as expenditures those costs that result in a decrease in current financial resources.
13.Routine employer contributions from the general fund and internal services billings from the enterprise fund are treated as transfers between funds.
14.The City of Virginia Beach issues $5 million in revenue bonds on January 1 to build a water line for the water enterprise fund. Interest is payable every six months. What entry is made for interest expense as of June 30
th
?
0
60,000
45,000
30,000
15.The GASB requires each governmental entity to prepare a CAFR.
16. The budget for Virginia Be.
True or False1. A fund in itself is a separate legal entity that i.docxshanaeacklam
True or False
1. A fund in itself is a separate legal entity that is established to comply with laws that require that certain transactions be segregated and accounted for as a separate "fund."
2. The Financial Accounting Standards Board (FASB) sets generally accepted accounting principles (GAAPs) for non-government not-for-profit organizations, while government non-profit organizations must follow GASB.
3. The size of a government’s operations does not necessarily coincide with the number of funds it establishes.
4. The MDA section of the basic financial statements is an introduction of events that have occurred in the organization as well as the possible effects of events that might happen.
5. The government wide financial statements are presented in addition to fund financial statements and include the entity’s fiduciary activities.
6. The budget of an NFP organization is not integrated into the record-keeping procedures and the applicable financial statements, as it is for governmental entities.
7. Certain revenues are precluded by GAAP from being recorded in special revenue funds. Revenues that are earmarked for expenditures for major capital projects should be recorded in special revenue funds.
8. NFP organizations adjust the value of their long-term debt for discounts or premiums on issuance of the debt, whereas governments list their long-term debt in the General Long-term Liabilities accounts at face value even though it may have been issued at a discount or at a premium.
9. Because they use full accrual accounting, NFPs account for depreciation. There is an exception, however, in regard to certain assets that have collection value which are preserved in their current condition, and have a claim on resources sufficient to preserve them indefinitely.
10. Proprietary funds use the accrual basis of accounting and the economic resources measurement focus. Accordingly, proprietary funds recognize revenues when they are earned and recognize expenses when a liability is incurred.
11. The basis of accounting describes when transactions are recorded, not what transactions are recorded. Accordingly, allocations such as depreciation and amortization are not recorded as expenditures of governmental funds, nor are long-term liabilities.
12. Governmental funds use the current financial resources measurement focus, which recognizes as expenditures those costs that result in a decrease in current financial resources.
13. Routine employer contributions from the general fund and internal services billings from the enterprise fund are treated as transfers between funds.
14. When accounting for non-profit entities, the statement of financial position breaks down its assets and liabilities as unrestricted asset, temporarily restricted assets, and permanently restricted assets.
15. The GASB requires each governmental entity to prepare a CAFR.
16. The budget for Silver Spring authorizes expenditures of 12 million and forecasts revenues of 10 million for 20.
TF questions are worth .5 point each1.A fund in itself is a sepa.docxjohniemcm5zt
T/F questions are worth .5 point each:
1.A fund in itself is a separate legal entity that is established to comply with laws that require that certain transactions be segregated and accounted for as a separate "fund."
F
2.The Financial Accounting Standards Board (FASB) sets generally accepted accounting principles (GAAPs) for non-government not-for-profit organizations, while government non-profit organizations must follow GASB.
T
3.The size of a government's operations does not necessarily coincide with the number of funds it establishes.
T
4.The MDA section of the basic financial statements is an introduction of events that have occurred in the organization as well as the possible effects of events that might happen.
T
5.The government wide financial statements are presented in addition to fund financial statements and include the entity's fiduciary activities.
6.The budget of an NFP organization is not integrated into the record-keeping procedures and the applicable financial statements, as it is for governmental entities.
7.Certain revenues are precluded by GAAP from being recorded in special revenue funds. Revenues that are earmarked for expenditures for major capital projects should be recorded in special revenue funds.
8.NFP organizations adjust the value of their long-term debt for discounts or premiums on issuance of the debt, whereas governments list their long-term debt in the General Long-term Liabilities accounts at face value even though it may have been issued at a discount or at a premium.
9.Because they use full accrual accounting, NFPs account for depreciation. There is an exception, however, in regard to certain assets that have collection value which are preservable in their current condition, and have a claim on resources sufficient to preserve them indefinitely.
10. Proprietary funds use the accrual basis of accounting and the economic resources measurement focus. Accordingly, proprietary funds recognize revenues when they are earned and recognize expenses when a liability is incurred.
11.The basis of accounting describes when transactions are recorded, not what transactions are recorded. Accordingly, allocations such as depreciation and amortization are not recorded as expenditures of governmental funds, nor are long-term liabilities.
12.Governmental funds use the current financial resources measurement focus, which recognizes as expenditures those costs that result in a decrease in current financial resources.
13.Routine employer contributions from the general fund and internal services billings from the enterprise fund are treated as transfers between funds.
14.The City of Virginia Beach issues $5 million in revenue bonds on January 1 to build a water line for the water enterprise fund. Interest is payable every six months. What entry is made for interest expense as of June 30
th
?
0
60,000
45,000
30,000
15.The GASB requires each governmental entity to prepare a CAFR.
16. The budget for Virginia Beach authorizes e.
The use of Funds in Governmental Accounting NeveenJamal
Governmental Accounting differs from Business enterprise accounting in three major respects:
1 Use a separate funds to accounts for its activities.
2. Use of current financial resources and modified accrual basis.
3. Incorporates Budgetary accounts into the financial Accounting System.
The main objectives of accounting system in government are to provide accountability for resources and to ensure the compliance with budgetary requirements and limitations.
For more classes visit
www.snaptutorial.com
ACC 548 Assignment Balancing the Budget
What are the relevant facts?
Who is affected?
Who are the major parties in this case?
What are the ethical conflicts in this case?
In government accounting, when someone ask about the equity section .pdfanantakoli2000
In government accounting, when someone ask about the equity section of the Statement of Net
Position, does it mean the Net Position involving Net Investment in Capital Assets, restricted for
debt service and unrestricted?
Solution
Yes.
The equity reported in the statement of net position should be labeled net position and displayed
in the following three components: (1) net investment in capital assets; (2) restricted
(distinguishing between major categories of restrictions); and (3) unrestricted.
Net Investment in Capital Assets
This component of net position consists of capital assets, including restricted capital assets, net
of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages,
notes, or other borrowings that are attributable to the acquisition, construction, or improvement
of those assets. Deferred outflows of resources (effective fiscal year 2014) and deferred inflows
of resources that are attributable to the acquisition, construction, or improvement of those assets
or related debt also should be included in this component of net position.
It is essential that related assets, deferred outflows, liabilities, and deferred inflows be reported
within the same category of net position. [Be sure to group restricted assets and their related
liabilities and/ or deferred inflows under the same category of Restricted Net Position. Similarly,
capital assets and their related liabilities and/ or deferred inflows should be under Net Investment
in Capital Assets.] This prevents one classification from being overstated while another is
understated by a similar amount.
Unspent Debt Proceeds: If there are significant unspent debt proceeds at year-end, the portion of
the debt attributable to the unspent proceeds should not be included in the calculation of \"net
investment in capital assets\". Rather, that portion of the debt should be included in the same net
position component as the unspent proceeds, in this case, restricted for capital projects.
Therefore, if no capital assets have been purchased or constructed from the debt proceeds, the
entire amount of the debt would reduce net position \"restricted for capital projects\". If some
capital assets have been purchased or constructed from the debt proceeds, that portion of the debt
would be considered \"capital-related.\" The remainder, the unspent portion of the debt, would be
included in the calculation of net position \"restricted for capital projects\". Generally, the effect
of unspent debt proceeds on net position will be negligible—restricted cash will approximate
related debt outstanding.
All uses of bond proceeds do not have to be categorized to determine how much of the debt
actually relates to assets that have been capitalized. Unless a significant portion of the debt
proceeds is spent for noncapitalizable purposes, the entire amount should be considered \"capital-
related.\"
If debt is issued to refund existing capital-related debt, the new debt is also.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
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1. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
1
CHAPTER 18
GOVERNMENTAL ENTITIES: SPECIAL FUNDS AND
GOVERNMENT-WIDE FINANCIAL STATEMENTS
ANSWERS TO QUESTIONS
Q18-1 A governmental entity would use a special revenue fund rather than a
general fund when the resources earmarked for the fund, such as federal or state
government grants or special tax levies, are restricted for specific purposes.
Q18-2 Operating budgets are prepared for the general fund, special revenue funds,
and debt service fund. Capital budgets are prepared for the capital projects fund.
Q18-3 Interest on long-term debt is accounted for in the debt service fund for only
the interest that is due and legally payable as an expenditure. Interest is not accrued
on the outstanding balance of the long-term debt.
Q18-4 The major differences between a special revenue fund and an enterprise
fund are
Special Revenue
Fund
Enterprise
Fund
Measurement focus
Current financial resources
Economic resources
Accounting basis
Modified accrual
Accrual
Budgetary basis
Operating budget
None required
Long-term assets
No
Yes
Long-term debt
No
Yes
Encumbrances
Yes
No
Financial statements
Governmental type
Commercial type
Q18-5 The basis of accounting used in the proprietary funds is the accrual basis
because the focus of the governmental entity is on capital maintenance and income
determination rather than budgetary spending authority.
Q18-6 The financial statements that must be prepared for the governmental funds
are the balance sheet and the statement of revenues, expenditures, and changes in
fund balances. The financial statements that must be prepared for the enterprise
funds are the statement of net assets, the statement of revenues, expenses, and
changes in fund net assets, and the statement of cash flows.
18-1
2. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
Q18-7 Proceeds from a bond issue are accounted for as an other financing source
in the fund that issued the bonds. However, some governments have a policy that the
capital projects fund may not keep any bond premium, in which case the bond
premium is typically transferred to a debt service fund. Other financing sources and
uses are reported separately below operations, but above special items, on the
governmental funds’ statement of revenues, expenditures, and changes in fund
balance.
Q18-8 A permanent fund is a governmental fund for which the principal is
maintained, but the income in the fund can be used by the government for its
programs that benefit all of its citizens. The basis of accounting in permanent funds is
the modified accrual method. Private-purpose trust funds are established to benefit
specific individuals or organizations, as specified by the donor. These private-purpose
trust funds may have an expendable principal, or the principal may be nonexpendable. The accrual basis of accounting is used for private-purpose funds. Thus,
a major difference between these funds is the specificity of who the beneficiaries of
the fund are.
Q18-9 GASB 34 specifies that only governmental and enterprise funds determined
to be “major” funds need to be separately disclosed in their own columns in the fund
financial statements. There are two tests to determine which individual governmental
and enterprise funds are considered major if they meet both tests. First, the general
fund is always considered a major fund. The first test is total assets, liabilities,
revenues, or expenditures/expenses of that individual fund are at least 10 percent or
more of the governmental or enterprise category. The second test is that total assets,
liabilities, revenues, or expenditures/expenses of the individual governmental or
enterprise fund are at least 5 percent of the total for all governmental and enterprise
funds combined. Any individual funds that are not considered major are aggregated
and presented in a single column. Management may, at any time, separately disclose
even those non-major funds for which they feel the additional disclosure will provide
information valuable to the readers of the financial statements.
Q18-10 Because the measurement focus of the governmental funds is on current
financial resources, revenue would be recognized in the governmental funds only if
the donated items are available to finance expenditures of the current period, For
example, donated land would be included in contribution revenue of a governmental
fund if the land was sold, or the government has entered into a contract to sell the
land, and that the proceeds from the sale will be available to finance expenditures of
the current period. However, a donation to a governmental fund, in the form of
financial resources or capital assets, that has a restriction imposed by the donor
which makes the donation unavailable to finance current expenditures, is not
included in the governmental fund’s financial statements. Of course, on the
government-wide statement of activities, all donations would be shown, at fair value
on a separate line below general revenues. Specifically, endowment and permanent
fund principal donations are reported below general revenues and above special and
extraordinary items.
On the governmental funds financial statements, special and extraordinary items
are reported below operations, but above the net change in fund balance line, in the
statement of revenues, expenditures, and changes in fund balance. Special items are
those significant transactions within the control of management that are either
unusual in nature or infrequent in occurrence. Extraordinary items are transactions or
events that are both unusual and infrequent in occurrence.
Q18-11 Agency funds must be self-balancing with assets equalling liabilities.
Therefore, agency funds do not have a net fund balance.
18-2
3. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
Q18-12 Component units are separate government entities for which the primary
government is financially accountable. The financial presentation of these component
units is dependent on the separability from the primary government. If the component
unit is virtually inseparable, then the component unit’s financial information is blended
into the primary government’s financial statements. However, if the component unit is
distinguishable, and has its own taxing authority, then the component unit’s financial
information is presented in a separate column in the government-wide financial
statements.
Q18-13 Two reconciliation schedules are required by GASB 34. The first reconciles
the fund balances reported in the governmental funds to the net assets of
governmental activities reported on the government-wide financial statements. For
example, internal service funds are not a governmental fund, but the accounts for
internal service funds are blended into the governmental activities that are reported
on the government-wide financial statements. The second reconciliation schedule
reconciles the net change in fund balances reported in the governmental funds
statements to the change in net assets reported in the government-wide financial
statements. These two reconciliation schedules are required by GASB 34 to be
presented either on the face of the fund financial statements or in a separate
schedule immediately following the fund financial statements.
Q18-14 The budgetary comparison schedule reports, for the general fund and any
other governmental fund that has a legally adopted budget, the initially approved
budget, the final budget of the year, and the actual amounts, for each line item in the
statement of revenues, expenditures, and changes in fund balance. A variance
column may also be used to compare the actual against the final budget. This
budgetary comparison schedule is part of the required supplementary information
(RSI) required by GASB 34. GASB 41 amended GASB 34 for those governments
that do not use the general fund and special revenue fund structure specified in
GASB 34 for their budgetary purposes. GASB 41 specified that those governments
with significant perspective differences should provide a budgetary comparison
schedule in the RSI based on the structure the government used for its legally
adopted budget.
Q18-15 The government-wide financial statements present the infrastructure assets,
such as roads, bridges, tunnels, sewer and water systems, etc., and other long-term
assets of the government entity, such as buildings, equipment, vehicles, etc. The
capital assets should be reported at historical cost or fair value at the time of
donation, if donated. Because the basis of accounting for the government-wide
financial statements is the accrual method, depreciation is recorded on the other
long-term assets and these are reported net of depreciation. For infrastructure assets,
the governmental entity may elect to use a modified approach in which depreciation is
not recorded. The modified approach requires an assessment of the current condition
of the infrastructure assets and an estimate of the annual amount required to
maintain and preserve the infrastructure assets. In addition, the government-wide
financial statements present the general long-term debt obligations of the
governmental entity at the present value of the debt principal and future interest, just
as computed under the accrual basis of accounting that is used for commercial
entities.
18-3
4. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
SOLUTIONS TO CASES
C18-1 Basis of Accounting and Reporting Issues
a. In the accrual basis of accounting, revenue should be recognized in the
accounting period in which it is earned and becomes measurable.
In the modified accrual basis of accounting, revenue should be recognized in the
accounting period in which it becomes both measurable and available to finance
expenditures of the fiscal period. "Available" means collectible within the current
period or soon enough thereafter to be used to pay current period liabilities.
b. For the general fund, the modified accrual basis of accounting should be used
because it is a governmental fund, which is, in essence, an accounting segregation of
financial resources.
For the special revenue fund, the modified accrual basis of accounting should be
used because it is a governmental fund, which is, in essence, an accounting
segregation of financial resources.
For the enterprise fund, the accrual basis of accounting should be used because it is
a proprietary fund, with activities similar to those in the commercial, profit-seeking
sector.
18-4
5. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
C18-2 Capital Projects, Debt Service, and Internal Service Funds
a. Capital projects funds account for the acquisition or construction of major capital
facilities or improvements. A separate capital projects fund is created at the time the
project is approved and ceases at the completion of the project. Accounting for capital
projects funds is similar to accounting for the general fund. The modified accrual
basis of accounting is used; no fixed assets, depreciation, or long-term debt is
recorded in these funds.
The bond proceeds are not revenue to the capital projects fund; they are reported as
Other Financing Sources. A premium on the sale of bonds is transferred to the debt
service fund. When the expenditure is recorded, Contract Payable is credited for the
current portion due and Contract Payable-Retained Percentage is credited for the
amount held back to ensure that the contractor fully completes the project to the
satisfaction of the governmental entity.
The financial statements for capital projects funds are a balance sheet and a
statement of revenues, expenditures, and changes in fund balance. No budget versus
actual is required because capital projects funds use a capital budget rather than an
operating budget.
b. Debt service funds account for the accumulation and use of resources for the
payment of general long-term debt principal and interest. Accounting for the debt
service fund is similar to accounting for the general fund. The modified accrual basis
of accounting is used; no fixed assets or long-term debt is recorded; only current
maturities are recorded in the fund.
The bond premium received from the capital projects fund is recorded as an other
financing source – transfer in. The matured portion of a serial bond is recognized as
an expenditure and Matured Bonds Payable is credited. Interest legally due and
payable is recorded as an expenditure and Matured Interest Payable is credited.
The financial statements of the debt service fund are a balance sheet and a
statement of revenue, expenditures, and changes in fund balance.
c. Internal service funds account for the financing of goods or services provided by
one department to other departments on a cost-reimbursement basis. Separate
internal service funds are established for each type of service. Accounting for internal
service funds is the same as for enterprise funds or commercial entities. The accrual
basis is used; these funds record fixed assets, depreciation, and long-term debt.
The internal service fund may be started with a transfer in from the general fund. The
billings are recorded in "Due from" accounts and the revenue account, Charges for
Services. The closing entries involve a Profit and Loss Summary or Excess of Net
Revenues over Costs account.
The financial statements of an internal service fund are a statement of net assets; a
statement of revenues, expenses, and changes in fund net assets; and, a statement
of cash flows.
18-5
6. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
C18-3 Discovery Case
Summary of major information items in the Financial Report of the United States
Government,
1.
The report is prepared by the Secretary of the Treasury.
2.
The Management’s Discussion and Analysis presents comparative historical
information for operations and financial position along with budget information,
both historical and projected.
3.
The Comptroller General of the United States heads the General Accountability
Office (GAO) who is the auditor for the U.S. government. For several years, the
Comptroller General has disclaimed an opinion on the consolidated financial
statements because of the material deficiencies in the government’s systems,
recordkeeping, documentation, and financial reporting.
The material
deficiencies are listed in the auditor’s report.
4.
The following five statements are presented: (1) Statements of Net Cost,
(2) Statements of Operations and Changes in Net Position, (3) Reconciliations
of Net Operating Revenue (Cost) to the Budget Surplus (unaudited), (4)
Dispositions of the Budget Surplus (unaudited), and (5) Balance Sheets.
5.
The Statements of Net Cost present the costs and revenue for the major
departments, agencies, commissions, and other units of the federal
government.
6.
The Statement of Operations and Changes in Net Position presents the
revenues by type, the total costs, and the net operating revenue (cost) for each
year.
7.
The Reconciliation of Net Operating Revenue (Cost) to the Budget Surplus
presents the increases or decreases in major cost programs, along with the
amount of capitalized fixed assets by major agencies of the federal
government.
8.
The Dispositions of the Budget Surplus presents the changes in assets and
liabilities during the years reported.
9.
The Balance Sheets present the assets, by major type, the liabilities, by major
type, and reconciles to the net position of the U.S. government.
10.
Major footnotes include a stewardship report on the resources held by the U.S.
government, and a large number of notes to the financial statements that
report on specific items related to agencies, commissions, and other entities
within the federal government.
18-6
7. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
C18-4 Becoming Familiar With a Local Government’s Comprehensive Annual
Financial Report (CAFR)
(Note to the instructor: Most local governments now produce a comprehensive annual
financial report. You might select the local city or county in which the university is located
or a large city close to the university town. Printed copies of the CAFR may be obtained
directly from that governmental entity and you could place these copies on reserve in
your university library for use by your students. Alternatively, many governments now
provide their CAFRs online. A Google web search using “CAFR” and the name of your
city, county or state will show if your selection provides an online copy of its CAFR. Or,
you may do a Google search using “CAFR” and then select one of the government units
that provide an online copy of its CAFR and then provide that link to your students or
insert that link into your online syllabus.)
a. Students should read the MD&A to get familiar with the governmental entity. One of
the items contained in the MD&A is information on the nature of the services performed
by the government. At the local government level, the services usually consist of police
and fire protection, street maintenance, recreation, and other services typically the
responsibility of the local government.
b. Because there is so much information contained in a CAFR, it is important to see what
information is covered by the auditor’s opinion. The auditor’s opinion is usually
unqualified. The auditor does not audit the MD&A and other RSI and does not express an
opinion on this information. The auditor reads the MD&A and other RSI to determine if
the information contained therein is reasonable.
c. A general purpose government will have most fund types. It is beneficial for the student
to see which fund types are used and which ones are not used by a government.
d. Students should become familiar with the types of information found in the notes. One
item of information disclosed in the notes is a description of the measurement focus and
basis of accounting used by the governmental funds. The footnotes’ discussions
regarding the governmental funds and their use of the financial resources measurement
focus and modified accrual basis of accounting reinforce what the students learned from
the text.
e. Listing the financial statements that use the economic resources measurement focus
and accrual basis of accounting reinforces the coverage in the text. In their evaluation,
students should remember that the governmental fund financial statements are the only
ones prepared using the current financial resources measurement focus and the modified
accrual basis of accounting.
f. Students should be aware of the reporting of major funds in the financial statements
of governmental and proprietary funds.
g. This question emphasizes that the reporting entity for the government may be larger
than the local governmental if the local government has fiscal accountability over other
governmental entities. Because many component units are reported discretely, students
should have little problem identifying the existence of component units.
18-7
8. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
C18-4 (continued)
h. The purpose of this question is for students to become acquainted with the balance
sheet equation for the governmental funds: Assets = Liabilities + Fund Balance. Another
goal for this question is for students to see that fund balance is separated into two
components: (1) reserved and (2) unreserved.
i. The purpose behind questions i - l is to help students understand the format of the
statement of revenues, expenditures, and changes in fund balance. The first section
deals with revenues, which are reported according to source. Students will discover that
taxes are generally not the only source of revenue.
j. The objective of this question is to get students to understand how governments report
expenditures. Students may expect governments to report expenditures by object;
however, expenditures are not reported this way on the statement of revenues,
expenditures, and changes in fund balance.
k. The purpose of this question is to have students examine the items reported in other
financing sources and uses. This should reinforce what they learn in the text when they
read the section dealing with interfund transfers.
l. This question covers the last items reported on the statement of revenues,
expenditures, and changes in fund balance: special items, the change in fund balance for
the year, and the ending fund balance at the end of the most recent year. Students
should not expect to see any special items since their occurrence is rare. However,
students should see the change in fund balance for the year being added to the
beginning fund balance to produce ending fund balance.
18-8
9. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
C18-5 The GASB’s Decision-Making Process
The GASB’s presentation of its decision-making process is found on their web site at
www.gasb.org/ then click on GASB FACTS in the left-hand frame, then click on Facts
About the GASB: The Mission and Structure of the Board, and finally, click on An Open
Decision-Making Process.
1. The Governmental Accounting Standards Advisory Council (GASAC). This council is
composed of about 25 persons from a diverse background in government accounting
and finance. This council provides suggestions for topics to be considered by the
GASB. In addition, the Board receives concerns about current governmental
accounting needs from other persons and groups who work in governmental
accounting or auditing.
2. Task Force. In many cases, a task force is formed shortly after the Board agrees to
place the project on its agenda. A task force is comprised of persons who know the
project’s subject matter and provides expertise and advice to the GASB as it focuses
on the critical issues and determine if a new standard is necessary.
3. Discussion Memorandum (DM). The DM is normally prepared by the staff and
defines the problem(s), the scope of the project, the accounting and reporting issues;
and presents relevant research, alternative solutions to the issues, and arguments
both for and against each alternative. Written comments are solicited and in many
cases a public hearing is scheduled to discuss the DM.
4. Invitation to Comment (ITC). An ITC is sometimes issued when the GASB seeks
more input on one or more of the issues.
5. Preliminary Views (PV). A PV puts forth the Board’s consensus at an early stage in
the process. A majority of the Board must approve the issuance of a PV. The Board
solicits comments on the PV.
6. Public Hearing. A public hearing is typically scheduled to provide the Board with an
opportunity to hear the viewpoints of the public as well as to allow the Board to raise
questions to the staff regarding written or oral comments received on the project,
including any submissions at the public hearing.
7. Analysis of Oral and Written Comments. The staff performs an analysis of the
submitted comments, looking for information and good arguments on the issues, and
presents this analysis to the members of the Board who often make their own review
of the comments.
8. Meetings of the Board. The Board may have several, or many, meetings to discuss
the issues. Board meetings on the project are open to the public, although observers
are not allowed to participate in the discussions.
9. Exposure Draft (ED). An ED presents the proposed new standards, the proposed
effective date and method of transition, background information, and explains the
basis for the Board’s conclusions regarding the issues covered by the ED.
10. Further Deliberations by the Board. The Board receives comments on the ED and
discusses the comments to determine if any modifications are needed in the
proposed standard.
11. Statements of Governmental Accounting Standards or Statements of Governmental
Accounting Concepts. A majority of the Board must vote in favor of adopting a
pronouncement. Statements of Standards establish new accounting or reporting
requirements. Statements of Concepts do not create new standards, but rather give
guidance for dealing with problems that arise on an issue.
And then, the Board continues to work on the next project!
18-9
10. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
C18-6 Summarizing a Recent GASB Exposure Draft
Note to the Instructor: This case provides your students with the opportunity to be on
the leading edge of a proposed governmental accounting or reporting standard. Students
can learn about some of the specifics of an expected, new GASB Statement.
The most recent ED on the web page will be dependent on future actions of the GASB,
but the Project Pages link in the left-hand frame of the GASB’s opening web page
presents information on the status of current GASB projects. These projects are in
various stages of progress, but as of 2008, it appears that future Statements may be on
economic condition reporting, fund balance reporting, and on service efforts and
accomplishments reporting. Of course, given the dynamic nature of governmental
accounting and reporting, it is expected that new projects will be added, and some of the
current projects may be discontinued or included within a larger project the board is
studying. And, some may become new GASB Statements!
SOLUTIONS TO EXERCISES
E18-1 Multiple-Choice Questions on Government Financial Reporting
1. a
2. d
3. b
4. a
5. a
6. b
7. a
$8,839,000 = assets of $14,839,000 minus liabilities of $6,000,000
8. c
$7,150,000 = capital assets (net) of $12,500,000 minus long-term debt of
$5,350,000
9. c
$1,035,000 = net assets of $8,839,000 minus $7,150,000 minus $654,000
10. a
(answers b, c, and d each include a fiduciary fund which is not a major fund)
11. d
12. c
18-10
11. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-2 Multiple-Choice Questions on Governmental Funds [AICPA Adapted]
1. d
2. b
3. a
4. c
5. c
6. b
E18-3 Multiple-Choice Questions on Proprietary Funds [AICPA Adapted]
1. b
2. d
3. d
4. b
5. c
6. c Prepaid insurance would be reported as an asset.
7. b
8. c
9. c
18-11
12. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-4 Multiple-Choice Questions on Various Funds
1.
c
The additions - investment earnings include the $50,000 of dividends and the
$35,000 of interest earned. The contribution is reported as an addition
-contributions.
2.
a
The entries in the trust fund to record the resources spent would appear as
follows:
Deductions - Benefits
Vouchers Payable
Vouchers Payable
Cash
3.
d
75,000
75,000
75,000
d
4.
75,000
Income is determined as follows:
Revenue – Charges for Services
Operating Expenses
Depreciation Expense
Interest Expense
Income
5.
c
$100,000
(45,000)
(40,000)
(5,000)
$ 10,000
The assets at June 30, 20X7 appear as follows:
Cash
Due from Other Funds
Computer Equipment (net)
Total Assets
$ 96,000
7,000
610,000
$713,000
6.
b
This is an example of an interfund services provided or used transaction. The
general fund would debit expenditures.
7.
a
This is an example of an interfund services provided or used transaction. The
enterprise fund would debit operating expenses.
8.
b
The net assets would be for the $600,000 transfer in plus the $10,000 of
income for the period.
18-12
13. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-5 Multiple-Choice Questions on Financial Reporting Issues for
Governmentwide and Fund-Based Financial Statements
1. c
2. c
the net assets of internal service funds are included in governmental
activities
3. d
4. d
5. a
$150,000 = $500,000 – $350,000
6. d
$37,000 = $25,000 + $20,000 – $8,000
7. c
$660,000 = $1,000,000 + $300,000 - $40,000 - $600,000
8. d
$1,035,000 = $1,000,000 + $60,000 interest - $20,000 benefits paid
- $5,000 deduction for investment revaluation
18-13
14. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-6 Capital Projects Fund Entries
a.
Entries for capital projects fund during 20X2:
1..1. Receipt of grant, sale of bonds and transfer of premium.
January 1, 20X2
.
Cash
Revenue – County Grant
Receipt of grant from county.
January 1, 20X2
Cash
Other Financing Sources – Bond Issue
Other Financing Sources – Bond Premium
Sale of $150,000 par bonds at 104.
November 3, 20X2
Other Financing Uses – Transfer
Out to Debt Service Fund
Cash
Transfer premium to debt service fund.
2. Entries to record and pay for construction:
April 5, 20X2
ENCUMBRANCES
BUDGETARY FUND BALANCE –
RESERVED FOR ENCUMBRANCES
August 8, 20X2
BUDGETARY FUND BALANCE – RESERVED
FOR ENCUMBRANCES
ENCUMBRANCES
Expenditures—Capital Outlay
Contract Payable
Establish contract payable for walkway.
Expenditures—Capital Outlay
Vouchers Payable
Establish vouchers payable for added carpeting.
November 3, 20X2
Contract Payable
Vouchers Payable
Cash
Pay contract payable and vouchers payable.
3. Close nominal accounts:
Revenue – County Grant
Other Financing Sources – Bond Issue
Other Financing Sources – Bond Premium
Fund Balance – Unreserved
18-14
50,000
156,000
6,000
50,000
150,000
6,000
6,000
182,000
182,000
182,000
189,000
5,500
189,000
5.500
50,000
150,000
6,000
182,000
189,000
5,500
194,500
206,000
15. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-6 (continued)
Fund Balance – Unreserved
Expenditures
Other Financing Uses – Transfer
Out to Debt Service Fund
4. Transfer of ending balance and close transfer account:
Other Financing Uses – Transfer
Out to Debt Service Fund
Cash
Record transfer of remainder to Debt Service.
Fund Balance – Unreserved
Other Financing Uses – Transfer
Out to Debt Service Fund
Close transfer out against unreserved
fund balance.
b.
200,500
194,500
6,000
5,500
5,500
5,500
5,500
City of Waterman
Capital Projects Fund
Statement of Revenues, Expenditures,
and Changes in Fund Balance
For Fiscal Year Ended December 31, 20X2
Revenue:
County Grant
Expenditures:
Capital Outlay
Deficiency due to excess of Expenditures over
Revenue
Other Financing Sources (Uses):
Proceeds of Bond Issue
Transfer Out to Debt Service Fund--Premium
Transfer Out to Debt Service Fund--Remainder
Total Other Financing Sources (Uses)
Net Change in Fund Balance
Fund Balance, January 1, 20X2
Fund Balance, December 31, 20X2
18-15
$ 50,000
194,500
$(144,500) )
$156,000
(6,000)
(5,500)
144,500
-0-0$
-0$
16. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-7 Debt Service Fund Entries and Statement
a.
Entries for debt service fund during 20X2:
1.
35,000
Property Taxes Receivable
Allowance for Uncollectibles
Revenue – Property Tax
Record tax levy.
40,000
Cash
Property Taxes Receivable
Record tax collections.
2.
ESTIMATED REVENUES CONTROL
ESTIMATED OTHER FINANCING
SOURCES – TRANSFER IN
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE
Record budget.
35,000
5,000
Property Taxes Receivable — Delinquent
Allowance for Uncollectibles
Property Taxes Receivable
Allowance for Uncollectibles – Delinquent
Revenue – Property Tax
Revise estimate of uncollectibles and
reclassify remaining receivables.
Cash
Other Financing Sources – Transfer
in from Capital Projects Fund
Receive bond premium.
3.
5,000
4,000
34,000
6,000
4,000
36,000
35,000
6,000
6,000
Expenditures
Matured Bonds Payable ($150,000 x 1/10 due)
Matured Interest Payable ($150,000 x .10
interest)
Record matured principal and interest.
30,000
Matured Bonds Payable
Matured Interest Payable
Cash
Pay matured principal and interest.
15,000
15,000
Expenditures
Vouchers Payable
Record other expenditures.
1,700
Vouchers Payable
Cash
Pay approved vouchers.
1,200
18-16
5,000
1,000
3,000
15,000
15,000
30,000
1,700
1,200
17. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-7 (continued)
4.
5.
Cash
Other Financing Sources – Transfer
In From Capital Projects Fund
Record transfer of unspent funds in
capital projects fund to debt service fund.
5,500
5,500
34,000
6,000
Revenue – Property Tax
Other Financing Sources – Transfer
in from Capital Projects Fund ($6,000 + $5,500)
Fund Balance – Reserved for Debt Service
Expenditures
Close nominal accounts..
b.
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE
ESTIMATED REVENUES CONTROL
ESTIMATED OTHER FINANCING
SOURCES – TRANSFER IN
Close budgetary accounts.
39,000
5,000
11,500
18,800
31,700
City of Waterman
Debt Service Fund
Balance Sheet
December 31, 20X2
Assets:
Cash
Property Tax Receivables (net)
Total Assets
Liabilities:
Vouchers Payable
Fund Balance:
Reserved for Debt Service
Total Liabilities and Fund Balance
c.
35,000
City of Waterman
Debt Service Fund
Statement of Revenues, Expenditures,
and Changes in Fund Balance
For Fiscal Year Ended December 31, 20X2
Revenue:
Property Taxes
Expenditures:
Principal Retirement
Interest
Miscellaneous
Total Expenditures
Excess of Revenue over Expenditures
Other Financing Sources (Uses):
Transfers In From Capital Projects Fund
Net Change in Fund Balance
Fund Balance, January 1, 20X2
Fund Balance, December 31, 20X2
18-17
$15,300
4,000
$19,300
$
500
18,800
$19,300
$39,000
$15,000
15,000
1,700
31,700
$ 7,300
11,500
$18,800
-0$18,800
18. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-8 Enterprise Fund Entries and Statements
a.
Entries for enterprise fund:
1.
Accounts Receivable
Revenue
Record charges to customers.
420,000
Cash
Accounts Receivable
Record collections on account.
432,000
2.
Cash
Due to General Fund
Receive loan from general fund.
30,000
3.
Plant and Equipment
Contracts Payable
Record extension of water and gas lines.
75,000
Contracts Payable
Cash
Record payment for extended lines.
75,000
4.
12,400
328,000
30,000
Due to Central Stores Fund
Vouchers Payable
Interest Payable
Cash
Record payment of approved vouchers,
interest, and payment to central stores.
5.
Inventory of Supplies
Operating Expenses
Interest Expense
Due to Central Stores Fund
Vouchers Payable
Interest Payable
Record expenses.
12,400
325,000
30,000
Revenue
Allowance for Uncollectibles
Reduce revenue for uncollectible accounts.
6,300
Depreciation Expense
Accumulated Depreciation
Adjust for depreciation for period.
32,000
Supplies Expense
Inventory of Supplies
Adjust for supplies on hand.
15,200
18-18
420,000
432,000
30,000
75,000
75,000
12,400
328,000
30,000
367,400
6,300
32,000
15,200
19. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-8 (continued)
Closing entries:
Revenue
Operating Expenses
Interest Expense
Depreciation Expense
Supplies Expense
Profit and Loss Summary
Close nominal accounts.
413,700
Profit and Loss Summary
Net Assets – Unrestricted
Close profit and loss summary.
Net Assets – Unrestricted
Net Assets – Invested in Capital
Assets, Net of Related Debt
Record increase in net assets-invested:
$43,000 = (ending balance of $563,000 net capital
assets less $500,000 related debt) minus
$20,000 beginning balance in net assetsInvested in capital assets net of related debt
b.
8,500
328,000
30,000
32,000
15,200
8,500
8,500
43,000
43,000
Augusta
MUD Enterprise Fund
Statement of Net Assets
December 31, 20X1
Assets:
Cash
Accounts Receivable
Less: Allowance for Uncollectibles
Inventory of Supplies
Land
Plant and Equipment
Less: Accumulated Depreciation
Total Assets
$ 13,000
(6,300)
$555,000
(112,000)
$111,600
6,700
5,200
120,000
443,000
$686,500
Liabilities:
Vouchers Payable
Due to General Fund
Bonds Payable, 6%
Total Liabilities
$ 18,000
30,000
500,000
$548,000
Net Assets:
Invested in Capital Assets, net of Related Debt
Unrestricted
Total Net Assets
$ 63,000
75,500
$138,500
18-19
20. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-8 (continued)
c.
Augusta
MUD Enterprise Fund
Statement of Revenue, Expenses, and
Changes in Fund Net Assets
For Fiscal Year Ended December 31, 20X1
Revenue:
Revenue from Services
Expenses:
Operating
Depreciation
Supplies
Operating Income
Nonoperating Expense:
Less: Interest on Capital-Related Debt
Change in Net Assets
Net Assets, January 1
Net Assets, December 31
$413,700
$328,000
32,000
15,200
[Note that interest expense on capital-related debt is a non-operating expense.]
18-20
375,200
$ 38,500
30,000
$ 8,500
130,000
$138,500
21. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-8 (continued)
d.
Augusta
MUD Enterprise Fund
Statement of Cash Flows
For the Year Ended December 31, 20X1
Cash Flows from Operating Activities:
Cash Received from Customers
Cash Payments for Goods and Services
Cash Paid to Internal Service Fund for Supplies
Net Cash Provided by Operating Activities
Cash Flows from Noncapital Financing Activities:
Cash Received from General Fund for Noncapital Loan
Net Cash Provided by Noncapital
Financing Activities
Cash Flows from Capital and Related Financing
Activities:
Interest on Capital-Related Debt
Extension of Service Lines
Net Cash Used for Capital and
Related Financing Activities
$ 432,000
(325,000)
(12,400)
$ 94,600
$ 30,000
30,000
$(30,000)
(75,000)
(105,000)
Cash Flows from Investing Activities
-0-
Net Increase in Cash
Cash at Beginning of Year
Cash at End of Year
$ 19,600
92,000
$111,600
Reconciliation of Operating Income to Net Cash
Provided by Operating Activities:
Operating Income
Adjustments to Reconcile Operating Income to Net Cash
Provided by Operating Activities:
Depreciation
Change in Assets and Liabilities:
Decrease in Inventory and Supplies
Decrease in net Accounts Receivable
Increase in Vouchers Payable
Total Adjustments
Net Cash Provided by Operating Activities
$ 38,500
$ 32,000
2,800
18,300
3,000
56,100
$ 94,600
[Note that interest paid on capital-related debt is reported in cash flows from capital
and related financing activities and not in the operating activities.]
18-21
22. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-9 Interfund Transfers and Transactions
General Fund
1.
a.
b.
2.
a.
March 1, 20X8, Transfer out:
Other Financing Uses – Transfer Out to
Building Maintenance Fund
Cash
June 30, 20X8, Closing entry:
Fund Balance – Unreserved
Other Financing Uses – Transfer Out to
Building Maintenance Fund
April 1, 20X8, Financing transaction:
Due from Building Maintenance Fund
Cash
b.
3.
April 15, 20X8, Transfer out:
Other Financing Uses – Transfer
Out to Debt Service Fund
Cash
b.
4.
12,000
12,000
12,000
8,000
8,000
Shown on the general fund balance sheet on June 30, 20X8
a.
12,000
a.
June 30, 20X8, Closing entry:
Fund Balance – Unreserved
Other Financing Uses – Transfer
Out to Debt Service Fund
May 5, 20X8, Interfund services provided or used:
Expenditures
Due to Transportation Service Fund
Due to Transportation Service Fund
Cash
b.
June 30, 20X8, Closing entry:
Fund Balance – Unreserved
Expenditures
2,400
2,400
2,400
825
825
825
18-22
2,400
825
825
825
23. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-9 (continued)
1.
Building Maintenance Internal Service Fund
a.
b.
2.
12,000
June 30, 20X8, Closing entry:
Transfer In from General Fund
Net Assets
12,000
12,000
12,000
April 1, 20X8, Financing transaction:
Cash
Due to General Fund
8,000
8,000
Debt Service Fund
a.
b.
4.
March 1, 20X8, Transfer in:
Cash
Transfer In from General Fund
Building Maintenance Fund
a.
3.
Other Fund
April 15, 20X8, Transfer in:
Cash
Other Financing Sources –
Transfer In from General Fund
June 30, 20X8, Closing entry:
Other Financing Sources –
Transfer In from General Fund
Unreserved Fund Balance
2,400
2,400
2,400
2,400
Transportation Service Fund
a.
May 5, 20X8, Interfund services provided or used:
Due from General Fund
Revenue from Billings
Cash
Due from General Fund
b.
825
825
June 30, 20X8, Closing entry:
Revenue from Billings
Net Assets - Unrestricted
18-23
825
825
825
825
24. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-10 Internal Service Fund Entries and Statements
a.
Entries for 20X2, including closing entries:
1.
2.
Inventory of Supplies
Furniture and Equipment
Vouchers Payable
Record acquisitions of supplies,
furniture, and office equipment.
96,000
4,700
Due from Other Funds
Billings to Departments
Record billings for jobs completed.
292,000
Cash
Due from Other Funds
Record collections on billings.
287,300
Costs of Printing Jobs
Operating Expenses
Inventory of Supplies
Vouchers Payable
Record costs of printing jobs.
204,000
38,000
Depreciation Expense
Accumulated Depreciation
Record depreciation for period.
Vouchers Payable
Cash
Pay approved vouchers.
23,000
243,000
100,700
292,000
287,300
92,400
149,600
23,000
243,000
Closing entries:
Billings to Departments
Costs of Printing Jobs
Operating Expenses
Depreciation Expense
Profit and Loss Summary
Close nominal accounts.
Profit and Loss Summary
Net Assets – Unrestricted
Close profit and loss summary.
Net Assets – Invested in Capital Assets,
Net of Related Debt
Net Assets - Unrestricted
Reclassify net assets as of end of period:
$18,300 = (ending balance of $191,700 net
capital assets less $0 related debt ) less
$210,000 beginning balance in net assets invested.
18-24
292,000
27,000
18,300
204,000
38,000
23,000
27,000
27,000
18,300
25. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-10 (continued)
b.
Bellevue
Printing Shop Fund
Statement of Net Assets
December 31, 20X2
Assets:
Cash
Due from Other Funds
Inventory of Supplies
Furniture and Equipment
Less: Accumulated Depreciation
Total Assets
$264,700
(73,000)
$ 68,900
20,300
13,400
191,700
$294,300
Liabilities:
Vouchers Payable
Total Liabilities
$ 19,300
$ 19,300
Net Assets:
Invested in Capital Assets, Net of Related Debt
Unrestricted
Total Net Assets
$191,700
83,300
$275,000
c.
Bellevue
Printing Shop Fund
Statement of Revenue, Expenses, and
Changes in Fund Net Assets
For Fiscal Year Ended December 31, 20X2
Revenue:
Billings to Departments
Expenses:
Costs of Printing Jobs
Operating
Depreciation
Income
Net Assets, January 1
Net Assets, December 31
$292,000
$204,000
38,000
23,000
18-25
265,000
$ 27,000
248,000
$275,000
26. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-10 (continued)
d.
Bellevue City
Internal Service Fund – Printing Shop
Statement of Cash Flows
For the Year Ended December 31, 20X2
Cash Flows from Operating Activities:
Cash Received from Customers
Cash Payments for Printing Jobs
Net Cash Provided by Operating Activities
$ 287,300
(238,300)
Cash Flows from Noncapital Financing Activities
Cash Flows from Capital and
Related Financing Activities
Acquisition of Capital Assets
(furniture and copier)
Net Cash Used for Capital and Related
Financing Activities
$49,000
-0-
$ (4,700)
(4,700)
Cash Flows from Investing Activities
-0-
Net Increase in Cash
Cash at Beginning of Year
Cash at End of Year
$44,300
24,600
$68,900
Reconciliation of Operating Income to Net Cash
Provided by Operating Activities:
Operating Income
$27,000
Adjustments to Reconcile Operating Income
to Net Cash Used by Operating Activities:
Depreciation
Change in Assets and Liabilities:
Increase in Due from Other Funds
from Billings
Increase in Inventory of Supplies
Increase in Vouchers Payable
Total Adjustments
Net Cash Provided by Operating Activities
18-26
$ 23,000
(4,700)
(3,600)
7,300
22,000
$49,000
27. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
E18-11 Multiple-Choice Questions on Government-wide Financial Statements
1.
c
($1,450,000 - $120,000)
2.
a
[($1,450,000 - $120,000) - $780,000]
3.
b
4.
c
For the amount of the bond issue proceeds. Note that no repayments
of debt were made during the year.
5.
c
The interest adjustment is from the modified accrual basis ($30,000)
to the accrual basis of measurement ($25,000).
6.
d
7.
c
8.
b
9.
c
10.
b
18-27
28. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
SOLUTIONS TO PROBLEMS
P18-12 Adjusting Entries for General Fund [AICPA Adapted]
Adjusting entries to correct the general fund:
1.
No entry required.
2.
Expenditures
Buildings
Correct for state grant
expended for buildings.
300,000
Expenditures
Capital Outlays (equipment)
Correct for expenditures
for playground equipment.
3.
22,000
Bonds Payable
Buildings
Correct for bonds used
to construct buildings.
1,000,000
Other Financing Uses – Transfer
Out to Debt Service Fund
Debt Service from Current Funds
Correct for transfer to debt service fund.
4.
5.
130,000
ENCUMBRANCES
BUDGETARY FUND BALANCE – RESERVED
FOR ENCUMBRANCES
Correct for unrecorded encumbrances.
4,950
Fund Balance – Unreserved
Fund Balance – Reserved for Inventory
Correct for reserve for ending inventory.
6,500
22,000
1,000,000
130,000
2,800
Expenditures
Inventory of Supplies
Correct for supplies used in period.
300,000
18-28
2,800
4,950
6,500
29. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-13 Entries for Funds [AICPA Adapted]
Fund
Journal Entries
1.
General
Fund
ESTIMATED REVENUES CONTROL
400,000
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE – UNRESERVED
394,000
6,000
2.
General
Fund
Taxes Receivable – Current
Revenue – Taxes
Allowance for Uncollectibles – Current
382,200
7,800
3.
PrivatePurpose
Trust Fund
Investments
Contributions
4.
General
50,000
Cash
Additions – Interest
Other Financing Uses – Transfer
Out to Internal Service Fund
Cash
Internal
Service
Fund
5.
390,000
Cash
Transfer In from General Fund
Capital
Projects
Cash
Other Financing Sources – Bond Issue
5,500
5,000
5,000
72,000
Due from General Fund
Other Financing Sources –
Transfer In from General Fund
24,000
General
6.
Special Assessments Receivable
Revenue – Special Assessments
Other Financing Uses – Transfer
Out to Capital Projects Fund
Due to Capital Projects Fund
5,500
5,000
5,000
72,000
3,000
Debt
Service
Fund
50,000
3,000
3,000
General
Fund
Due to Capital Projects Fund
Cash
3,000
Capital
Projects
Fund
Cash
Due from General Fund
3,000
Debt
Service
Fund
Cash
Special Assessments Receivable
18-29
24,000
24,000
3,000
3,000
3,000
24,000
30. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-13 (continued)
Fund
7.
Capital
Projects
Fund
Journal Entries
ENCUMBRANCES
75,000
BUDGETARY FUND BALANCE – RESERVED
FOR ENCUMBRANCES
75,000
BUDGETARY FUND BALANCE – RESERVED
FOR ENCUMBRANCES
ENCUMBRANCES
75,000
75,000
Expenditures
Contracts Payable
75,000
Contracts Payable
Cash
75,000
8.
Internal
Service
Fund
Inventory of Supplies
Cash (or Vouchers Payable)
9.
General
Fund
Cash
Taxes Receivable – Current
Revenue – Licenses and Fees
Allowance for Uncollectibles – Current
Revenue – Taxes
Estimate
$7,800
Actual
(4,000)
Correction
$3,800
10.
Capital
Projects
Fund
Cash
Other Financing Sources – Bond Issue
11.
General
Fund
BUDGETARY FUND BALANCE – RESERVED
FOR ENCUMBRANCES
ENCUMBRANCES
Expenditures
Cash
1,900
393,000
3,800
500,000
15,000
15,000
18-30
75,000
75,000
1,900
386,000
7,000
3,800
500,000
15,000
15,000
31. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-14 Entries to Adjust Account Balances [AICPA Adapted]
a.
General Fund
Adjusting entries:
1.
Allowance for Uncollectibles – Delinquent
Fund Balance – Unreserved
Reduce estimated losses on prior year's
taxes to amount of receivables of $8,000.
2.
Revenue
Donated Land
Remove accounts belonging only in the
government-wide financial statements.
3.
Fund Balance – Unreserved
Fund Balance – Reserved
for Encumbrances – 20X0
Record purchase orders outstanding
on June 30, 20X0.
8,800
Expenditures – 20X0
Other Expenditures
Reclassify purchases of supplies
chargeable to prior year's appropriations.
Excess of $600 actual cost over estimate
is approved and charged to current year
expenditures.
8,800
ENCUMBRANCES
BUDGETARY FUND BALANCE – RESERVED
FOR ENCUMBRANCES
Record encumbering of appropriations for
purchase orders outstanding on June 30, 20X1.
2,100
4.
5.
Special Assessment Bonds Payable
Due to Capital Projects Fund
Record liability to capital projects
fund for cash obtained from sale of
special assessment bonds.
6.
Revenue
Tax Anticipation Notes Payable
Due to Water Utility Fund
Record tax anticipation notes payable
and liability to water utility fund for
funds obtained from sale of scrap.
18-31
2,200
27,000
2,200
27,000
8,800
8,800
2,100
100,000
21,000
100,000
20,000
1,000
32. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-14 (continued)
Closing entries:
APPROPRIATIONS CONTROL
ESTIMATED REVENUES CONTROL
BUDGETARY FUND BALANCE –
UNRESERVED
BUDGETARY FUND BALANCE – RESERVED
FOR ENCUMBRANCES
ENCUMBRANCES
348,000
2,100
Fund Balance – Unreserved
Fund Balance – Reserved for Encumbrances
2,100
Revenue
Fund Balance – Unreserved
Other Expenditures
Expenditures – Building Addition Constructed
Expenditures – Serial Bonds Paid
306,000
31,200
Fund Balance – Reserved for
Encumbrances – 20X0
Expenditures – 20X0
b.
8,800
310,000
38,000
2,100
2,100
271,200
50,000
16,000
8,800
Adjusting Journal Entries:
Capital Projects Fund:
5.
Due from General Fund
Other Financing Sources – Bond Issue
Record receivable due from general
fund for proceeds of sale of bonds.
Water Utility Fund:
6.
Due from General Fund
Revenue – Miscellaneous
Record receivable from general fund
for cash obtained from sale of scrap.
18-32
100,000
1,000
100,000
1,000
33. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-15 Capital Projects Fund Entries and Statements
a.
Journal entries:
1.
CPF Cash
5,080,000
Other Financing Sources – Bond Issue
Other Financing Sources – Bond Premium
Other Financing Uses – Transfer
Out to Debt Service Fund
Cash
80,000
DSF Cash
Other Financing Sources – Transfer
In from Capital Projects Fund
2.
45,000
80,000
80,000
CPF Expenditures
Vouchers Payable
5,000,000
80,000
Vouchers Payable
Cash
80,000
45,000
45,000
45,000
(Note: It is not necessary to first establish, and then immediately reverse an
encumbrance account.)
3.
4.
CPF ENCUMBRANCES
4,500,000
BUDGETARY FUND BALANCE – RESERVED
FOR ENCUMBRANCES
4,500,000
CPF BUDGETARY FUND BALANCE – RESERVED
FOR ENCUMBRANCES
2,000,000
ENCUMBRANCES
2,000,000
Expenditures
Contracts Payable
Contracts Payable – Retained
Percentage
CPF Contracts Payable
Cash
2,000,000
1,800,000
1,800,000
200,000
1,800,000
Closing entries for Capital Projects Fund:
Other Financing Sources – Bond Issue
Other Financing Sources – Bond Premium
Expenditures
Other Financing Uses – Transfer
Out to Debt Service Fund
Fund Balance – Unreserved
BUDGETARY FUND BALANCE –
RESERVED FOR ENCUMBRANCES
ENCUMBRANCES
18-33
5,000,000
80,000
2,045,000
80,000
2,955,000
2,500,000
2,500,000
34. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-15 (continued)
Fund Balance – Unreserved
Fund Balance – Reserved
for Encumbrances
b.
2,500,000
West City
Capital Projects Fund
Balance Sheet
June 30, 20X3
Cash
Total Assets
Assets
$ 3,155,000
$ 3,155,000
Liabilities and Fund Balance
Contracts Payable – Retained Percentage
Fund Balance:
Reserved for Encumbrances
Unreserved
Total Liabilities and Fund Balance
c.
2,500,000
$
$2,500,000
455,000
200,000
2,955,000
$ 3,155,000
West City
Capital Projects Fund
Statement of Revenues, Expenditures,
and Changes in Fund Balance
For Fiscal Year Ended June 30, 20X3
Expenditures:
Capital Outlays:
Building Removal
Building Construction
Total Expenditures
Deficiency of Revenues over Expenditures
Other Financing Sources (Uses):
Proceeds of Serial Bonds
Transfer Out to Debt Service Fund
Total Other Financing Sources (Uses)
Net Change in Fund Balance
Fund Balance, July 1, 20X2
Fund Balance, June 30, 20X3
18-34
$
45,000
2,000,000
$ 2,045,000
$(2,045,000)
5,080,000
(80,000)
$ 5,000,000
$ 2,955,000
-0$ 2,955,000
35. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-16 Recording Entries in Various Funds [AICPA Adapted]
1.
Entries made in the capital projects fund for 20X8:
Cash
Other Financing Sources – Bond Issue
Issued $800,000 of bonds at their face value.
800,000
ENCUMBRANCES
BUDGETARY FUND BALANCE – RESERVED
FOR ENCUMBRANCES
Contractor’s bid is accepted.
750,000
BUDGETARY FUND BALANCE – RESERVED FOR
ENCUMBRANCES
ENCUMBRANCES
One-third of the project was completed during 20X8.
Expenditures
Contracts Payable
Actual construction cost incurred in 20X8.
2.
800,000
750,000
250,000
246,000
250,000
246,000
Entries made in the special revenue fund for 20X8:
ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE – UNRESERVED
Record the budget for 20X8.
112,000
Cash
Revenues
Collected hotel room taxes.
109,000
Expenditures
Vouchers Payable
Incurred expenditures for general promotion
and motor vehicle.
103,000
Vouchers Payable
Cash
Paid expenditures.
103,000
18-35
108,000
4,000
109,000
103,000
103,000
36. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-16 (continued)
3.
Entry made in the general fund for 20X8:
Other Financing Uses – Transfer
Out to Debt Service Fund
Cash
Record transfer of resources to debt service fund.
313,500
313,500
Entries made in the debt service fund for 20X8:
Cash
Other Financing Sources – Transfer
In from General Fund
Record transfer of resources from general fund.
313,500
313,500
Expenditures – Interest
Matured Interest Payable
Record interest legally due and payable.
Expenditures – Principal
Matured Bonds Payable
Record principal legally due and payable.
300,000
Matured Bonds Payable
Matured Interest Payable
Cash
Record payment of matured bonds and interest.
4.
13,500
300,000
13,500
300,000
313,500
Closing entries in the general fund for 20X8:
BUDGETARY FUND BALANCE – RESERVED FOR
ENCUMBRANCES
ENCUMBRANCES
Close outstanding encumbrances at year-end.
Fund Balance – Unreserved
Fund Balance – Reserved for Encumbrances
Reserve actual fund balance for encumbrances
expected to be honored in 20X9.
5.
13,500
83,000
83,000
83,000
83,000
Adjusting entry in the general fund for 20X8:
Fund Balance – Reserved for Inventories
Inventory of Supplies
Adjust inventory of supplies to balance
at December 31, 20X8.
18-36
3,000
3,000
37. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-17 Matching Questions Involving Various Funds
1.
L
2.
C
3.
R
4.
M
5.
I
6.
G
7.
Q
8.
A
9.
O
10.
F
18-37
38. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-18 Questions on Fund Transactions [AICPA Adapted]
1. $104,500
(Stated in item #3.)
2. $17,000
(Stated in item #4.)
3. $125,000
(Item #5 states that $83,000 is reserved for encumbrances. To this
is added the $42,000 reserve for the ending inventory.)
4. $236,000
(Item #1 states that $600,000 of bond proceeds were received in
the capital project fund, less $364,000 of construction expenditures
in the period.)
5. $6,000
(Item #2 states that $109,000 tax revenues were received from
which $81,000 and $22,000 was expended.)
6. $104,500
(Stated in item #3.)
7. $386,000
(Item #1 states construction expenditures of $364,000 plus item #2
states a motor vehicle purchase of $22,000.)
8. $100,000
(Item #3 states a reduction in long-term debt principal of
$100,000.)
9. $181,000
(Item #6 states that $181,000 was used to purchase supplies
during the period.)
10. $190,000
(Item #6 states encumbrances of $190,000.)
18-38
39. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-19
Matching Questions Involving the Statement of Cash Flows for a
Proprietary Fund
1.
C
2.
A
3.
C
4.
A
5.
E
6.
A
7.
C
8.
B
9.
B
10.
C
11.
A
12.
E
13.
D
14.
D
15.
C
18-39
40. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-20
Matching Questions Involving the Statement of Revenues,
Expenditures, and Changes in Fund Balance for a Capital Projects
Fund and a Debt Service Fund
1.
C
2.
D
3.
C
4.
C
5.
B
6.
A
7.
C
8.
D
9.
A
10.
C
11.
B
12.
B
13.
D
18-40
41. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-21 Question on Fund Transactions [AICPA Adapted]
a.
1.
G
2.
K
3.
L
4.
L
5.
E
6.
J
7.
D
8.
A
9.
F
10.
B
11.
B and J
12.
F and J
13.
C and J
14.
J
15.
B and J
16.
G and J
17.
A
18.
D
19.
I and J
20.
H and J
b.
18-41
42. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-22 Major Fund Tests
Step 1: 10 percent criterion tests
Denominators for 10 percent tests are the total of each of the four items for that fund type (for
governmental and then for enterprise)
10 percent criterion tests:
Governmental fund type:
Percent of:
Assets
$2,112,400
Liabilities
$951,300
Revenues
$5,790,000
2.00%
3.99%
1.68%
0.00%
0.00%
5.65%
7.94%
0.71%
5.72%
0.19%
Assets
$3,996,000
Liabilities
$2,900,700
Revenues
$618,000
66.07%*
33.93%*
62.08%*
37.92%*
46.76%*
53.24%*
General fund – is always a major fund
Special Revenue
1.28%(a)
Capital Project – Library
21.30%*
Capital Project – Arena
1.33%
Debt Service
1.94%
Permanent
11.65%*
Enterprise fund type:
Percent of:
Enterprise – Electric
Enterprise – Water
(a)
1.28% = $27,000 / $2,112,400
* Meets the 10 percent criterion test
18-42
Expenditures
$5,659,800
5.80%
7.39%
0.99%
5.12%
0.32%
Expenses
$543,000
45.12%*
54.88%*
43. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-22 (continued)
Step 2: 5 percent criterion tests
The 5 percent criterion test is applied only to those funds that met the 10 percent criterion
test.
(For each of the four 5 percent tests, the denominator is the combined amount of that
item
from the governmental funds plus the enterprise funds.)
Computation of denominators for 5 percent governmental and enterprise fund types:
Revenue Expenditures/
Assets
Liabilities
s
Expenses
Governmental fund types
$2,112,400
$ 951,300 $5,790,000
$5,659,800
Enterprise fund types
3,996,000
2,900,700
618,000
543,000
Combined
$6,108,400
$3,852,000 $6,408,000
$6,202,800
5 percent criterion tests:
Assets
Percent of combined amount of:
Governmental fund type:
General fund – is always
a major fund
Capital Project – Library
Permanent
Enterprise type funds:
Enterprise – Electric
Enterprise – Water
Liabilities
Revenues
$6,108,400
$3,852,000
$6,408,000
7.37%(a)**
4.03%
43.22%**
22.20%**
Expenditures/
Expenses
$6,202,800
0.99%
0.00%
7.18%**
0.17%
6.74%**
0.29%
46.75%**
28.56%**
4.51%
5.13%**
3.95%
4.80%
(a)
7.37% = $450,000 / $6,108,400
** Meets the 5 percent criterion test
To be a major fund, an individual fund must meet both the 10 percent and the 5 percent
major fund criteria in at least one financial statement item. Each major fund is presented in a
separate column on the fund-based financial statements presented as part of the
comprehensive annual financial report for the governmental entity.
(1) General fund – is always a major fund
(2) Capital Projects – Library fund – assets (both 10% and 5% criterion tests)
(3) Enterprise – Electric – assets and liabilities (both 10% and 5% criterion tests)
(4) Enterprise – Water – assets, liabilities, revenues (both 10% and 5% criterion tests)
The other governmental funds must be aggregated and reported in a single column in the
governmental funds balance sheet and statement of revenues, expenditures, and changes in
fund balance.
18-43
44. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-23 Reconciliation Schedules
a. Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of
Net Assets:
City of Sycamore
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
Fund balances reported in the governmental funds
Amounts reported for the governmental activities in the statement of net
assets are different because:
Capital assets used in governmental activities are not financial resources and
therefore are not reported in the governmental funds. The internal service
fund reported $18,000 in capital assets. Thus, the amount of the adjustment
Is for the capital assets not reported in just the governmental funds,
($4,311,000 = $4,329,000 - $18,000)
Internal service funds are used by management to charge costs of certain
activities. The assets and liabilities of the internal service fund and are
Included in governmental activities In the statement of net assets.
Long-term liabilities, including bonds payable, are not due and payable in the
current period and therefore are not reported as liabilities in the
governmental funds.
Interest in the governmental funds is recognized under the modified accrual
basis, but under the accrual basis for the government-wide financial
statements.
Net assets are adjusted for interest ($5,000 = $6,000 - $1,000).
Net assets of governmental activities
18-44
$ 888,400
4,311,000
37,000
(460,000)
(5,000)
$4,771,400
45. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-23 (continued)
b. Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances of Governmental Funds to the Statement of Activities:
City of Sycamore
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances of Governmental Funds to the Statement of Activities
Net change in fund balances – governmental funds
Governmental funds report capital outlays as expenditures. However, in
the statement of activities, the costs of those assets is capitalized and
depreciated over their estimated useful lives. This is the amount by which
capital outlays in the governmental funds ($287,000) exceeded
depreciation of the governmental assets ($187,000)
Bond proceeds provide current financial resources for the governmental
funds. However, the issuance of debt increases long-term liabilities in the
statement of net assets. Bond proceeds of $460,000 are not reduced
because there is no repayment of principal during the year.
Revenues and expenses in the statement of activities are recorded on the
accrual basis. Interest in the governmental funds is recorded on the
modified accrual basis. Accrual interest revenue exceeded modified
accrual interest revenue recognized in the governmental funds by $1,000.
Accrual interest expense exceeded modified accrual interest expense
by $6,000 ($46,000 - $40,000). The net interest adjustment is $5,000.
Internal service funds are used by management to charge the costs of
certain services. The net revenue (expense) of the internal service
funds is reported with governmental activities.
Change in net assets of governmental activities
18-45
$509,400
100,000
(460,000)
(5,000)
9,000
$153,400
46. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-24 True/False Questions
1.
F
The budgetary comparison schedule requires both the initial budget and the
final budget.
2.
T
3.
F
A component unit is financially accountable to the primary government.
4.
F
The net assets in the government-wide statement of net assets would be
categorized by: invested in capital assets, net of related debt; restricted by
outside donors in specific funds; and, unrestricted.
5.
F
The tests for a major governmental, or enterprise fund, for which separate
disclosure is required in the government-wide financial statements are: (a)
total assets, liabilities, revenues, or expenditures/expenses of that individual
governmental or enterprise fund are at least 10 percent or more of the
governmental or enterprise category, and (b) total assets, liabilities,
revenues, or expenditures/expenses of the individual governmental or
enterprise fund are at least 5 percent of the total for all governmental and
enterprise funds combined.
6.
T
7.
T
8.
F
9.
T
10.
F
11.
T
12.
F
Depreciation on fixed assets of a government entity may be computed by any
method deemed appropriate, such as straight-line or an accelerated method,
but depreciation of fixed assets is not equal to the expenditures for fixed
assets made in the governmental funds.
13.
F
Management’s Discussion and Analysis is a required supplementary
information disclosure in the new government reporting model.
14.
F
Fiduciary funds are not part of the government-wide statement of net assets,
but would be separately reported in the fiduciary funds section of the fundbased financial statements.
15.
T
The internal service fund is blended into the governmental activities columns
of the government-wide financial statement of net assets and statement of
activities.
In the reconciliation schedule for the statement of revenues, expenditures,
and changes in fund balances, bond proceeds would be subtracted because
they were included as other financing sources in the governmental funds, but
are an addition to liabilities in the government-wide financial statements.
18-46
47. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
11P18-25 Determining Whether a Special Revenue Fund Is a Major Fund
Test 1: 10% criterion: Are the assets, liabilities, revenues, or expenditures of the
special revenue fund at least 10% of their respective totals for all governmental
funds?
Totals for
Amount Reported by
Items Tested
Governmental Funds
Special Revenue Fund
1.
Assets
$50,000,000
$4,100,000 ( 8.2%)
(10% test failed)
2.
Liabilities
22,000,000
3,900,000 (17.7%)
(10% test met)
3.
Revenues
70,000,000
6,700,000 ( 9.6%)
(10% test failed)
4.
Expenditures
60,000,000
6,500,000 (10.8%)
(10% test met)
Test 2: 5% criterion: Two items met the 10% criterion test--liabilities and expenditures.
The 5% criterion test is met if at least one of the items that met the 10% criterion first test
is at least 5% of the respective amounts for all governmental and enterprise funds.
2.
4.
Items Tested
Liabilities
(5% test met)
Expenditures/expenses
(5% test met)
Totals for
Governmental and
Enterprise Funds
$37,000,000
Amount reported
by Special
Revenue Fund
$3,900,000 (10.5%)
82,000,000
6,500,000 ( 7.9%)
Conclusion:
The special revenue fund should be reported as a major fund on the financial
statements of the governmental funds for 20X2 because both its expenditures and
liabilities met the 10% and the 5% tests.
18-47
48. Chapter 18 - Governmental Entities: Special Funds and Government-Wide Financial Statements
P18-26 Preparation of a Statement of Net Assets for a Governmental Entity
Gibson City
Statement of Net Assets
December 31, 20X2
Assets
Cash and cash equivalents
Taxes receivable (net)
Accounts receivable (net)
Internal balances
Inventories
Investments
Capital assets:
Land
Infrastructure
Other depreciable assets (net)
Total assets
Liabilities
Vouchers payable
Accrued interest payable
Revenue bonds payable
General obligation bonds payable
Total liabilities
Net assets
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets
Governmental
Activities
Business-type
Activities
$ 68,000
52,000
$ 28,000
12,000
5,000
7,000
15,000
(5,000)
10,000
25,000
100,000
60,000
75,000
$385,000
$ 32,000
1,500
50,000
45,000
$162,000
$
4,000
2,000
80,000
Total
$ 96,000
52,000
12,000
17,000
40,000
150,000
60,000
120,000
$547,000
60,000
$ 93,500
$ 86,000
$ 36,000
3,500
80,000
60,000
$179,500
$175,000*
55,000
61,500***
$291,500
$ 15,000**
5,000
56,000***
$ 76,000
$190,000
60,000
117,500
$367,500
Computation notes:
*
$235,000 of capital assets (net) minus $60,000 of general obligation bonds equals
$175,000.
**
$95,000 of capital assets minus $80,000 of revenue bonds equals $15,000.
*** The unrestricted net assets amount is plugged in to make the total net assets equal
assets minus liabilities.
The internal balances amount of $5,000 is the amount that the governmental activities owe to
business-type activities.
18-48