Solution Manual For Essentials of Accounting for Governmental and Not-for-Profit Organizations, 14th Edition
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Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit
Organizations
1-1
INSTRUCTOR’S MANUAL
TO ACCOMPANY
ESSENTIALS OF ACCOUNTING FOR GOVERNMENTAL
AND NOT-FOR-PROFIT ORGANIZATIONS:
14TH EDITION
PREPARED BY:
PAUL A. COPLEY
MARY LORETTA MANKTELOW
Organizations
1-1
INSTRUCTOR’S MANUAL
TO ACCOMPANY
ESSENTIALS OF ACCOUNTING FOR GOVERNMENTAL
AND NOT-FOR-PROFIT ORGANIZATIONS:
14TH EDITION
PREPARED BY:
PAUL A. COPLEY
MARY LORETTA MANKTELOW
Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit
Organizations
1-2
CHAPTER 1 Introduction to Accounting and Financial Reporting for Governmental and
Not-for-Profit Organizations
1-1. THE SOLUTION TO THIS AND THE FIRST EXERCISE OF CHAPTERS 2 THROUGH 9 WILL
DIFFER FROM STUDENT TO STUDENT ASSUMING EACH HAS A DIFFERENT CAFR.
1-2.
1) ORGANIZATIONAL PURPOSES: WHILE THE PURPOSE OF A COMMERCIAL BUSINESS
IS TO GENERATE A PROFIT FOR THE BENEFIT OF ITS OWNERS, GOVERNMENTS EXIST
FOR THE WELL BEING OF CITIZENS BY PROVIDING PUBLIC SERVICES – WHETHER OR
NOT THE SERVICES ARE PROFITABLE UNDERTAKINGS.
2) SOURCES OF REVENUES: GOVERNMENTS DERIVE MANY OF THEIR RESOURCES
FROM TAXES. INDIVIDUALS AND BUSINESSES PAY TAXES TO AVOID PENALTY, NOT
VOLUNTARILY BECAUSE THEY PERCEIVE GOVERNMENT SERVICES TO BE OF VALUE
AND FAIRLY PRICED. SINCE TAXES DO NOT INVOLVE AN EARNINGS PROCESS, THE
TIMING OF THE RECOGNITION OF TAX REVENUE IS NOT ALWAYS CLEAR.
3) POTENTIAL FOR LONGEVITY: BECAUSE THE U.S. AND STATE CONSTITUTIONS
GRANT STATE AND LOCAL GOVERNMENTS THE ABILITY TO TAX, GOVERNMENTS
VERY RARELY GO OUT OF BUSINESS. THIS LONG-TERM VIEW OF OPERATIONS
CHANGES THE FOCUS OF ACCOUNTING FROM ONE OF NEAR-TERM RECOVERY OF
AMOUNTS INVESTED IN ASSETS TO A LONGER-TERM FOCUS ON THE SUSTAINABILITY
OF SERVICES AND THE ABILITY TO MEET FUTURE DEMAND.
4) RELATIONSHIP WITH STAKEHOLDERS: TAXES ARE CREATED THROUGH THE
LEGISLATIVE PROCESS BY OFFICIALS ELECTED BY THE CITIZENS. BECAUSE CITIZENS
AND BUSINESSES ARE THEN REQUIRED TO PAY THESE TAXES, GOVERNMENTS HAVE
AN OBLIGATION TO DEMONSTRATE ACCOUNTABILITY FOR THESE PUBLIC FUNDS.
5) ROLE OF THE BUDGET: GOVERNMENT BUDGETS ARE EXPRESSIONS OF PUBLIC
POLICY AND OFTEN CARRY THE AUTHORITY OF LAW, PREVENTING PUBLIC OFFICIALS
FROM SPENDING OUTSIDE THEIR BUDGETARY AUTHORITY. THE INCREASED
IMPORTANCE OF BUDGETS IS REFLECTED IN GOVERNMENT FINANCIAL REPORTS BY A
REQUIRED REPORT COMPARING BUDGETED AND ACTUAL AMOUNTS.
1-3. THE THREE STANDARDS SETTING BODIES IN QUESTION ARE THE FEDERAL ACCOUNTING
STANDARDS ACCOUNTING ADVISORY BOARD (FASAB), THE GOVERNMENTAL
ACCOUNTING STANDARDS BOARD (GASB), AND THE FINANCIAL ACCOUNTING
STANDARDS BOARD (FASB). THE FASAB ESTABLISHES ACCOUNTING AND REPORTING
STANDARDS FOR THE FEDERAL GOVERNMENT AND ITS AGENCIES UNLESS OBJECTED TO
BY ONE OF THE "PRINCIPALS" (THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND
BUDGET, THE COMPTROLLER GENERAL OF THE UNITED STATES (GAO), AND THE
SECRETARY OF THE TREASURY). WHEN THE "PRINCIPALS" APPROVE, THE FASAB
STANDARDS BECOME GAAP. THE GASB SETS ACCOUNTING AND FINANCIAL
REPORTING STANDARDS FOR STATE AND LOCAL GOVERNMENTAL ORGANIZATIONS,
INCLUDING THOSE NOT-FOR-PROFIT ORGANIZATIONS THAT ARE DETERMINED TO BE
STATE AND LOCAL GOVERNMENTS. THE FASB SETS ACCOUNTING AND FINANCIAL
REPORTING STANDARDS FOR PROFIT SEEKING BUSINESSES AND FOR
NONGOVERNMENTAL, NOT-FOR-PROFIT ENTITIES.
Organizations
1-2
CHAPTER 1 Introduction to Accounting and Financial Reporting for Governmental and
Not-for-Profit Organizations
1-1. THE SOLUTION TO THIS AND THE FIRST EXERCISE OF CHAPTERS 2 THROUGH 9 WILL
DIFFER FROM STUDENT TO STUDENT ASSUMING EACH HAS A DIFFERENT CAFR.
1-2.
1) ORGANIZATIONAL PURPOSES: WHILE THE PURPOSE OF A COMMERCIAL BUSINESS
IS TO GENERATE A PROFIT FOR THE BENEFIT OF ITS OWNERS, GOVERNMENTS EXIST
FOR THE WELL BEING OF CITIZENS BY PROVIDING PUBLIC SERVICES – WHETHER OR
NOT THE SERVICES ARE PROFITABLE UNDERTAKINGS.
2) SOURCES OF REVENUES: GOVERNMENTS DERIVE MANY OF THEIR RESOURCES
FROM TAXES. INDIVIDUALS AND BUSINESSES PAY TAXES TO AVOID PENALTY, NOT
VOLUNTARILY BECAUSE THEY PERCEIVE GOVERNMENT SERVICES TO BE OF VALUE
AND FAIRLY PRICED. SINCE TAXES DO NOT INVOLVE AN EARNINGS PROCESS, THE
TIMING OF THE RECOGNITION OF TAX REVENUE IS NOT ALWAYS CLEAR.
3) POTENTIAL FOR LONGEVITY: BECAUSE THE U.S. AND STATE CONSTITUTIONS
GRANT STATE AND LOCAL GOVERNMENTS THE ABILITY TO TAX, GOVERNMENTS
VERY RARELY GO OUT OF BUSINESS. THIS LONG-TERM VIEW OF OPERATIONS
CHANGES THE FOCUS OF ACCOUNTING FROM ONE OF NEAR-TERM RECOVERY OF
AMOUNTS INVESTED IN ASSETS TO A LONGER-TERM FOCUS ON THE SUSTAINABILITY
OF SERVICES AND THE ABILITY TO MEET FUTURE DEMAND.
4) RELATIONSHIP WITH STAKEHOLDERS: TAXES ARE CREATED THROUGH THE
LEGISLATIVE PROCESS BY OFFICIALS ELECTED BY THE CITIZENS. BECAUSE CITIZENS
AND BUSINESSES ARE THEN REQUIRED TO PAY THESE TAXES, GOVERNMENTS HAVE
AN OBLIGATION TO DEMONSTRATE ACCOUNTABILITY FOR THESE PUBLIC FUNDS.
5) ROLE OF THE BUDGET: GOVERNMENT BUDGETS ARE EXPRESSIONS OF PUBLIC
POLICY AND OFTEN CARRY THE AUTHORITY OF LAW, PREVENTING PUBLIC OFFICIALS
FROM SPENDING OUTSIDE THEIR BUDGETARY AUTHORITY. THE INCREASED
IMPORTANCE OF BUDGETS IS REFLECTED IN GOVERNMENT FINANCIAL REPORTS BY A
REQUIRED REPORT COMPARING BUDGETED AND ACTUAL AMOUNTS.
1-3. THE THREE STANDARDS SETTING BODIES IN QUESTION ARE THE FEDERAL ACCOUNTING
STANDARDS ACCOUNTING ADVISORY BOARD (FASAB), THE GOVERNMENTAL
ACCOUNTING STANDARDS BOARD (GASB), AND THE FINANCIAL ACCOUNTING
STANDARDS BOARD (FASB). THE FASAB ESTABLISHES ACCOUNTING AND REPORTING
STANDARDS FOR THE FEDERAL GOVERNMENT AND ITS AGENCIES UNLESS OBJECTED TO
BY ONE OF THE "PRINCIPALS" (THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND
BUDGET, THE COMPTROLLER GENERAL OF THE UNITED STATES (GAO), AND THE
SECRETARY OF THE TREASURY). WHEN THE "PRINCIPALS" APPROVE, THE FASAB
STANDARDS BECOME GAAP. THE GASB SETS ACCOUNTING AND FINANCIAL
REPORTING STANDARDS FOR STATE AND LOCAL GOVERNMENTAL ORGANIZATIONS,
INCLUDING THOSE NOT-FOR-PROFIT ORGANIZATIONS THAT ARE DETERMINED TO BE
STATE AND LOCAL GOVERNMENTS. THE FASB SETS ACCOUNTING AND FINANCIAL
REPORTING STANDARDS FOR PROFIT SEEKING BUSINESSES AND FOR
NONGOVERNMENTAL, NOT-FOR-PROFIT ENTITIES.
Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit
Organizations
1-2
CHAPTER 1 Introduction to Accounting and Financial Reporting for Governmental and
Not-for-Profit Organizations
1-1. THE SOLUTION TO THIS AND THE FIRST EXERCISE OF CHAPTERS 2 THROUGH 9 WILL
DIFFER FROM STUDENT TO STUDENT ASSUMING EACH HAS A DIFFERENT CAFR.
1-2.
1) ORGANIZATIONAL PURPOSES: WHILE THE PURPOSE OF A COMMERCIAL BUSINESS
IS TO GENERATE A PROFIT FOR THE BENEFIT OF ITS OWNERS, GOVERNMENTS EXIST
FOR THE WELL BEING OF CITIZENS BY PROVIDING PUBLIC SERVICES – WHETHER OR
NOT THE SERVICES ARE PROFITABLE UNDERTAKINGS.
2) SOURCES OF REVENUES: GOVERNMENTS DERIVE MANY OF THEIR RESOURCES
FROM TAXES. INDIVIDUALS AND BUSINESSES PAY TAXES TO AVOID PENALTY, NOT
VOLUNTARILY BECAUSE THEY PERCEIVE GOVERNMENT SERVICES TO BE OF VALUE
AND FAIRLY PRICED. SINCE TAXES DO NOT INVOLVE AN EARNINGS PROCESS, THE
TIMING OF THE RECOGNITION OF TAX REVENUE IS NOT ALWAYS CLEAR.
3) POTENTIAL FOR LONGEVITY: BECAUSE THE U.S. AND STATE CONSTITUTIONS
GRANT STATE AND LOCAL GOVERNMENTS THE ABILITY TO TAX, GOVERNMENTS
VERY RARELY GO OUT OF BUSINESS. THIS LONG-TERM VIEW OF OPERATIONS
CHANGES THE FOCUS OF ACCOUNTING FROM ONE OF NEAR-TERM RECOVERY OF
AMOUNTS INVESTED IN ASSETS TO A LONGER-TERM FOCUS ON THE SUSTAINABILITY
OF SERVICES AND THE ABILITY TO MEET FUTURE DEMAND.
4) RELATIONSHIP WITH STAKEHOLDERS: TAXES ARE CREATED THROUGH THE
LEGISLATIVE PROCESS BY OFFICIALS ELECTED BY THE CITIZENS. BECAUSE CITIZENS
AND BUSINESSES ARE THEN REQUIRED TO PAY THESE TAXES, GOVERNMENTS HAVE
AN OBLIGATION TO DEMONSTRATE ACCOUNTABILITY FOR THESE PUBLIC FUNDS.
5) ROLE OF THE BUDGET: GOVERNMENT BUDGETS ARE EXPRESSIONS OF PUBLIC
POLICY AND OFTEN CARRY THE AUTHORITY OF LAW, PREVENTING PUBLIC OFFICIALS
FROM SPENDING OUTSIDE THEIR BUDGETARY AUTHORITY. THE INCREASED
IMPORTANCE OF BUDGETS IS REFLECTED IN GOVERNMENT FINANCIAL REPORTS BY A
REQUIRED REPORT COMPARING BUDGETED AND ACTUAL AMOUNTS.
1-3. THE THREE STANDARDS SETTING BODIES IN QUESTION ARE THE FEDERAL ACCOUNTING
STANDARDS ACCOUNTING ADVISORY BOARD (FASAB), THE GOVERNMENTAL
ACCOUNTING STANDARDS BOARD (GASB), AND THE FINANCIAL ACCOUNTING
STANDARDS BOARD (FASB). THE FASAB ESTABLISHES ACCOUNTING AND REPORTING
STANDARDS FOR THE FEDERAL GOVERNMENT AND ITS AGENCIES UNLESS OBJECTED TO
BY ONE OF THE "PRINCIPALS" (THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND
BUDGET, THE COMPTROLLER GENERAL OF THE UNITED STATES (GAO), AND THE
SECRETARY OF THE TREASURY). WHEN THE "PRINCIPALS" APPROVE, THE FASAB
STANDARDS BECOME GAAP. THE GASB SETS ACCOUNTING AND FINANCIAL
REPORTING STANDARDS FOR STATE AND LOCAL GOVERNMENTAL ORGANIZATIONS,
INCLUDING THOSE NOT-FOR-PROFIT ORGANIZATIONS THAT ARE DETERMINED TO BE
STATE AND LOCAL GOVERNMENTS. THE FASB SETS ACCOUNTING AND FINANCIAL
REPORTING STANDARDS FOR PROFIT SEEKING BUSINESSES AND FOR
NONGOVERNMENTAL, NOT-FOR-PROFIT ENTITIES.
Organizations
1-2
CHAPTER 1 Introduction to Accounting and Financial Reporting for Governmental and
Not-for-Profit Organizations
1-1. THE SOLUTION TO THIS AND THE FIRST EXERCISE OF CHAPTERS 2 THROUGH 9 WILL
DIFFER FROM STUDENT TO STUDENT ASSUMING EACH HAS A DIFFERENT CAFR.
1-2.
1) ORGANIZATIONAL PURPOSES: WHILE THE PURPOSE OF A COMMERCIAL BUSINESS
IS TO GENERATE A PROFIT FOR THE BENEFIT OF ITS OWNERS, GOVERNMENTS EXIST
FOR THE WELL BEING OF CITIZENS BY PROVIDING PUBLIC SERVICES – WHETHER OR
NOT THE SERVICES ARE PROFITABLE UNDERTAKINGS.
2) SOURCES OF REVENUES: GOVERNMENTS DERIVE MANY OF THEIR RESOURCES
FROM TAXES. INDIVIDUALS AND BUSINESSES PAY TAXES TO AVOID PENALTY, NOT
VOLUNTARILY BECAUSE THEY PERCEIVE GOVERNMENT SERVICES TO BE OF VALUE
AND FAIRLY PRICED. SINCE TAXES DO NOT INVOLVE AN EARNINGS PROCESS, THE
TIMING OF THE RECOGNITION OF TAX REVENUE IS NOT ALWAYS CLEAR.
3) POTENTIAL FOR LONGEVITY: BECAUSE THE U.S. AND STATE CONSTITUTIONS
GRANT STATE AND LOCAL GOVERNMENTS THE ABILITY TO TAX, GOVERNMENTS
VERY RARELY GO OUT OF BUSINESS. THIS LONG-TERM VIEW OF OPERATIONS
CHANGES THE FOCUS OF ACCOUNTING FROM ONE OF NEAR-TERM RECOVERY OF
AMOUNTS INVESTED IN ASSETS TO A LONGER-TERM FOCUS ON THE SUSTAINABILITY
OF SERVICES AND THE ABILITY TO MEET FUTURE DEMAND.
4) RELATIONSHIP WITH STAKEHOLDERS: TAXES ARE CREATED THROUGH THE
LEGISLATIVE PROCESS BY OFFICIALS ELECTED BY THE CITIZENS. BECAUSE CITIZENS
AND BUSINESSES ARE THEN REQUIRED TO PAY THESE TAXES, GOVERNMENTS HAVE
AN OBLIGATION TO DEMONSTRATE ACCOUNTABILITY FOR THESE PUBLIC FUNDS.
5) ROLE OF THE BUDGET: GOVERNMENT BUDGETS ARE EXPRESSIONS OF PUBLIC
POLICY AND OFTEN CARRY THE AUTHORITY OF LAW, PREVENTING PUBLIC OFFICIALS
FROM SPENDING OUTSIDE THEIR BUDGETARY AUTHORITY. THE INCREASED
IMPORTANCE OF BUDGETS IS REFLECTED IN GOVERNMENT FINANCIAL REPORTS BY A
REQUIRED REPORT COMPARING BUDGETED AND ACTUAL AMOUNTS.
1-3. THE THREE STANDARDS SETTING BODIES IN QUESTION ARE THE FEDERAL ACCOUNTING
STANDARDS ACCOUNTING ADVISORY BOARD (FASAB), THE GOVERNMENTAL
ACCOUNTING STANDARDS BOARD (GASB), AND THE FINANCIAL ACCOUNTING
STANDARDS BOARD (FASB). THE FASAB ESTABLISHES ACCOUNTING AND REPORTING
STANDARDS FOR THE FEDERAL GOVERNMENT AND ITS AGENCIES UNLESS OBJECTED TO
BY ONE OF THE "PRINCIPALS" (THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND
BUDGET, THE COMPTROLLER GENERAL OF THE UNITED STATES (GAO), AND THE
SECRETARY OF THE TREASURY). WHEN THE "PRINCIPALS" APPROVE, THE FASAB
STANDARDS BECOME GAAP. THE GASB SETS ACCOUNTING AND FINANCIAL
REPORTING STANDARDS FOR STATE AND LOCAL GOVERNMENTAL ORGANIZATIONS,
INCLUDING THOSE NOT-FOR-PROFIT ORGANIZATIONS THAT ARE DETERMINED TO BE
STATE AND LOCAL GOVERNMENTS. THE FASB SETS ACCOUNTING AND FINANCIAL
REPORTING STANDARDS FOR PROFIT SEEKING BUSINESSES AND FOR
NONGOVERNMENTAL, NOT-FOR-PROFIT ENTITIES.
Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit
Organizations
1-3
1-4. THE DEFINITION OF A GOVERNMENT, AS AGREED TO BY THE FASB AND THE GASB IS
AS FOLLOWS:
“PUBLIC CORPORATIONS AND BODIES CORPORATE AND POLITIC ARE GOVERNMENTAL
ORGANIZATIONS. OTHER ORGANIZATIONS ARE GOVERNMENTAL ORGANIZATIONS IF
THEY HAVE ONE OR MORE OF THE FOLLOWING CHARACTERISTICS:
1. POPULAR ELECTION OF OFFICERS OR APPOINTMENT (OR APPROVAL) OF A
CONTROLLING MAJORITY OF THE MEMBERS OF THE ORGANIZATION’S
GOVERNING BODY BY OFFICIALS OF ONE OR MORE STATE OR LOCAL
GOVERNMENTS;
2. THE POTENTIAL FOR UNILATERAL DISSOLUTION BY A GOVERNMENT WITH THE
NET ASSETS REVERTING TO A GOVERNMENT, OR
3. THE POWER TO ENACT AND ENFORCE A TAX LEVY.
FURTHERMORE, ORGANIZATIONS ARE PRESUMED TO BE GOVERNMENTAL IF THEY HAVE
THE ABILITY TO ISSUE DIRECTLY (RATHER THAN THROUGH A STATE OR MUNICIPAL
AUTHORITY) DEBT THAT PAYS INTEREST EXEMPT FROM FEDERAL TAXATION.
Organizations
1-3
1-4. THE DEFINITION OF A GOVERNMENT, AS AGREED TO BY THE FASB AND THE GASB IS
AS FOLLOWS:
“PUBLIC CORPORATIONS AND BODIES CORPORATE AND POLITIC ARE GOVERNMENTAL
ORGANIZATIONS. OTHER ORGANIZATIONS ARE GOVERNMENTAL ORGANIZATIONS IF
THEY HAVE ONE OR MORE OF THE FOLLOWING CHARACTERISTICS:
1. POPULAR ELECTION OF OFFICERS OR APPOINTMENT (OR APPROVAL) OF A
CONTROLLING MAJORITY OF THE MEMBERS OF THE ORGANIZATION’S
GOVERNING BODY BY OFFICIALS OF ONE OR MORE STATE OR LOCAL
GOVERNMENTS;
2. THE POTENTIAL FOR UNILATERAL DISSOLUTION BY A GOVERNMENT WITH THE
NET ASSETS REVERTING TO A GOVERNMENT, OR
3. THE POWER TO ENACT AND ENFORCE A TAX LEVY.
FURTHERMORE, ORGANIZATIONS ARE PRESUMED TO BE GOVERNMENTAL IF THEY HAVE
THE ABILITY TO ISSUE DIRECTLY (RATHER THAN THROUGH A STATE OR MUNICIPAL
AUTHORITY) DEBT THAT PAYS INTEREST EXEMPT FROM FEDERAL TAXATION.
Loading page 4...
Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit
Organizations
1-4
1-5. THE SOURCES OF AUTHORITATIVE GAAP FOR STATE AND LOCAL GOVERNMENTS ARE:
− CATEGORY A: GASB STATEMENTS (AND INTERPRETATIONS)
− CATEGORY B: GASB IMPLEMENTATION GUIDES, GASB TECHNICAL
BULLETINS AND LITERATURE OF THE AMERICAN INSTITUTE OF CERTIFIED
PUBLIC ACCOUNTANTS (AICPA) SPECIFICALLY CLEARED BY THE GASB
IF THE ACCOUNTING TREATMENT FOR A GIVEN TRANSACTION IS NOT SPECIFIED BY A
STATEMENT IN CATEGORY A, A STATE AND LOCAL GOVERNMENT SHOULD CONSIDER
WHETHER IT IS COVERED BY ONE OF THE SOURCES IDENTIFIED IN CATEGORY B. IF THE
ACCOUNTING TREATMENT IS NOT SPECIFIED WITHIN ONE OF THESE AUTHORITATIVE
SOURCES, THE GOVERNMENT SHOULD CONSIDER WHETHER THE TRANSACTION IS
SUFFICIENTLY SIMILAR TO ONES COVERED BY ONE OF THE AUTHORITATIVE SOURCES
THAT A SIMILAR ACCOUNTING TREATMENT CAN BE APPLIED. IF NOT, THE
GOVERNMENT MAY USE NON-AUTHORITATIVE SOURCES FOR GUIDANCE, INCLUDING:
− GASB CONCEPT STATEMENTS,
− FASB, FASAB, OR INTERNATIONAL STANDARDS BOARD
PRONOUNCEMENTS,
− AICPA LITERATURE NOT SPECIFICALLY CLEARED BY THE GASB,
− OTHER SOURCES PROVIDED BY PROFESSIONAL ORGANIZATIONS,
REGULATORY AGENCIES, TEXTBOOKS, AND PUBLISHED ARTICLES, OR
− PREVALENT PRACTICES THAT EVOLVED AMONG GOVERNMENTS WITHOUT
SPECIFIC AUTHORITATIVE ACTION.
Organizations
1-4
1-5. THE SOURCES OF AUTHORITATIVE GAAP FOR STATE AND LOCAL GOVERNMENTS ARE:
− CATEGORY A: GASB STATEMENTS (AND INTERPRETATIONS)
− CATEGORY B: GASB IMPLEMENTATION GUIDES, GASB TECHNICAL
BULLETINS AND LITERATURE OF THE AMERICAN INSTITUTE OF CERTIFIED
PUBLIC ACCOUNTANTS (AICPA) SPECIFICALLY CLEARED BY THE GASB
IF THE ACCOUNTING TREATMENT FOR A GIVEN TRANSACTION IS NOT SPECIFIED BY A
STATEMENT IN CATEGORY A, A STATE AND LOCAL GOVERNMENT SHOULD CONSIDER
WHETHER IT IS COVERED BY ONE OF THE SOURCES IDENTIFIED IN CATEGORY B. IF THE
ACCOUNTING TREATMENT IS NOT SPECIFIED WITHIN ONE OF THESE AUTHORITATIVE
SOURCES, THE GOVERNMENT SHOULD CONSIDER WHETHER THE TRANSACTION IS
SUFFICIENTLY SIMILAR TO ONES COVERED BY ONE OF THE AUTHORITATIVE SOURCES
THAT A SIMILAR ACCOUNTING TREATMENT CAN BE APPLIED. IF NOT, THE
GOVERNMENT MAY USE NON-AUTHORITATIVE SOURCES FOR GUIDANCE, INCLUDING:
− GASB CONCEPT STATEMENTS,
− FASB, FASAB, OR INTERNATIONAL STANDARDS BOARD
PRONOUNCEMENTS,
− AICPA LITERATURE NOT SPECIFICALLY CLEARED BY THE GASB,
− OTHER SOURCES PROVIDED BY PROFESSIONAL ORGANIZATIONS,
REGULATORY AGENCIES, TEXTBOOKS, AND PUBLISHED ARTICLES, OR
− PREVALENT PRACTICES THAT EVOLVED AMONG GOVERNMENTS WITHOUT
SPECIFIC AUTHORITATIVE ACTION.
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Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit
Organizations
1-5
1-6.
A. CONCEPTUALLY, THE MEASUREMENT FOCUS DETERMINES WHAT IS MEASURED; THE
BASIS OF ACCOUNTING DETERMINES WHEN SOMETHING IS MEASURED. THE ECONOMIC
RESOURCES MEASUREMENT FOCUS MEASURES ALL ECONOMIC RESOURCES, INCLUDING
CAPITAL ASSETS AND LONG-TERM DEBT. THE CURRENT FINANCIAL RESOURCES
MEASUREMENT FOCUS MEASURES PRIMARILY FINANCIAL RESOURCES AND DOES NOT
RECOGNIZE LONG-TERM ASSETS AND LIABILITIES. THESE RESOURCES ARE GENERALLY
RESTRICTED TO CURRENT ASSETS, INVESTMENTS, AND SHORT-TERM LIABILITIES
THE ACCRUAL BASIS OF ACCOUNTING RECOGNIZES REVENUES WHEN EARNED AND
EXPENSES WHEN INCURRED. THE MODIFIED ACCRUAL BASIS OF ACCOUNTING IS
SOMEWHERE BETWEEN THE CASH AND ACCRUAL BASES OF ACCOUNTING AND
RECOGNIZES REVENUES WHEN MEASURABLE AND AVAILABLE TO FINANCE
EXPENDITURES OF THE CURRENT PERIOD. THE MODIFIED ACCRUAL BASIS OF
ACCOUNTING RECOGNIZES EXPENDITURES GENERALLY WHEN THE FUND LIABILITY IS
INCURRED (I.E. GOODS AND SERVICES ARE RECEIVED).
B. UNDER ACCRUAL ACCOUNTING REVENUES BASED ON EXCHANGE TRANSACTIONS ARE
RECOGNIZED WHEN EARNED. UNDER MODIFIED ACCRUAL ACCOUNTING, REVENUE
RECOGNITION IS MODIFIED TO REQUIRE THAT THE AMOUNT BE MEASURABLE AND
AVAILABLE TO FINANCE EXPENDITURES OF THE CURRENT PERIOD.
C. UNDER ACCRUAL ACCOUNTING, EXPENSES ARE RECOGNIZED WHEN GOODS OR SERVICES
ARE USED. EXPENSES ARE OFTEN MATCHED WITH THE REVENUES THOSE EXPENSES
GENERATE, IN THE CASE OF EXCHANGE TRANSACTIONS. ACCRUALS ARE REQUIRED FOR
INTEREST AND OTHER EXPENSES, REGARDLESS OF WHEN CASH IS TO BE TRANSFERRED.
UNDER MODIFIED ACCRUAL ACCOUNTING, EXPENDITURES (NOT EXPENSES) ARE
RECORDED GENERALLY WHEN GOODS OR SERVICES ARE RECEIVED. (TO THE
INSTRUCTOR: THIS ANSWER IS BASED ON THE INFORMATION GIVEN IN CHAPTER 1; MORE
SOPHISTICATION IS INTRODUCED IN LATER CHAPTERS.)
D. UNDER THE ECONOMIC RESOURCES MEASUREMENT FOCUS AND ACCRUAL ACCOUNTING,
FIXED ASSETS ARE CAPITALIZED AND DEPRECIATED (EXCEPT FOR INFRASTRUCTURE
ASSETS USING THE MODIFIED APPROACH). UNDER THE CURRENT FINANCIAL RESOURCES
MEASUREMENT FOCUS AND MODIFIED ACCRUAL ACCOUNTING, FIXED ASSETS ARE NOT
CAPITALIZED OR DEPRECIATED; RATHER FIXED ASSETS ARE CHARGED TO EXPENDITURES
WHEN RECEIVED.
E. UNDER THE ECONOMIC RESOURCES MEASUREMENT FOCUS AND ACCRUAL ACCOUNTING,
LONG-TERM DEBT IS RECORDED AS A LIABILITY. UNDER THE CURRENT FINANCIAL
RESOURCES MEASUREMENT FOCUS AND MODIFIED ACCRUAL ACCOUNTING, LONG-TERM
DEBT IS NOT RECORDED AS A LIABILITY. (LATER CHAPTERS WILL INDICATE THAT THE
ISSUANCE OF DEBT RESULTS IN AN “OTHER FINANCING SOURCE” IN THE
GOVERNMENTAL FUND STATEMENTS AND THAT THE REPAYMENT OF DEBT WILL RESULT
IN AN EXPENDITURE IN THE GOVERNMENTAL FUND STATEMENTS.)
Organizations
1-5
1-6.
A. CONCEPTUALLY, THE MEASUREMENT FOCUS DETERMINES WHAT IS MEASURED; THE
BASIS OF ACCOUNTING DETERMINES WHEN SOMETHING IS MEASURED. THE ECONOMIC
RESOURCES MEASUREMENT FOCUS MEASURES ALL ECONOMIC RESOURCES, INCLUDING
CAPITAL ASSETS AND LONG-TERM DEBT. THE CURRENT FINANCIAL RESOURCES
MEASUREMENT FOCUS MEASURES PRIMARILY FINANCIAL RESOURCES AND DOES NOT
RECOGNIZE LONG-TERM ASSETS AND LIABILITIES. THESE RESOURCES ARE GENERALLY
RESTRICTED TO CURRENT ASSETS, INVESTMENTS, AND SHORT-TERM LIABILITIES
THE ACCRUAL BASIS OF ACCOUNTING RECOGNIZES REVENUES WHEN EARNED AND
EXPENSES WHEN INCURRED. THE MODIFIED ACCRUAL BASIS OF ACCOUNTING IS
SOMEWHERE BETWEEN THE CASH AND ACCRUAL BASES OF ACCOUNTING AND
RECOGNIZES REVENUES WHEN MEASURABLE AND AVAILABLE TO FINANCE
EXPENDITURES OF THE CURRENT PERIOD. THE MODIFIED ACCRUAL BASIS OF
ACCOUNTING RECOGNIZES EXPENDITURES GENERALLY WHEN THE FUND LIABILITY IS
INCURRED (I.E. GOODS AND SERVICES ARE RECEIVED).
B. UNDER ACCRUAL ACCOUNTING REVENUES BASED ON EXCHANGE TRANSACTIONS ARE
RECOGNIZED WHEN EARNED. UNDER MODIFIED ACCRUAL ACCOUNTING, REVENUE
RECOGNITION IS MODIFIED TO REQUIRE THAT THE AMOUNT BE MEASURABLE AND
AVAILABLE TO FINANCE EXPENDITURES OF THE CURRENT PERIOD.
C. UNDER ACCRUAL ACCOUNTING, EXPENSES ARE RECOGNIZED WHEN GOODS OR SERVICES
ARE USED. EXPENSES ARE OFTEN MATCHED WITH THE REVENUES THOSE EXPENSES
GENERATE, IN THE CASE OF EXCHANGE TRANSACTIONS. ACCRUALS ARE REQUIRED FOR
INTEREST AND OTHER EXPENSES, REGARDLESS OF WHEN CASH IS TO BE TRANSFERRED.
UNDER MODIFIED ACCRUAL ACCOUNTING, EXPENDITURES (NOT EXPENSES) ARE
RECORDED GENERALLY WHEN GOODS OR SERVICES ARE RECEIVED. (TO THE
INSTRUCTOR: THIS ANSWER IS BASED ON THE INFORMATION GIVEN IN CHAPTER 1; MORE
SOPHISTICATION IS INTRODUCED IN LATER CHAPTERS.)
D. UNDER THE ECONOMIC RESOURCES MEASUREMENT FOCUS AND ACCRUAL ACCOUNTING,
FIXED ASSETS ARE CAPITALIZED AND DEPRECIATED (EXCEPT FOR INFRASTRUCTURE
ASSETS USING THE MODIFIED APPROACH). UNDER THE CURRENT FINANCIAL RESOURCES
MEASUREMENT FOCUS AND MODIFIED ACCRUAL ACCOUNTING, FIXED ASSETS ARE NOT
CAPITALIZED OR DEPRECIATED; RATHER FIXED ASSETS ARE CHARGED TO EXPENDITURES
WHEN RECEIVED.
E. UNDER THE ECONOMIC RESOURCES MEASUREMENT FOCUS AND ACCRUAL ACCOUNTING,
LONG-TERM DEBT IS RECORDED AS A LIABILITY. UNDER THE CURRENT FINANCIAL
RESOURCES MEASUREMENT FOCUS AND MODIFIED ACCRUAL ACCOUNTING, LONG-TERM
DEBT IS NOT RECORDED AS A LIABILITY. (LATER CHAPTERS WILL INDICATE THAT THE
ISSUANCE OF DEBT RESULTS IN AN “OTHER FINANCING SOURCE” IN THE
GOVERNMENTAL FUND STATEMENTS AND THAT THE REPAYMENT OF DEBT WILL RESULT
IN AN EXPENDITURE IN THE GOVERNMENTAL FUND STATEMENTS.)
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Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit
Organizations
1-6
1-7. PRIVATE SECTOR ORGANIZATIONS ARE ORGANIZATIONS THAT ARE NOT OWNED OR
CONTROLLED BY GOVERNMENTS AND INCLUDE BUSINESSES AS WELL AS PRIVATE NOT-
FOR-PROFIT ORGANIZATIONS. PUBLIC SECTOR ORGANIZATIONS ARE GOVERNMENTS OR
ORGANIZATIONS OWNED OR CONTROLLED BY GOVERNMENTS.
1-8. ACCORDING TO THE WEB SITE, “THE MISSION OF THE GOVERNMENTAL ACCOUNTING
STANDARDS BOARD IS TO ESTABLISH AND IMPROVE STANDARDS OF STATE AND LOCAL
GOVERNMENTAL ACCOUNTING AND FINANCIAL REPORTING THAT WILL:
* RESULT IN USEFUL INFORMATION FOR USERS OF FINANCIAL REPORTS AND
* GUIDE AND EDUCATE THE PUBLIC, INCLUDING ISSUERS, AUDITORS, AND USERS OF
THOSE FINANCIAL REPORTS.”
1-9. THE APPROPRIATE FUNDS ARE:
a) CAPITAL PROJECTS FUND: THESE FINANCIAL RESOURCES ARE TO BE USED TO
FINANCE CONSTRUCTION OF A CAPITAL ASSET. SINCE THE JAIL IS UNLIKELY TO
CHARGE FOR ITS SERVICES, IT WOULD NOT BE PART OF A PROPRIETARY FUND.
b) SPECIAL REVENUE FUND: SINCE THE TAX REVENUE IS RESTRICTED BY STATE
LAW FOR A PURPOSE OTHER THAN CAPITAL PROJECT OR DEBT SERVICE, THESE
AMOUNTS WOULD BE REPORTED IN A SPECIAL REVENUE FUND.
c) ENTERPRISE FUND: ALTHOUGH THIS REPRESENTS A CAPITAL PROJECT, WATER
DEPARTMENTS ARE TYPICALLY REPORTED AS ENTERPRISE FUNDS.
d) PRIVATE-PURPOSE TRUST FUND: THIS IS A TRUST FUND IN WHICH THE INCOME
BENEFITS INDIVIDUALS. IF THE PURPOSE OF THE FUND WAS TO BENEFIT THE
GOVERNMENT OR ITS CITIZENRY (BROADLY), THEN IT WOULD BE APPROPRIATE
TO REPORT THESE RESOURCES IN A PERMANENT FUND.
e) SPECIAL REVENUE FUND: ALTHOUGH THE LIBRARY BENEFITS THE CITIZENRY IN
GENERAL, THE ABSENCE OF A REQUIREMENT THAT PRINCIPAL BE MAINTAINED
PRECLUDES THE RESOURCES BEING REPORTED IN A PERMANENT FUND. SINCE
THE RESOURCES ARE RESTRICTED BY THE DONOR, THEY WOULD BE REPORTED IN
A SPECIAL REVENUE FUND.
f) GENERAL FUND: THE RESOURCES ARE NEITHER FIDUCIARY NOR PROPRIETARY.
SINCE THE RESOURCES ARE NOT RESTRICTED OR COMMITTED TO A PARTICULAR
Organizations
1-6
1-7. PRIVATE SECTOR ORGANIZATIONS ARE ORGANIZATIONS THAT ARE NOT OWNED OR
CONTROLLED BY GOVERNMENTS AND INCLUDE BUSINESSES AS WELL AS PRIVATE NOT-
FOR-PROFIT ORGANIZATIONS. PUBLIC SECTOR ORGANIZATIONS ARE GOVERNMENTS OR
ORGANIZATIONS OWNED OR CONTROLLED BY GOVERNMENTS.
1-8. ACCORDING TO THE WEB SITE, “THE MISSION OF THE GOVERNMENTAL ACCOUNTING
STANDARDS BOARD IS TO ESTABLISH AND IMPROVE STANDARDS OF STATE AND LOCAL
GOVERNMENTAL ACCOUNTING AND FINANCIAL REPORTING THAT WILL:
* RESULT IN USEFUL INFORMATION FOR USERS OF FINANCIAL REPORTS AND
* GUIDE AND EDUCATE THE PUBLIC, INCLUDING ISSUERS, AUDITORS, AND USERS OF
THOSE FINANCIAL REPORTS.”
1-9. THE APPROPRIATE FUNDS ARE:
a) CAPITAL PROJECTS FUND: THESE FINANCIAL RESOURCES ARE TO BE USED TO
FINANCE CONSTRUCTION OF A CAPITAL ASSET. SINCE THE JAIL IS UNLIKELY TO
CHARGE FOR ITS SERVICES, IT WOULD NOT BE PART OF A PROPRIETARY FUND.
b) SPECIAL REVENUE FUND: SINCE THE TAX REVENUE IS RESTRICTED BY STATE
LAW FOR A PURPOSE OTHER THAN CAPITAL PROJECT OR DEBT SERVICE, THESE
AMOUNTS WOULD BE REPORTED IN A SPECIAL REVENUE FUND.
c) ENTERPRISE FUND: ALTHOUGH THIS REPRESENTS A CAPITAL PROJECT, WATER
DEPARTMENTS ARE TYPICALLY REPORTED AS ENTERPRISE FUNDS.
d) PRIVATE-PURPOSE TRUST FUND: THIS IS A TRUST FUND IN WHICH THE INCOME
BENEFITS INDIVIDUALS. IF THE PURPOSE OF THE FUND WAS TO BENEFIT THE
GOVERNMENT OR ITS CITIZENRY (BROADLY), THEN IT WOULD BE APPROPRIATE
TO REPORT THESE RESOURCES IN A PERMANENT FUND.
e) SPECIAL REVENUE FUND: ALTHOUGH THE LIBRARY BENEFITS THE CITIZENRY IN
GENERAL, THE ABSENCE OF A REQUIREMENT THAT PRINCIPAL BE MAINTAINED
PRECLUDES THE RESOURCES BEING REPORTED IN A PERMANENT FUND. SINCE
THE RESOURCES ARE RESTRICTED BY THE DONOR, THEY WOULD BE REPORTED IN
A SPECIAL REVENUE FUND.
f) GENERAL FUND: THE RESOURCES ARE NEITHER FIDUCIARY NOR PROPRIETARY.
SINCE THE RESOURCES ARE NOT RESTRICTED OR COMMITTED TO A PARTICULAR
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Chapter 01 - Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit
Organizations
1-7
PURPOSE, THE GENERAL FUND WOULD BE THE APPROPRIATE FUND FOR
REPORTING THE PROCEEDS OF THE SALE OF THE EQUIPMENT.
g) SEVERAL FUNDS WILL BE AFFECTED:
– GENERAL FUND – CONTRIBUTIONS ON BEHALF OF THE TEACHERS AND PUBLIC
SAFETY EMPLOYEES WILL BE PAID BY THE GENERAL FUND WHICH INCLUDES
DEPARTMENTS WHERE THESE EMPLOYEES WORK.
– ENTERPRISE FUND - WATER DEPARTMENTS ARE TYPICALLY REPORTED IN
ENTERPRISE FUNDS AND CONTRIBUTIONS ON BEHALF OF WATER DEPARTMENT
EMPLOYEES WILL BE PAID BY THIS FUND.
– PENSION TRUST FUND – THE AMOUNTS CONTRIBUTED BY THE GENERAL AND
ENTERPRISE FUNDS WILL BE RECEIVED BY THE PENSION TRUST FUND FOR
INVESTMENT.
Organizations
1-7
PURPOSE, THE GENERAL FUND WOULD BE THE APPROPRIATE FUND FOR
REPORTING THE PROCEEDS OF THE SALE OF THE EQUIPMENT.
g) SEVERAL FUNDS WILL BE AFFECTED:
– GENERAL FUND – CONTRIBUTIONS ON BEHALF OF THE TEACHERS AND PUBLIC
SAFETY EMPLOYEES WILL BE PAID BY THE GENERAL FUND WHICH INCLUDES
DEPARTMENTS WHERE THESE EMPLOYEES WORK.
– ENTERPRISE FUND - WATER DEPARTMENTS ARE TYPICALLY REPORTED IN
ENTERPRISE FUNDS AND CONTRIBUTIONS ON BEHALF OF WATER DEPARTMENT
EMPLOYEES WILL BE PAID BY THIS FUND.
– PENSION TRUST FUND – THE AMOUNTS CONTRIBUTED BY THE GENERAL AND
ENTERPRISE FUNDS WILL BE RECEIVED BY THE PENSION TRUST FUND FOR
INVESTMENT.
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Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-1
CHAPTER 2 Overview of Financial Reporting for State and Local Governments
2-1. THE SOLUTION TO THIS AND THE FIRST EXERCISE OF CHAPTERS 1 AND 3 THROUGH 9
WILL DIFFER FROM STUDENT TO STUDENT ASSUMING EACH HAS A DIFFERENT CAFR.
2-2.
A. A FINANCIAL REPORTING ENTITY IS THE PRIMARY GOVERNMENT
TOGETHER WITH ITS COMPONENT UNITS. COMPONENT UNITS ARE
ORGANIZATIONS FOR WHICH THE PRIMARY GOVERNMENT IS FINANCIALLY
ACCOUNTABLE, AND OTHER ORGANIZATIONS FOR WHICH THE NATURE AND
SIGNIFICANCE OF THEIR RELATIONSHIP WITH THE PRIMARY GOVERNMENT
ARE SUCH THAT EXCLUSION WOULD CAUSE THE REPORTING ENTITY'S
FINANCIAL STATEMENTS TO BE MISLEADING OR INCOMPLETE.
B. A PRIMARY GOVERNMENT IS A STATE GOVERNMENT, GENERAL PURPOSE
LOCAL GOVERNMENT, OR SPECIAL PURPOSE GOVERNMENT. AN EXAMPLE OF
A PRIMARY GOVERNMENT WOULD BE ANY STATE, MUNICIPALITY, OR
COUNTY (GENERAL PURPOSE GOVERNMENTS) AND ANY SPECIAL-PURPOSE
GOVERNMENT THAT MEETS THE CERTAIN CRITERIA.
C. A COMPONENT UNIT IS A LEGALLY SEPARATE ORGANIZATION FOR WHICH
THE ELECTED OFFICIALS OF THE PRIMARY GOVERNMENT ARE FINANCIALLY
ACCOUNTABLE. IN ADDITION, A COMPONENT UNIT CAN BE ANOTHER
ORGANIZATION FOR WHICH THE NATURE AND SIGNIFICANCE OF ITS
RELATIONSHIP WITH A PRIMARY GOVERNMENT ARE SUCH THAT EXCLUSION
WOULD CAUSE THE REPORTING ENTITY'S FINANCIAL STATEMENTS TO BE
MISLEADING OR INCOMPLETE.
D. THE TWO PRIMARY METHODS FOR REPORTING COMPONENT UNITS IN THE
FINANCIAL STATEMENTS OF A PRIMARY GOVERNMENT ARE BLENDING AND
DISCRETE PRESENTATION. BLENDING REPORTS THE COMPONENT UNIT AS
ONE OF THE FUNDS OF THE PRIMARY GOVERNMENT, WHICH THEN RESULTS IN
INCLUDING THE COMPONENT UNIT AS PART OF THE BASIC FINANCIAL
STATEMENTS. BLENDING IS USED WHEN COMPONENT UNITS ARE
SUFFICIENTLY INTERTWINED WITH THE PRIMARY GOVERNMENT THAT THEY
ARE, IN SUBSTANCE, THE SAME AS THE PRIMARY GOVERNMENT. BLENDING
IS ALSO USED IF THE COMPONENT UNIT PROVIDES SERVICES SOLELY TO THE
PRIMARY GOVERNMENT OR IF THE COMPONENT UNIT’S DEBTS ARE EXPECTED
TO BE PAID BY THE PRIMARY GOVERNMENT.
DISCRETE PRESENTATION INVOLVES REPORTING THE COMPONENT UNIT IN A
COLUMN TO THE RIGHT OF THE PRIMARY GOVERNMENT IN THE
GOVERNMENT-WIDE FINANCIAL STATEMENTS OF THE REPORTING ENTITY.
2-1
CHAPTER 2 Overview of Financial Reporting for State and Local Governments
2-1. THE SOLUTION TO THIS AND THE FIRST EXERCISE OF CHAPTERS 1 AND 3 THROUGH 9
WILL DIFFER FROM STUDENT TO STUDENT ASSUMING EACH HAS A DIFFERENT CAFR.
2-2.
A. A FINANCIAL REPORTING ENTITY IS THE PRIMARY GOVERNMENT
TOGETHER WITH ITS COMPONENT UNITS. COMPONENT UNITS ARE
ORGANIZATIONS FOR WHICH THE PRIMARY GOVERNMENT IS FINANCIALLY
ACCOUNTABLE, AND OTHER ORGANIZATIONS FOR WHICH THE NATURE AND
SIGNIFICANCE OF THEIR RELATIONSHIP WITH THE PRIMARY GOVERNMENT
ARE SUCH THAT EXCLUSION WOULD CAUSE THE REPORTING ENTITY'S
FINANCIAL STATEMENTS TO BE MISLEADING OR INCOMPLETE.
B. A PRIMARY GOVERNMENT IS A STATE GOVERNMENT, GENERAL PURPOSE
LOCAL GOVERNMENT, OR SPECIAL PURPOSE GOVERNMENT. AN EXAMPLE OF
A PRIMARY GOVERNMENT WOULD BE ANY STATE, MUNICIPALITY, OR
COUNTY (GENERAL PURPOSE GOVERNMENTS) AND ANY SPECIAL-PURPOSE
GOVERNMENT THAT MEETS THE CERTAIN CRITERIA.
C. A COMPONENT UNIT IS A LEGALLY SEPARATE ORGANIZATION FOR WHICH
THE ELECTED OFFICIALS OF THE PRIMARY GOVERNMENT ARE FINANCIALLY
ACCOUNTABLE. IN ADDITION, A COMPONENT UNIT CAN BE ANOTHER
ORGANIZATION FOR WHICH THE NATURE AND SIGNIFICANCE OF ITS
RELATIONSHIP WITH A PRIMARY GOVERNMENT ARE SUCH THAT EXCLUSION
WOULD CAUSE THE REPORTING ENTITY'S FINANCIAL STATEMENTS TO BE
MISLEADING OR INCOMPLETE.
D. THE TWO PRIMARY METHODS FOR REPORTING COMPONENT UNITS IN THE
FINANCIAL STATEMENTS OF A PRIMARY GOVERNMENT ARE BLENDING AND
DISCRETE PRESENTATION. BLENDING REPORTS THE COMPONENT UNIT AS
ONE OF THE FUNDS OF THE PRIMARY GOVERNMENT, WHICH THEN RESULTS IN
INCLUDING THE COMPONENT UNIT AS PART OF THE BASIC FINANCIAL
STATEMENTS. BLENDING IS USED WHEN COMPONENT UNITS ARE
SUFFICIENTLY INTERTWINED WITH THE PRIMARY GOVERNMENT THAT THEY
ARE, IN SUBSTANCE, THE SAME AS THE PRIMARY GOVERNMENT. BLENDING
IS ALSO USED IF THE COMPONENT UNIT PROVIDES SERVICES SOLELY TO THE
PRIMARY GOVERNMENT OR IF THE COMPONENT UNIT’S DEBTS ARE EXPECTED
TO BE PAID BY THE PRIMARY GOVERNMENT.
DISCRETE PRESENTATION INVOLVES REPORTING THE COMPONENT UNIT IN A
COLUMN TO THE RIGHT OF THE PRIMARY GOVERNMENT IN THE
GOVERNMENT-WIDE FINANCIAL STATEMENTS OF THE REPORTING ENTITY.
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Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-2
2-3.
A. THE THREE MAJOR SECTIONS OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
ARE THE INTRODUCTORY, FINANCIAL, AND STATISTICAL SECTIONS.
B. THE GOVERNMENT-WIDE FINANCIAL STATEMENTS ARE THE STATEMENT OF NET
POSITION AND THE STATEMENT OF ACTIVITIES. GOVERNMENT-WIDE STATEMENTS
ARE PRESENTED USING THE ECONOMIC RESOURCES MEASUREMENT FOCUS AND THE
ACCRUAL BASIS OF ACCOUNTING.
C. THE GOVERNMENTAL FUND STATEMENTS ARE THE BALANCE SHEET AND THE
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES.
GOVERNMENTAL FUND STATEMENTS ARE PRESENTED USING THE CURRENT
FINANCIAL RESOURCES MEASUREMENT FOCUS AND MODIFIED ACCRUAL BASIS OF
ACCOUNTING.
D. THE PROPRIETARY FUND STATEMENTS ARE THE STATEMENT OF NET POSITION
(OR BALANCE SHEET), STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN
FUND NET POSITION, AND THE STATEMENT OF CASH FLOWS. THE PROPRIETARY
FUND STATEMENTS ARE PREPARED USING THE ECONOMIC RESOURCES
MEASUREMENT FOCUS AND THE ACCRUAL BASIS OF ACCOUNTING.
E. THE FIDUCIARY FUND STATEMENTS ARE THE STATEMENT OF FIDUCIARY NET
POSITION AND THE STATEMENT OF CHANGES IN FIDUCIARY NET POSITION.
FIDUCIARY FUND STATEMENTS ARE PREPARED USING THE ECONOMIC RESOURCES
MEASUREMENT FOCUS AND THE ACCRUAL BASIS OF ACCOUNTING.
F. MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A) IS CONSIDERED TO BE
REQUIRED SUPPLEMENTARY INFORMATION (RSI) AND IS PRESENTED IN THE
FINANCIAL SECTION AFTER THE AUDITOR'S REPORT. THE REMAINDER OF RSI IS
GENERALLY PRESENTED AFTER THE NOTES TO THE FINANCIAL STATEMENTS AND
INCLUDES (A) BUDGETARY COMPARISON SCHEDULES, (B ) INFORMATION
REGARDING INFRASTRUCTURE ASSETS WHEN USING THE MODIFIED APPROACH (C)
SCHEDULES REQUIRED FOR DEFINED BENEFIT PENSION PLANS, AND (D)
INFORMATION REQUIRED FOR EXTERNAL FINANCING POOLS.
2-2
2-3.
A. THE THREE MAJOR SECTIONS OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT
ARE THE INTRODUCTORY, FINANCIAL, AND STATISTICAL SECTIONS.
B. THE GOVERNMENT-WIDE FINANCIAL STATEMENTS ARE THE STATEMENT OF NET
POSITION AND THE STATEMENT OF ACTIVITIES. GOVERNMENT-WIDE STATEMENTS
ARE PRESENTED USING THE ECONOMIC RESOURCES MEASUREMENT FOCUS AND THE
ACCRUAL BASIS OF ACCOUNTING.
C. THE GOVERNMENTAL FUND STATEMENTS ARE THE BALANCE SHEET AND THE
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES.
GOVERNMENTAL FUND STATEMENTS ARE PRESENTED USING THE CURRENT
FINANCIAL RESOURCES MEASUREMENT FOCUS AND MODIFIED ACCRUAL BASIS OF
ACCOUNTING.
D. THE PROPRIETARY FUND STATEMENTS ARE THE STATEMENT OF NET POSITION
(OR BALANCE SHEET), STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN
FUND NET POSITION, AND THE STATEMENT OF CASH FLOWS. THE PROPRIETARY
FUND STATEMENTS ARE PREPARED USING THE ECONOMIC RESOURCES
MEASUREMENT FOCUS AND THE ACCRUAL BASIS OF ACCOUNTING.
E. THE FIDUCIARY FUND STATEMENTS ARE THE STATEMENT OF FIDUCIARY NET
POSITION AND THE STATEMENT OF CHANGES IN FIDUCIARY NET POSITION.
FIDUCIARY FUND STATEMENTS ARE PREPARED USING THE ECONOMIC RESOURCES
MEASUREMENT FOCUS AND THE ACCRUAL BASIS OF ACCOUNTING.
F. MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A) IS CONSIDERED TO BE
REQUIRED SUPPLEMENTARY INFORMATION (RSI) AND IS PRESENTED IN THE
FINANCIAL SECTION AFTER THE AUDITOR'S REPORT. THE REMAINDER OF RSI IS
GENERALLY PRESENTED AFTER THE NOTES TO THE FINANCIAL STATEMENTS AND
INCLUDES (A) BUDGETARY COMPARISON SCHEDULES, (B ) INFORMATION
REGARDING INFRASTRUCTURE ASSETS WHEN USING THE MODIFIED APPROACH (C)
SCHEDULES REQUIRED FOR DEFINED BENEFIT PENSION PLANS, AND (D)
INFORMATION REQUIRED FOR EXTERNAL FINANCING POOLS.
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Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-3
2.4 THE GENERAL FUND IS ALWAYS CONSIDERED A MAJOR FUND. OTHER
GOVERNMENTAL FUNDS ARE CONSIDERED MAJOR WHEN BOTH OF THE FOLLOWING
CONDITIONS EXIST: (A) TOTAL ASSETS, LIABILITIES, REVENUES, OR EXPENDITURES
OF THAT INDIVIDUAL GOVERNMENTAL FUND CONSTITUTE 10 PERCENT OF THE
TOTAL FOR THE GOVERNMENTAL FUNDS CATEGORY, AND (B) TOTAL ASSETS,
LIABILITIES, REVENUES, OR EXPENDITURES OF THAT INDIVIDUAL GOVERNMENTAL
OR ENTERPRISE FUND ARE 5 PERCENT OF THE TOTAL OF THE GOVERNMENTAL AND
ENTERPRISE CATEGORIES, COMBINED. ADDITIONALLY, A GOVERNMENT MAY
DESIGNATE ANY FUND MAJOR IF REPORTING THAT FUND SEPARATELY WOULD BE
USEFUL. WHEN APPLYING THESE RULES, DEFERRED OUTFLOWS OF RESOURCES ARE
INCLUDED WITH ASSETS AND DEFERRED INFLOWS ARE INCLUDED WITH LIABILITIES.
AN ENTERPRISE FUND IS CONSIDERED MAJOR IF: (A) ASSETS, LIABILITIES,
REVENUES, OR EXPENSES ARE 10 PERCENT OR MORE OF THE TOTAL FOR ALL
ENTERPRISE FUNDS, AND (B) ITS ASSETS, LIABILITIES, REVENUES, OR EXPENSES ARE
5 PERCENT OR MORE OF THE TOTAL OF THE GOVERNMENTAL AND ENTERPRISE
CATEGORIES, COMBINED. WHEN APPLYING THESE RULES, DEFERRED OUTFLOWS OF
RESOURCES ARE INCLUDED WITH ASSETS AND DEFERRED INFLOWS ARE INCLUDED
WITH LIABILITIES.
• OPERATING ACTIVITIES ARE THOSE ASSOCIATED WITH OPERATING INCOME.
AS A RESULT, CASH FLOWS FROM INTEREST EXPENSE, INTEREST REVENUE
AND INVESTMENT INCOME DO NOT APPEAR IN THE OPERATING ACTIVITIES
SECTION.
2-5 SEVERAL DIFFERENCES EXIST BETWEEN THE GASB FORMAT CASH FLOW
STATEMENT AND THE FASB FORMAT REQUIRED OF COMMERCIAL BUSINESSES:
1) GASB REQUIRES GOVERNMENTS TO PREPARE CASH FLOWS FROM OPERATING
ACTIVITIES ON THE DIRECT METHOD.
2) THE RECONCILIATION OF INCOME TO CASH FLOWS FROM OPERATING
ACTIVITIES OF THE PROPRIETARY FUND, WHICH APPEARS IN THE BOTTOM
SECTION OF THE STATEMENT, BEGINS WITH OPERATING INCOME, NOT NET
INCOME (OR TOTAL CHANGE IN NET POSITION).
3) THE STATEMENT HAS FOUR SECTIONS, RATHER THAN THE THREE OBSERVED
IN FASB FORMAT STATEMENTS. THESE INCLUDE:
• NONCAPITAL RELATED FINANCING ACTIVITIES INVOLVE THE BORROWING
AND PAYMENT (INCLUDING INTEREST) OF LOANS FOR PURPOSES OTHER THAN
FINANCING CAPITAL ADDITIONS – CHIEFLY, BORROWING FOR OPERATIONS.
• CAPITAL AND RELATED FINANCING INCLUDE GRANTS AND DEBT
TRANSACTIONS (INCLUDING INTEREST) USED TO FINANCE CAPITAL
ADDITIONS.
• INVESTING ACTIVITIES INVOLVE THE ACQUISITION AND SALE OF
INVESTMENTS AS WELL AS CASH RECEIVED FROM INVESTMENT INCOME.
2-3
2.4 THE GENERAL FUND IS ALWAYS CONSIDERED A MAJOR FUND. OTHER
GOVERNMENTAL FUNDS ARE CONSIDERED MAJOR WHEN BOTH OF THE FOLLOWING
CONDITIONS EXIST: (A) TOTAL ASSETS, LIABILITIES, REVENUES, OR EXPENDITURES
OF THAT INDIVIDUAL GOVERNMENTAL FUND CONSTITUTE 10 PERCENT OF THE
TOTAL FOR THE GOVERNMENTAL FUNDS CATEGORY, AND (B) TOTAL ASSETS,
LIABILITIES, REVENUES, OR EXPENDITURES OF THAT INDIVIDUAL GOVERNMENTAL
OR ENTERPRISE FUND ARE 5 PERCENT OF THE TOTAL OF THE GOVERNMENTAL AND
ENTERPRISE CATEGORIES, COMBINED. ADDITIONALLY, A GOVERNMENT MAY
DESIGNATE ANY FUND MAJOR IF REPORTING THAT FUND SEPARATELY WOULD BE
USEFUL. WHEN APPLYING THESE RULES, DEFERRED OUTFLOWS OF RESOURCES ARE
INCLUDED WITH ASSETS AND DEFERRED INFLOWS ARE INCLUDED WITH LIABILITIES.
AN ENTERPRISE FUND IS CONSIDERED MAJOR IF: (A) ASSETS, LIABILITIES,
REVENUES, OR EXPENSES ARE 10 PERCENT OR MORE OF THE TOTAL FOR ALL
ENTERPRISE FUNDS, AND (B) ITS ASSETS, LIABILITIES, REVENUES, OR EXPENSES ARE
5 PERCENT OR MORE OF THE TOTAL OF THE GOVERNMENTAL AND ENTERPRISE
CATEGORIES, COMBINED. WHEN APPLYING THESE RULES, DEFERRED OUTFLOWS OF
RESOURCES ARE INCLUDED WITH ASSETS AND DEFERRED INFLOWS ARE INCLUDED
WITH LIABILITIES.
• OPERATING ACTIVITIES ARE THOSE ASSOCIATED WITH OPERATING INCOME.
AS A RESULT, CASH FLOWS FROM INTEREST EXPENSE, INTEREST REVENUE
AND INVESTMENT INCOME DO NOT APPEAR IN THE OPERATING ACTIVITIES
SECTION.
2-5 SEVERAL DIFFERENCES EXIST BETWEEN THE GASB FORMAT CASH FLOW
STATEMENT AND THE FASB FORMAT REQUIRED OF COMMERCIAL BUSINESSES:
1) GASB REQUIRES GOVERNMENTS TO PREPARE CASH FLOWS FROM OPERATING
ACTIVITIES ON THE DIRECT METHOD.
2) THE RECONCILIATION OF INCOME TO CASH FLOWS FROM OPERATING
ACTIVITIES OF THE PROPRIETARY FUND, WHICH APPEARS IN THE BOTTOM
SECTION OF THE STATEMENT, BEGINS WITH OPERATING INCOME, NOT NET
INCOME (OR TOTAL CHANGE IN NET POSITION).
3) THE STATEMENT HAS FOUR SECTIONS, RATHER THAN THE THREE OBSERVED
IN FASB FORMAT STATEMENTS. THESE INCLUDE:
• NONCAPITAL RELATED FINANCING ACTIVITIES INVOLVE THE BORROWING
AND PAYMENT (INCLUDING INTEREST) OF LOANS FOR PURPOSES OTHER THAN
FINANCING CAPITAL ADDITIONS – CHIEFLY, BORROWING FOR OPERATIONS.
• CAPITAL AND RELATED FINANCING INCLUDE GRANTS AND DEBT
TRANSACTIONS (INCLUDING INTEREST) USED TO FINANCE CAPITAL
ADDITIONS.
• INVESTING ACTIVITIES INVOLVE THE ACQUISITION AND SALE OF
INVESTMENTS AS WELL AS CASH RECEIVED FROM INVESTMENT INCOME.
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Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-4
2-6. THE DIFFERENCE BETWEEN ASSETS AND LIABILITIES IS CALLED NET POSITION AND IS
REPORTED IN THREE CATEGORIES:
▪ NET INVESTMENT IN CAPITAL ASSETS IS COMPUTED BY TAKING THE CAPITAL
ASSETS, LESS ACCUMULATED DEPRECIATION, AND DEDUCTING OUTSTANDING DEBT
THAT IS RELATED TO THE FINANCING OF CAPITAL ASSETS. LIABILITIES INCURRED
TO FINANCE OPERATIONS (INCLUDING LONG-TERM LIABILITIES FOR COMPENSATED
ABSENCES OR EMPLOYEE BENEFITS) WOULD NOT BE DEDUCTED.
▪ RESTRICTED NET POSITION INCLUDE RESOURCES THAT ARE RESTRICTED BY: (A)
EXTERNAL PARTIES, INCLUDING CREDITORS, GRANTORS, CONTRIBUTORS, OR BY
LAWS OR REGULATIONS OF OTHER GOVERNMENTS, OR (2) LAWS OR
CONSTITUTIONAL PROVISIONS OF THE REPORTING GOVERNMENT.
▪ THE REMAINING AMOUNT, UNRESTRICTED NET POSITION, IS A “PLUG” FIGURE
THAT IS DETERMINED BY DEDUCTING THE BALANCES OF THE OTHER TWO
CATEGORIES FROM THE OVERALL EXCESS OF ASSETS OVER LIABILITIES.
2-4
2-6. THE DIFFERENCE BETWEEN ASSETS AND LIABILITIES IS CALLED NET POSITION AND IS
REPORTED IN THREE CATEGORIES:
▪ NET INVESTMENT IN CAPITAL ASSETS IS COMPUTED BY TAKING THE CAPITAL
ASSETS, LESS ACCUMULATED DEPRECIATION, AND DEDUCTING OUTSTANDING DEBT
THAT IS RELATED TO THE FINANCING OF CAPITAL ASSETS. LIABILITIES INCURRED
TO FINANCE OPERATIONS (INCLUDING LONG-TERM LIABILITIES FOR COMPENSATED
ABSENCES OR EMPLOYEE BENEFITS) WOULD NOT BE DEDUCTED.
▪ RESTRICTED NET POSITION INCLUDE RESOURCES THAT ARE RESTRICTED BY: (A)
EXTERNAL PARTIES, INCLUDING CREDITORS, GRANTORS, CONTRIBUTORS, OR BY
LAWS OR REGULATIONS OF OTHER GOVERNMENTS, OR (2) LAWS OR
CONSTITUTIONAL PROVISIONS OF THE REPORTING GOVERNMENT.
▪ THE REMAINING AMOUNT, UNRESTRICTED NET POSITION, IS A “PLUG” FIGURE
THAT IS DETERMINED BY DEDUCTING THE BALANCES OF THE OTHER TWO
CATEGORIES FROM THE OVERALL EXCESS OF ASSETS OVER LIABILITIES.
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Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-5
2-7.
CITY OF SOUTHERN SPRINGS
STATEMENT OF NET POSITION
AS OF APRIL 30, 2020
GOVERNMENTAL
ACTIVITIES
BUSINESS-TYPE
ACTIVITIES TOTAL
ASSETS:
CASH AND CASH EQUIVALENTS
RECEIVABLES
INVENTORIES
CAPITAL ASSETS, NET
TOTAL ASSETS
$4,050,000
650,000
10,600,000
15,300,000
$ 880,000
1,130,000
520,000
11,350,000
13,880,000
$4,930,000
1,780,000
520,000
21,950,000
29,180,000
LIABILITIES:
ACCOUNTS PAYABLE
NONCURRENT LIABILITIES
TOTAL LIABILITIES
550,000
5,550,000
6,100,000
659,000
3,210,000
3,869,000
1,209,000
8,760,000
9,969,000
NET POSITION:
NET INVESTMENT IN CAPITAL
ASSETS
RESTRICTED FOR DEBT SERVICE
UNRESTRICTED
TOTAL NET POSITION
5,050,000
754,000
3,396,000
$9,200,000
8,140,000
223,000
1,648,000
$10,011,000
13,190,000
977,000
5,044,000
$19,211,000
2-5
2-7.
CITY OF SOUTHERN SPRINGS
STATEMENT OF NET POSITION
AS OF APRIL 30, 2020
GOVERNMENTAL
ACTIVITIES
BUSINESS-TYPE
ACTIVITIES TOTAL
ASSETS:
CASH AND CASH EQUIVALENTS
RECEIVABLES
INVENTORIES
CAPITAL ASSETS, NET
TOTAL ASSETS
$4,050,000
650,000
10,600,000
15,300,000
$ 880,000
1,130,000
520,000
11,350,000
13,880,000
$4,930,000
1,780,000
520,000
21,950,000
29,180,000
LIABILITIES:
ACCOUNTS PAYABLE
NONCURRENT LIABILITIES
TOTAL LIABILITIES
550,000
5,550,000
6,100,000
659,000
3,210,000
3,869,000
1,209,000
8,760,000
9,969,000
NET POSITION:
NET INVESTMENT IN CAPITAL
ASSETS
RESTRICTED FOR DEBT SERVICE
UNRESTRICTED
TOTAL NET POSITION
5,050,000
754,000
3,396,000
$9,200,000
8,140,000
223,000
1,648,000
$10,011,000
13,190,000
977,000
5,044,000
$19,211,000
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Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-6
2-8. CITY OF NORTHERN PINES
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2020
PROGRAM REVENUES NET(EXPENSE)REVENUE AND CHANGE IN NET POSITION
FUNCTIONS/PROGRAMS EXPENSES
CHARGES FOR
SERVICES
OPERATING
GRANTS
GOVERNMENTAL
ACTIVITIES
BUSINESS-TYPE
ACTIVITIES TOTAL
GOVERNMENTAL ACTIVITIES:
GENERAL GOVERNMENT
PUBLIC SAFETY
PUBLIC WORKS
HEALTH AND SANITATION
CULTURE AND RECREATION
INTEREST ON LONG-TERM DEBT
TOTAL GOVERNMENTAL ACTIVITIES
$ 10,000,000
23,000,000
11,890,000
6,210,000
4,198,000
1,021,000
56,319,000
$1,110,000
1,410,000
2,355,000
2,198,000
________
7,073,000
$ 698,000
1,210,000
________
1,908,000
$(8,890,000)
(20,892,000)
(11,890,000)
(2,645,000)
(2,000,000)
( 1,021,000)
(47,338,000)
$ $(8,890,000)
(20,892,000)
(11,890,000)
(2,645,000)
(2,000,000)
(1,021,000)
(47,338,000)
BUSINESS-TYPE ACTIVITIES:
WATER AND SEWER SYSTEM
PARKING SYSTEM
TOTAL BUSINESS-TYPE ACTIVITIES
11,550,000
419,000
11,969,000
12,678,000
298,000
12,976,000
----
----
----
----
----
----
1,128,000
(121,000)
1,007,000
1,128,000
(1 21,000)
1,007,000
TOTAL – PRIMARY GOVERNMENT $68,288,000 $20,049,000 $1,908,000 (47,338,000) 1,007,000 (46,331,000)
GENERAL REVENUES:
PROPERTY TAXES
SALES TAXES
INVESTMENT EARNINGS
SPECIAL ITEM-GAIN ON SALE OF LAND
TRANSFERS
TOTAL GENERAL REVENUES,
SPECIAL ITEMS, AND TRANSFERS
CHANGE IN NET POSITION
NET POSITION, BEGINNING OF YEAR
NET POSITION, END OF YEAR
27,112,000
20,698,000
1,250,000
(888,000)
48,172,000
834,000
12,222,000
$13,056,000
319,000
888,000
1,207,000
2,214,000
22,333,000
$24,547,000
27,112,000
20,698,000
319,000
1,250,000
-
49,379,000
3,048,000
34,555,000
$37,603,000
2-6
2-8. CITY OF NORTHERN PINES
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2020
PROGRAM REVENUES NET(EXPENSE)REVENUE AND CHANGE IN NET POSITION
FUNCTIONS/PROGRAMS EXPENSES
CHARGES FOR
SERVICES
OPERATING
GRANTS
GOVERNMENTAL
ACTIVITIES
BUSINESS-TYPE
ACTIVITIES TOTAL
GOVERNMENTAL ACTIVITIES:
GENERAL GOVERNMENT
PUBLIC SAFETY
PUBLIC WORKS
HEALTH AND SANITATION
CULTURE AND RECREATION
INTEREST ON LONG-TERM DEBT
TOTAL GOVERNMENTAL ACTIVITIES
$ 10,000,000
23,000,000
11,890,000
6,210,000
4,198,000
1,021,000
56,319,000
$1,110,000
1,410,000
2,355,000
2,198,000
________
7,073,000
$ 698,000
1,210,000
________
1,908,000
$(8,890,000)
(20,892,000)
(11,890,000)
(2,645,000)
(2,000,000)
( 1,021,000)
(47,338,000)
$ $(8,890,000)
(20,892,000)
(11,890,000)
(2,645,000)
(2,000,000)
(1,021,000)
(47,338,000)
BUSINESS-TYPE ACTIVITIES:
WATER AND SEWER SYSTEM
PARKING SYSTEM
TOTAL BUSINESS-TYPE ACTIVITIES
11,550,000
419,000
11,969,000
12,678,000
298,000
12,976,000
----
----
----
----
----
----
1,128,000
(121,000)
1,007,000
1,128,000
(1 21,000)
1,007,000
TOTAL – PRIMARY GOVERNMENT $68,288,000 $20,049,000 $1,908,000 (47,338,000) 1,007,000 (46,331,000)
GENERAL REVENUES:
PROPERTY TAXES
SALES TAXES
INVESTMENT EARNINGS
SPECIAL ITEM-GAIN ON SALE OF LAND
TRANSFERS
TOTAL GENERAL REVENUES,
SPECIAL ITEMS, AND TRANSFERS
CHANGE IN NET POSITION
NET POSITION, BEGINNING OF YEAR
NET POSITION, END OF YEAR
27,112,000
20,698,000
1,250,000
(888,000)
48,172,000
834,000
12,222,000
$13,056,000
319,000
888,000
1,207,000
2,214,000
22,333,000
$24,547,000
27,112,000
20,698,000
319,000
1,250,000
-
49,379,000
3,048,000
34,555,000
$37,603,000
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Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-7
2-9
CITY OF EASTERN SHORES
GENERAL FUND STATEMENTS OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCE
FOR THE YEAR ENDED SEPTEMBER 30, 2020
REVENUES:
PROPERTY TAXES $27,520,000
SALES TAXES 13,816,000
FEES AND FINES 1,324,000
LICENSES AND PERMITS 1,721,000
INTERGOVERNMENTAL REVENUES 2,368,000
INVESTMENT EARNINGS 654,000
TOTAL REVENUES 47,403,000
EXPENDITURES:
CURRENT:
GENERAL GOVERNMENT $ 11,725,000
PUBLIC SAFETY 24,444,000
PUBLIC WORKS 6,211,000
HEALTH AND SANITATION 1,163,000
CULTURE AND RECREATION 2,154,000
TOTAL EXPENDITURES 45,697,000
EXCESS OF REVENUES OVER EXPENDITURES 1,706,000
OTHER FINANCING SOURCES (USES):
TRANSFER TO CAPITAL PROJECT FUND (1,529,000)
TOTAL OTHER FINANCING SOURCES (USES) (1,529,000)
SPECIAL ITEM: PROCEEDS FROM SALE OF LAND 821,000
NET CHANGE IN FUND BALANCE 998,000
FUND BALANCE, BEGINNING OF YEAR 1,750,000
FUND BALANCE, END OF YEAR $2,748,000
2-7
2-9
CITY OF EASTERN SHORES
GENERAL FUND STATEMENTS OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCE
FOR THE YEAR ENDED SEPTEMBER 30, 2020
REVENUES:
PROPERTY TAXES $27,520,000
SALES TAXES 13,816,000
FEES AND FINES 1,324,000
LICENSES AND PERMITS 1,721,000
INTERGOVERNMENTAL REVENUES 2,368,000
INVESTMENT EARNINGS 654,000
TOTAL REVENUES 47,403,000
EXPENDITURES:
CURRENT:
GENERAL GOVERNMENT $ 11,725,000
PUBLIC SAFETY 24,444,000
PUBLIC WORKS 6,211,000
HEALTH AND SANITATION 1,163,000
CULTURE AND RECREATION 2,154,000
TOTAL EXPENDITURES 45,697,000
EXCESS OF REVENUES OVER EXPENDITURES 1,706,000
OTHER FINANCING SOURCES (USES):
TRANSFER TO CAPITAL PROJECT FUND (1,529,000)
TOTAL OTHER FINANCING SOURCES (USES) (1,529,000)
SPECIAL ITEM: PROCEEDS FROM SALE OF LAND 821,000
NET CHANGE IN FUND BALANCE 998,000
FUND BALANCE, BEGINNING OF YEAR 1,750,000
FUND BALANCE, END OF YEAR $2,748,000
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Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-8
2-10.
CITY OF WESTERN SANDS
WATER AND SEWER FUND
STATEMENT OF REVENUES, EXPENSES,
AND CHANGES IN FUND NET POSITION
YEAR ENDED DECEMBER 31, 2020
OPERATING REVENUES:
CHARGES FOR SERVICES $ 17,387,000
OPERATING EXPENSES:
PERSONNEL SERVICES $ 5,877,000
CONTRACTUAL SERVICES 2,995,000
UTILITIES 888,000
REPAIRS AND MAINTENANCE 1,992,000
DEPRECIATION 5,422,000
TOTAL OPERATING EXPENSES 17,174,000
OPERATING INCOME 213,000
NONOPERATING REVENUES (EXPENSES):
INTEREST REVENUE
STATE AID
29,000
100,000
INTEREST EXPENSE (104,000)
TOTAL NONOPERATING REVENUES AND EXPENSES 25,000
INCOME (LOSS) BEFORE CONTRIBUTIONS AND
TRANSFERS
238,000
CAPITAL CONTRIBUTIONS 1,632,000
TRANSFER TO GENERAL FUND (365,000)
CHANGE IN NET POSITION 1,505,000
NET POSITION, BEGINNING OF YEAR 1,800,000
NET POSITION, END OF YEAR $3,305,000
2-8
2-10.
CITY OF WESTERN SANDS
WATER AND SEWER FUND
STATEMENT OF REVENUES, EXPENSES,
AND CHANGES IN FUND NET POSITION
YEAR ENDED DECEMBER 31, 2020
OPERATING REVENUES:
CHARGES FOR SERVICES $ 17,387,000
OPERATING EXPENSES:
PERSONNEL SERVICES $ 5,877,000
CONTRACTUAL SERVICES 2,995,000
UTILITIES 888,000
REPAIRS AND MAINTENANCE 1,992,000
DEPRECIATION 5,422,000
TOTAL OPERATING EXPENSES 17,174,000
OPERATING INCOME 213,000
NONOPERATING REVENUES (EXPENSES):
INTEREST REVENUE
STATE AID
29,000
100,000
INTEREST EXPENSE (104,000)
TOTAL NONOPERATING REVENUES AND EXPENSES 25,000
INCOME (LOSS) BEFORE CONTRIBUTIONS AND
TRANSFERS
238,000
CAPITAL CONTRIBUTIONS 1,632,000
TRANSFER TO GENERAL FUND (365,000)
CHANGE IN NET POSITION 1,505,000
NET POSITION, BEGINNING OF YEAR 1,800,000
NET POSITION, END OF YEAR $3,305,000
Loading page 16...
Chapter 02 - Overview of Financial Reporting for State and Local Governments
2-9
2-11.
# INFORMATION ITEM STATEMENT $ AMOUNT
A. TOTAL CAPITAL OUTLAY FOR THE
COURTHOUSE RENOVATION
STATEMENT OF REVENUES
EXPENDITURES & CHANGES IN FUND
BALANCE – GOVERNMENTAL FUNDS $ 10,924,818
B. TOTAL CASH PAID FOR CAPITAL ADDITIONS
FOR THE SOLID WASTE FUND
STATEMENT OF CASH FLOWS-
PROPRIETARY FUNDS $ 456,179
C. INTEREST PAID (NOT EXPENSE) ON
GENERAL LONG-TERM DEBT
STATEMENT OF REVENUES
EXPENDITURES & CHANGES IN FUND
BALANCE – GOVERNMENTAL FUNDS
$ 924,818
D. INTEREST PAID (NOT EXPENSE) ON WATER
DEPARTMENT DEBT
STATEMENT OF CASH FLOWS-
PROPRIETARY FUNDS $ 535,567
E. CAPITAL ASSET (NET) FOR THE
GOVERNMENT’S COMPONENT UNITS
STATEMENT OF NET POSITION
(GOVERNMENT-WIDE) $ 11,170,900
F. CONTRIBUTIONS RECEIVED FOR USE BY THE
PRIVATE PURPOSE TRUST
STATEMENT OF CHANGES IN FIDUCIARY
NET POSITION $ 100,000
G. NONCURRENT LIABILITIES ASSOCIATED
WITH GOVERNMENTAL ACTIVITIES THAT
ARE DUE IN MORE THAN ONE YEAR.
STATEMENT OF NET POSITION
(GOVERNMENT-WIDE) $ 39,834,882
H. NONCASH CONTRIBUTIONS OF CAPITAL
ASSETS FOR THE WATER DEPARTMENT.
STATEMENT OF CASH FLOWS-
PROPRIETARY FUNDS
ALSO, STATEMENT OF REVENUES,
EXPENSES AND CHANGES IN FUND NET
POSITION: PROPRIETARY FUNDS
$ 3,085,946
2-12.
# INFORMATION ITEM STATEMENTS $ AMOUNT
A. TOTAL FUND BALANCE OF THE
SPECIAL REVENUE FUND
STATEMENT OF REVENUES
EXPENDITURES & CHANGES
IN FUND BALANCE –
GOVERNMENTAL FUNDS
BALANCE SHEET –
GOVERNMENTAL
FUNDS
$ 572,014
B. NET POSITION AVAILABLE FOR
EMPLOYEE PENSIONS
STATEMENT OF CHANGES IN
FIDUCIARY NET POSITION
STATEMENT OF
FIDUCIARY NET
POSITION
$ 10,983,590
C. OPERATING INCOME FOR THE
INTERNAL SERVICE FUNDS
STATEMENT OF REVENUES,
EXPENSES, AND CHANGES IN
FUND NET POSITION –
PROPRIETARY FUNDS
STATEMENT OF
CASH FLOWS-
PROPRIETARY
FUNDS
$ 23,822
D. NET POSITION OF THE PRIMARY
GOVERNMENT
STATEMENT OF NET
POSITION (GOVERNMENT-
WIDE)
STATEMENT OF
ACTIVITIES
(GOVERNMENT-
WIDE)
$ 86,285,455
2-9
2-11.
# INFORMATION ITEM STATEMENT $ AMOUNT
A. TOTAL CAPITAL OUTLAY FOR THE
COURTHOUSE RENOVATION
STATEMENT OF REVENUES
EXPENDITURES & CHANGES IN FUND
BALANCE – GOVERNMENTAL FUNDS $ 10,924,818
B. TOTAL CASH PAID FOR CAPITAL ADDITIONS
FOR THE SOLID WASTE FUND
STATEMENT OF CASH FLOWS-
PROPRIETARY FUNDS $ 456,179
C. INTEREST PAID (NOT EXPENSE) ON
GENERAL LONG-TERM DEBT
STATEMENT OF REVENUES
EXPENDITURES & CHANGES IN FUND
BALANCE – GOVERNMENTAL FUNDS
$ 924,818
D. INTEREST PAID (NOT EXPENSE) ON WATER
DEPARTMENT DEBT
STATEMENT OF CASH FLOWS-
PROPRIETARY FUNDS $ 535,567
E. CAPITAL ASSET (NET) FOR THE
GOVERNMENT’S COMPONENT UNITS
STATEMENT OF NET POSITION
(GOVERNMENT-WIDE) $ 11,170,900
F. CONTRIBUTIONS RECEIVED FOR USE BY THE
PRIVATE PURPOSE TRUST
STATEMENT OF CHANGES IN FIDUCIARY
NET POSITION $ 100,000
G. NONCURRENT LIABILITIES ASSOCIATED
WITH GOVERNMENTAL ACTIVITIES THAT
ARE DUE IN MORE THAN ONE YEAR.
STATEMENT OF NET POSITION
(GOVERNMENT-WIDE) $ 39,834,882
H. NONCASH CONTRIBUTIONS OF CAPITAL
ASSETS FOR THE WATER DEPARTMENT.
STATEMENT OF CASH FLOWS-
PROPRIETARY FUNDS
ALSO, STATEMENT OF REVENUES,
EXPENSES AND CHANGES IN FUND NET
POSITION: PROPRIETARY FUNDS
$ 3,085,946
2-12.
# INFORMATION ITEM STATEMENTS $ AMOUNT
A. TOTAL FUND BALANCE OF THE
SPECIAL REVENUE FUND
STATEMENT OF REVENUES
EXPENDITURES & CHANGES
IN FUND BALANCE –
GOVERNMENTAL FUNDS
BALANCE SHEET –
GOVERNMENTAL
FUNDS
$ 572,014
B. NET POSITION AVAILABLE FOR
EMPLOYEE PENSIONS
STATEMENT OF CHANGES IN
FIDUCIARY NET POSITION
STATEMENT OF
FIDUCIARY NET
POSITION
$ 10,983,590
C. OPERATING INCOME FOR THE
INTERNAL SERVICE FUNDS
STATEMENT OF REVENUES,
EXPENSES, AND CHANGES IN
FUND NET POSITION –
PROPRIETARY FUNDS
STATEMENT OF
CASH FLOWS-
PROPRIETARY
FUNDS
$ 23,822
D. NET POSITION OF THE PRIMARY
GOVERNMENT
STATEMENT OF NET
POSITION (GOVERNMENT-
WIDE)
STATEMENT OF
ACTIVITIES
(GOVERNMENT-
WIDE)
$ 86,285,455
Loading page 17...
Chapter 03 – Modified Accrual Accounting
3-1
`
CHAPTER 3: MODIFIED ACCRUAL ACCOUNTING:
INCLUDING THE ROLE OF FUND BALANCES AND BUDGETARY AUTHORITY
3-1. THE SOLUTION TO THIS AND THE FIRST EXERCISE OF CHAPTERS 1 AND 2 AND 4 THROUGH 9
WILL DIFFER FROM STUDENT TO STUDENT ASSUMING EACH HAS A DIFFERENT CAFR.
3-2.
THE BUDGET STABILIZATION FUND’S PURPOSE IS TOO VAGUE AND MUST BE REPORTED WITH
UNASSIGNED FUND BALANCE.
3-3. RAINY DAY FUNDS ARE CLASSIFIED AS COMMITTED ONLY IF THEY ARE CREATED BY A
RESOLUTION OR ORDINANCE THAT IDENTIFIES THE SPECIFIC CIRCUMSTANCES UNDER WHICH
THE RESOURCES MAY BE EXPENDED. RAINY DAY AMOUNTS THAT ARE AVAILABLE “IN
EMERGENCIES” OR IN PERIODS OF “REVENUE SHORTFALLS” WOULD NOT BE CLASSIFIED AS
COMMITTED UNLESS THE EMERGENCY OR SHORTFALL CONDITION IS SPECIFIED AND OF A
MAGNITUDE TO DISTINGUISH IT FROM EVENTS THAT OCCUR ROUTINELY.
RAINY DAY FUNDS NOT MEETING THESE CONDITIONS ARE REPORTED AS UNASSIGNED FUND
BALANCE IN THE GENERAL FUND.
CITY OF OXBOW
PARTIAL BALANCE SHEET – GENERAL FUND
AS OF DECEMBER 31, 2020
FUND BALANCES
NONSPENDABLE
- PREPAID INSURANCE 7,000
RESTRICTED
- INTERGOVERNMENTAL GRANTS 199,000
- EMERGENCY SERVICES 26,000
COMMITTED
- RAINY DAY FUND 600,000
- CAPITAL PROJECTS 275,000
ASSIGNED -
UNASSIGNED 452,000
TOTAL FUND BALANCE $ 1,559,000
3-1
`
CHAPTER 3: MODIFIED ACCRUAL ACCOUNTING:
INCLUDING THE ROLE OF FUND BALANCES AND BUDGETARY AUTHORITY
3-1. THE SOLUTION TO THIS AND THE FIRST EXERCISE OF CHAPTERS 1 AND 2 AND 4 THROUGH 9
WILL DIFFER FROM STUDENT TO STUDENT ASSUMING EACH HAS A DIFFERENT CAFR.
3-2.
THE BUDGET STABILIZATION FUND’S PURPOSE IS TOO VAGUE AND MUST BE REPORTED WITH
UNASSIGNED FUND BALANCE.
3-3. RAINY DAY FUNDS ARE CLASSIFIED AS COMMITTED ONLY IF THEY ARE CREATED BY A
RESOLUTION OR ORDINANCE THAT IDENTIFIES THE SPECIFIC CIRCUMSTANCES UNDER WHICH
THE RESOURCES MAY BE EXPENDED. RAINY DAY AMOUNTS THAT ARE AVAILABLE “IN
EMERGENCIES” OR IN PERIODS OF “REVENUE SHORTFALLS” WOULD NOT BE CLASSIFIED AS
COMMITTED UNLESS THE EMERGENCY OR SHORTFALL CONDITION IS SPECIFIED AND OF A
MAGNITUDE TO DISTINGUISH IT FROM EVENTS THAT OCCUR ROUTINELY.
RAINY DAY FUNDS NOT MEETING THESE CONDITIONS ARE REPORTED AS UNASSIGNED FUND
BALANCE IN THE GENERAL FUND.
CITY OF OXBOW
PARTIAL BALANCE SHEET – GENERAL FUND
AS OF DECEMBER 31, 2020
FUND BALANCES
NONSPENDABLE
- PREPAID INSURANCE 7,000
RESTRICTED
- INTERGOVERNMENTAL GRANTS 199,000
- EMERGENCY SERVICES 26,000
COMMITTED
- RAINY DAY FUND 600,000
- CAPITAL PROJECTS 275,000
ASSIGNED -
UNASSIGNED 452,000
TOTAL FUND BALANCE $ 1,559,000
Loading page 18...
Chapter 03 – Modified Accrual Accounting
3-2
3-4. DEBITS CREDITS
A. ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE
10,800,000
9,400,000
1,400,000
B. ESTIMATED REVENUES CONTROL
BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
9,700,000
400,000
10,100,000
C. ESTIMATED REVENUES CONTROL
ESTIMATED OTHER FINANCING SOURCES
CONTROL
APPROPRIATIONS CONTROL
ESTIMATED OTHER FINANCING
USES CONTROL
BUDGETARY FUND BALANCE
10,200,000
1,300,000
9,700,000
900,000
900,000
D. ESTIMATED REVENUES CONTROL
ESTIMATED OTHER FINANCING
SOURCES CONTROL
BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
ESTIMATED OTHER FINANCING
USES CONTROL
9,900,000
1,100,000
100,000
10,000,000
1,100,000
3-2
3-4. DEBITS CREDITS
A. ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE
10,800,000
9,400,000
1,400,000
B. ESTIMATED REVENUES CONTROL
BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
9,700,000
400,000
10,100,000
C. ESTIMATED REVENUES CONTROL
ESTIMATED OTHER FINANCING SOURCES
CONTROL
APPROPRIATIONS CONTROL
ESTIMATED OTHER FINANCING
USES CONTROL
BUDGETARY FUND BALANCE
10,200,000
1,300,000
9,700,000
900,000
900,000
D. ESTIMATED REVENUES CONTROL
ESTIMATED OTHER FINANCING
SOURCES CONTROL
BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
ESTIMATED OTHER FINANCING
USES CONTROL
9,900,000
1,100,000
100,000
10,000,000
1,100,000
Loading page 19...
Chapter 03 – Modified Accrual Accounting
3-3
3-5.
VILLAGE OF SYCAMORE
GENERAL JOURNAL
DEBITS CREDITS
A. ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE
1,120,000
987,000
133,000
B. CASH
REVENUES CONTROL
1,105,000
1,105,000
C. ENCUMBRANCES CONTROL
BUDGETARY FUND BALANCE -
RESERVE FOR ENCUMBRANCES
479,000
479,000
D. BUDGETARY FUND BALANCE -
RESERVE FOR ENCUMBRANCES
ENCUMBRANCES CONTROL
EXPENDITURES CONTROL
ACCOUNTS PAYABLE
470,500
470,000
470,500
470,000
E. EXPENDITURES CONTROL
ACCOUNTS PAYABLE
513,000
513,000
F. ACCOUNTS PAYABLE
CASH
983,000
983,000
3-3
3-5.
VILLAGE OF SYCAMORE
GENERAL JOURNAL
DEBITS CREDITS
A. ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE
1,120,000
987,000
133,000
B. CASH
REVENUES CONTROL
1,105,000
1,105,000
C. ENCUMBRANCES CONTROL
BUDGETARY FUND BALANCE -
RESERVE FOR ENCUMBRANCES
479,000
479,000
D. BUDGETARY FUND BALANCE -
RESERVE FOR ENCUMBRANCES
ENCUMBRANCES CONTROL
EXPENDITURES CONTROL
ACCOUNTS PAYABLE
470,500
470,000
470,500
470,000
E. EXPENDITURES CONTROL
ACCOUNTS PAYABLE
513,000
513,000
F. ACCOUNTS PAYABLE
CASH
983,000
983,000
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Chapter 03 – Modified Accrual Accounting
3-4
3-6.
A. (1) EXCHANGE TRANSACTIONS ARE TRANSACTIONS “IN WHICH EACH PARTY RECEIVES
AND GIVES UP ESSENTIALLY EQUAL VALUES.” (2) NONEXCHANGE TRANSACTIONS ARE
TRANSACTIONS “IN WHICH A GOVERNMENT RECEIVES (OR GIVES) VALUE WITHOUT
DIRECTLY GIVING (OR RECEIVING) EQUAL VALUE IN EXCHANGE.”
B. THE FOUR ELIGIBILITY REQUIREMENTS ARE
(1) REQUIRED CHARACTERISTICS OF RECIPIENTS: REQUIRED CHARACTERISTICS OF
RECIPIENTS MEANS THAT RECIPIENTS MUST BE THE TYPE SPECIFIED IN THE LEGISLATION OR
GRANT AGREEMENTS.
(2) TIME REQUIREMENTS: IF A DONOR SPECIFIES THAT A GRANT BE EXPENDED BY A
RECIPIENT IN A FUTURE PERIOD, THEN THE RECIPIENT WOULD NOT RECOGNIZE THE
RECEIVABLE OR THE REVENUE UNTIL THAT FUTURE PERIOD
(3) REIMBURSEMENTS: REIMBURSEMENT GRANTS REQUIRE THAT QUALIFYING
EXPENDITURES MUST BE INCURRED BY A RECIPIENT BEFORE A REVENUE CAN BE
RECOGNIZED.
(4) CONTINGENCIES: RESOURCES PLEDGED THAT HAVE A CONTINGENCY ATTACHED ARE
NOT TO BE RECOGNIZED UNTIL THE CONTINGENCY HAS BEEN MET.
C. THE FOUR CLASSES OF NONEXCHANGE REVENUES ARE (1) IMPOSED NONEXCHANGE
TRANSACTIONS, (2) DERIVED TAX REVENUES, (3) GOVERNMENT-MANDATED NONEXCHANGE
TRANSACTIONS, AND (4) VOLUNTARY NONEXCHANGE TRANSACTIONS.
AN EXAMPLE OF IMPOSED NONEXCHANGE REVENUES WOULD BE PROPERTY TAXES.
ASSETS FROM PROPERTY TAXES ARE RECOGNIZED WHEN AN ENFORCEABLE LEGAL CLAIM
EXISTS. REVENUES WOULD BE RECOGNIZED IN THE PERIOD FOR WHICH THE TAXES ARE
LEVIED.
EXAMPLES OF DERIVED TAX REVENUES INCLUDE SALES, INCOME, AND MOTOR FUEL TAXES.
FOR DERIVED TAX REVENUES, ASSETS ARE RECOGNIZED WHEN THE TAX IS IMPOSED. THE
TAX IS RECOGNIZED AS REVENUE AT THE SAME TIME AS THE ASSET, PROVIDING THAT THE
UNDERLYING TRANSACTION HAS TAKEN PLACE.
AN EXAMPLE OF GOVERNMENT-MANDATED NONEXCHANGE TRANSACTIONS WOULD BE
STATE FUNDING FOR MAINSTREAMING HANDICAPPED CHILDREN IN CLASSROOMS,
ACCOMPANIED BY STATE LAW THAT MAINSTREAMING TAKE PLACE. ASSETS AND REVENUES
SHOULD BE RECOGNIZED WHEN ELIGIBILITY REQUIREMENTS HAVE BEEN MET. AN EXAMPLE
OF A VOLUNTARY NONEXCHANGE TRANSACTION WOULD BE A CONTRIBUTION OR GRANT
TO SUPPORT A PROGRAM THAT WAS VOLUNTARILY ENTERED INTO BY THE GOVERNMENT.
NONEXCHANGE TRANSACTIONS SHOULD BE RECOGNIZED AS ASSETS AND REVENUES WHEN
ELIGIBILITY REQUIREMENTS HAVE BEEN MET.
3-4
3-6.
A. (1) EXCHANGE TRANSACTIONS ARE TRANSACTIONS “IN WHICH EACH PARTY RECEIVES
AND GIVES UP ESSENTIALLY EQUAL VALUES.” (2) NONEXCHANGE TRANSACTIONS ARE
TRANSACTIONS “IN WHICH A GOVERNMENT RECEIVES (OR GIVES) VALUE WITHOUT
DIRECTLY GIVING (OR RECEIVING) EQUAL VALUE IN EXCHANGE.”
B. THE FOUR ELIGIBILITY REQUIREMENTS ARE
(1) REQUIRED CHARACTERISTICS OF RECIPIENTS: REQUIRED CHARACTERISTICS OF
RECIPIENTS MEANS THAT RECIPIENTS MUST BE THE TYPE SPECIFIED IN THE LEGISLATION OR
GRANT AGREEMENTS.
(2) TIME REQUIREMENTS: IF A DONOR SPECIFIES THAT A GRANT BE EXPENDED BY A
RECIPIENT IN A FUTURE PERIOD, THEN THE RECIPIENT WOULD NOT RECOGNIZE THE
RECEIVABLE OR THE REVENUE UNTIL THAT FUTURE PERIOD
(3) REIMBURSEMENTS: REIMBURSEMENT GRANTS REQUIRE THAT QUALIFYING
EXPENDITURES MUST BE INCURRED BY A RECIPIENT BEFORE A REVENUE CAN BE
RECOGNIZED.
(4) CONTINGENCIES: RESOURCES PLEDGED THAT HAVE A CONTINGENCY ATTACHED ARE
NOT TO BE RECOGNIZED UNTIL THE CONTINGENCY HAS BEEN MET.
C. THE FOUR CLASSES OF NONEXCHANGE REVENUES ARE (1) IMPOSED NONEXCHANGE
TRANSACTIONS, (2) DERIVED TAX REVENUES, (3) GOVERNMENT-MANDATED NONEXCHANGE
TRANSACTIONS, AND (4) VOLUNTARY NONEXCHANGE TRANSACTIONS.
AN EXAMPLE OF IMPOSED NONEXCHANGE REVENUES WOULD BE PROPERTY TAXES.
ASSETS FROM PROPERTY TAXES ARE RECOGNIZED WHEN AN ENFORCEABLE LEGAL CLAIM
EXISTS. REVENUES WOULD BE RECOGNIZED IN THE PERIOD FOR WHICH THE TAXES ARE
LEVIED.
EXAMPLES OF DERIVED TAX REVENUES INCLUDE SALES, INCOME, AND MOTOR FUEL TAXES.
FOR DERIVED TAX REVENUES, ASSETS ARE RECOGNIZED WHEN THE TAX IS IMPOSED. THE
TAX IS RECOGNIZED AS REVENUE AT THE SAME TIME AS THE ASSET, PROVIDING THAT THE
UNDERLYING TRANSACTION HAS TAKEN PLACE.
AN EXAMPLE OF GOVERNMENT-MANDATED NONEXCHANGE TRANSACTIONS WOULD BE
STATE FUNDING FOR MAINSTREAMING HANDICAPPED CHILDREN IN CLASSROOMS,
ACCOMPANIED BY STATE LAW THAT MAINSTREAMING TAKE PLACE. ASSETS AND REVENUES
SHOULD BE RECOGNIZED WHEN ELIGIBILITY REQUIREMENTS HAVE BEEN MET. AN EXAMPLE
OF A VOLUNTARY NONEXCHANGE TRANSACTION WOULD BE A CONTRIBUTION OR GRANT
TO SUPPORT A PROGRAM THAT WAS VOLUNTARILY ENTERED INTO BY THE GOVERNMENT.
NONEXCHANGE TRANSACTIONS SHOULD BE RECOGNIZED AS ASSETS AND REVENUES WHEN
ELIGIBILITY REQUIREMENTS HAVE BEEN MET.
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Chapter 03 – Modified Accrual Accounting
3-5
3-7.
A. UNDER MODIFIED ACCRUAL ACCOUNTING, REVENUES SHOULD BE RECOGNIZED WHEN
MEASURABLE AND AVAILABLE TO FINANCE EXPENDITURES OF THE CURRENT PERIOD.
PROPERTY TAXES ARE CONSIDERED TO BE AVAILABLE WHEN RECEIVED NO MORE THAN 60
DAYS AFTER THE END OF A FISCAL YEAR.
B. UNDER MODIFIED ACCRUAL ACCOUNTING, EXPENDITURES ARE DECREASES IN NET
FINANCIAL RESOURCES AND ARE GENERALLY RECOGNIZED WHEN FUND LIABILITIES ARE
INCURRED. EXPENDITURES MAY BE FOR CURRENT PURPOSES, CAPITAL OUTLAY, AND DEBT
SERVICE.
3-8. (1) GAAP BASIS IS THE ACCOUNTING PRINCIPLES USED TO REPORT IN THE GENERAL FUND
BALANCE SHEET AND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND
BALANCE. IT IS THE RESULT OF APPLYING GASB STANDARDS FOR GOVERNMENTAL FUND
REPORTING. (2) BUDGETARY BASIS IS THE BASIS USED TO REPORT THE “ACTUAL” COLUMN
IN THE BUDGETARY COMPARISON SCHEDULE. THE ACTUAL COLUMN OF THE BUDGETARY
COMPARISON SCHEDULE IS TO BE REPORTED ON THE BASIS REQUIRED BY LAW FOR BUDGET
PREPARATION, EVEN IF THAT BASIS DIFFERS FROM GASB STANDARDS. TYPICALLY
BUDGETARY BASIS DIFFERS FROM THE GAAP BASIS IN THE TIMING OF THE RECOGNITION OF
REVENUES AND EXPENDITURES.
3-5
3-7.
A. UNDER MODIFIED ACCRUAL ACCOUNTING, REVENUES SHOULD BE RECOGNIZED WHEN
MEASURABLE AND AVAILABLE TO FINANCE EXPENDITURES OF THE CURRENT PERIOD.
PROPERTY TAXES ARE CONSIDERED TO BE AVAILABLE WHEN RECEIVED NO MORE THAN 60
DAYS AFTER THE END OF A FISCAL YEAR.
B. UNDER MODIFIED ACCRUAL ACCOUNTING, EXPENDITURES ARE DECREASES IN NET
FINANCIAL RESOURCES AND ARE GENERALLY RECOGNIZED WHEN FUND LIABILITIES ARE
INCURRED. EXPENDITURES MAY BE FOR CURRENT PURPOSES, CAPITAL OUTLAY, AND DEBT
SERVICE.
3-8. (1) GAAP BASIS IS THE ACCOUNTING PRINCIPLES USED TO REPORT IN THE GENERAL FUND
BALANCE SHEET AND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND
BALANCE. IT IS THE RESULT OF APPLYING GASB STANDARDS FOR GOVERNMENTAL FUND
REPORTING. (2) BUDGETARY BASIS IS THE BASIS USED TO REPORT THE “ACTUAL” COLUMN
IN THE BUDGETARY COMPARISON SCHEDULE. THE ACTUAL COLUMN OF THE BUDGETARY
COMPARISON SCHEDULE IS TO BE REPORTED ON THE BASIS REQUIRED BY LAW FOR BUDGET
PREPARATION, EVEN IF THAT BASIS DIFFERS FROM GASB STANDARDS. TYPICALLY
BUDGETARY BASIS DIFFERS FROM THE GAAP BASIS IN THE TIMING OF THE RECOGNITION OF
REVENUES AND EXPENDITURES.
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Chapter 03 – Modified Accrual Accounting
3-6
3-9.
CITY OF SOUTH RIVER
APPROPRIATION, EXPENDITURES, AND ENCUMBRANCES LEDGER
GENERAL FUND: PUBLIC SAFETY – POLICE
MONTH: JULY, 2020
UNEXPENDED
APPROPRIATION
BALANCE
TRANSACTION REFERENCE APPROPRIATIONS ENCUMBRANCES EXPENDITURES = SUM
1 BUDGET ($8,900,000) ($8,900,000)
2
PURCHASE ORDERS
ISSUED $520,000 ($8,380,000)
3
INVOICES RECEIVED
AND APPROVED FOR
PAYMENT ($480,000) $478,000 ($8,382,000)
4 PAYROLLS $302,000 ($8,080,000)
5 BUDGET REVISION $50,000 ($8,030,000)
TOTAL ($8,850,000) $40,000 $ 780,000 ($8,030,000)
$ AMOUNTS IN ( ) DENOTE CREDITS
3-10.
1. THE CITY APPROVED A BUDGET PROVIDING APPROPRIATIONS TO THE PUBLIC SAFETY
DEPARTMENT IN THE AMOUNT OF $ 300,000.
2. PURCHASE ORDERS TOTALING $ 19,500 WERE PLACED AND ENCUMBRANCES RECORDED.
3. INVOICES TOTALING $ 15,500 ARE RECEIVED AND APPROVED FOR PAYMENT. THESE ITEMS
WERE PREVIOUSLY ENCUMBERED IN THE AMOUNT OF $ 16,000. $ 3,500 OF THE PURCHASE
ORDERS FROM #2 ARE STILL OUTSTANDING.
4. EXPENDITURES TOTALING $ 11,000 ARE RECORDED. SINCE THESE AMOUNTS WERE NOT
PREVIOUSLY ENCUMBERED, THEY ARE LIKELY SALARIES OR OTHER RECURRING ITEMS
5. THE APPROPRIATIONS BUDGET IS REDUCED BY $ 18,000 AS A RESULT OF A BUDGET REVISION.
3-6
3-9.
CITY OF SOUTH RIVER
APPROPRIATION, EXPENDITURES, AND ENCUMBRANCES LEDGER
GENERAL FUND: PUBLIC SAFETY – POLICE
MONTH: JULY, 2020
UNEXPENDED
APPROPRIATION
BALANCE
TRANSACTION REFERENCE APPROPRIATIONS ENCUMBRANCES EXPENDITURES = SUM
1 BUDGET ($8,900,000) ($8,900,000)
2
PURCHASE ORDERS
ISSUED $520,000 ($8,380,000)
3
INVOICES RECEIVED
AND APPROVED FOR
PAYMENT ($480,000) $478,000 ($8,382,000)
4 PAYROLLS $302,000 ($8,080,000)
5 BUDGET REVISION $50,000 ($8,030,000)
TOTAL ($8,850,000) $40,000 $ 780,000 ($8,030,000)
$ AMOUNTS IN ( ) DENOTE CREDITS
3-10.
1. THE CITY APPROVED A BUDGET PROVIDING APPROPRIATIONS TO THE PUBLIC SAFETY
DEPARTMENT IN THE AMOUNT OF $ 300,000.
2. PURCHASE ORDERS TOTALING $ 19,500 WERE PLACED AND ENCUMBRANCES RECORDED.
3. INVOICES TOTALING $ 15,500 ARE RECEIVED AND APPROVED FOR PAYMENT. THESE ITEMS
WERE PREVIOUSLY ENCUMBERED IN THE AMOUNT OF $ 16,000. $ 3,500 OF THE PURCHASE
ORDERS FROM #2 ARE STILL OUTSTANDING.
4. EXPENDITURES TOTALING $ 11,000 ARE RECORDED. SINCE THESE AMOUNTS WERE NOT
PREVIOUSLY ENCUMBERED, THEY ARE LIKELY SALARIES OR OTHER RECURRING ITEMS
5. THE APPROPRIATIONS BUDGET IS REDUCED BY $ 18,000 AS A RESULT OF A BUDGET REVISION.
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Chapter 03 – Modified Accrual Accounting
3-7
3-11 (A)
CITY OF VIENNA
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
FOR THE YEAR ENDED DEC. 31, 2020
ACTUAL
AMOUNTS VARIANCE
Budgeted (Budgetary with Final
Original Final Basis) Budget
Revenues:
Taxes 6,500,000 6,465,000 6,480,000 15,000
Licenses 230,000 230,000 225,000 (5,000)
Intergovernmental 1,200,000 1 ,200,000 1,200,000 0
Miscellaneous 120,000 104,000 106,000 2,000
Total Revenues 8,050,000 7,999,000 8,011,000 12,000
Expenditures and Encumbrances
General Government 2,700,000 2,602,000 2,503,500 98,500
Public Safety 4,050,000 4,200,000 4,215,000 (15,000)
Health and Welfare 1,230,000 1,220,000 1,198,000 22,000
Total Expenditures and
Encumbrances. 7,980,000 8,022,000 7,916,500 105,500
Net Change in Fund Balance 70,000 (23,000) 94,500 117,500
Fund Balance – Beginning 350,000 350,000 350,000 0
Fund Balance - Ending 420,000 327,000 444,500 117,500
3-11 (B)
GENERAL LEDGER SUBSIDIARY LEDGER
DEBITS CREDITS DEBITS CREDITS
BUDGETARY FUND BALANCE
ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
93,000
51,000
42,000
REVENUES LEDGER:
TAX REVENUES
MISCELLANEOUS REVENUES
APPROPRIATIONS LEDGER:
GENERAL GOVERNMENT
HEALTH AND WELFARE
PUBLIC SAFETY
98,000
10,000
35,000
16,000
150,000
3-7
3-11 (A)
CITY OF VIENNA
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
FOR THE YEAR ENDED DEC. 31, 2020
ACTUAL
AMOUNTS VARIANCE
Budgeted (Budgetary with Final
Original Final Basis) Budget
Revenues:
Taxes 6,500,000 6,465,000 6,480,000 15,000
Licenses 230,000 230,000 225,000 (5,000)
Intergovernmental 1,200,000 1 ,200,000 1,200,000 0
Miscellaneous 120,000 104,000 106,000 2,000
Total Revenues 8,050,000 7,999,000 8,011,000 12,000
Expenditures and Encumbrances
General Government 2,700,000 2,602,000 2,503,500 98,500
Public Safety 4,050,000 4,200,000 4,215,000 (15,000)
Health and Welfare 1,230,000 1,220,000 1,198,000 22,000
Total Expenditures and
Encumbrances. 7,980,000 8,022,000 7,916,500 105,500
Net Change in Fund Balance 70,000 (23,000) 94,500 117,500
Fund Balance – Beginning 350,000 350,000 350,000 0
Fund Balance - Ending 420,000 327,000 444,500 117,500
3-11 (B)
GENERAL LEDGER SUBSIDIARY LEDGER
DEBITS CREDITS DEBITS CREDITS
BUDGETARY FUND BALANCE
ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
93,000
51,000
42,000
REVENUES LEDGER:
TAX REVENUES
MISCELLANEOUS REVENUES
APPROPRIATIONS LEDGER:
GENERAL GOVERNMENT
HEALTH AND WELFARE
PUBLIC SAFETY
98,000
10,000
35,000
16,000
150,000
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Chapter 03 – Modified Accrual Accounting
3-8
3-12(A).
CITY OF SPRINGFIELD
GENERAL FUND -GENERAL JOURNAL
YEAR ENDED DECEMBER 31, 2020
GENERAL LEDGER SUBSIDIARY LEDGER
DEBITS CREDITS DEBITS CREDITS
1. ESTIMATED REVENUES CONTROL
BUDGETARY FUND BALANCE
12,471,000
12,471,000
ESTIMATED REVENUES LEDGER:
PROPERTY TAXES
SALES TAXES
LICENSES AND PERMITS
MISCELLANEOUS REVENUES
5,641,000
4,830,000
1,500,000
500,000
2. BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
10,495,000
10,495,000
APPROPRIATIONS LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,285,000
4,210,000
1,000,000
3. CASH
REVENUES CONTROL
12,745,000
12,745,000
REVENUES LEDGER:
PROPERTY TAXES
SALES TAXES
LICENSES AND PERMITS
MISCELLANEOUS REVENUES
5,545,000
4,700,000
1,700,000
800,000
4. ENCUMBRANCES CONTROL
BUDGETARY FUND BALANCE -
RESERVE FOR ENCUMBRANCES
10,810,000
10,810,000
ENCUMBRANCES LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,275,000
4,630,000
905,000
3-8
3-12(A).
CITY OF SPRINGFIELD
GENERAL FUND -GENERAL JOURNAL
YEAR ENDED DECEMBER 31, 2020
GENERAL LEDGER SUBSIDIARY LEDGER
DEBITS CREDITS DEBITS CREDITS
1. ESTIMATED REVENUES CONTROL
BUDGETARY FUND BALANCE
12,471,000
12,471,000
ESTIMATED REVENUES LEDGER:
PROPERTY TAXES
SALES TAXES
LICENSES AND PERMITS
MISCELLANEOUS REVENUES
5,641,000
4,830,000
1,500,000
500,000
2. BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
10,495,000
10,495,000
APPROPRIATIONS LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,285,000
4,210,000
1,000,000
3. CASH
REVENUES CONTROL
12,745,000
12,745,000
REVENUES LEDGER:
PROPERTY TAXES
SALES TAXES
LICENSES AND PERMITS
MISCELLANEOUS REVENUES
5,545,000
4,700,000
1,700,000
800,000
4. ENCUMBRANCES CONTROL
BUDGETARY FUND BALANCE -
RESERVE FOR ENCUMBRANCES
10,810,000
10,810,000
ENCUMBRANCES LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,275,000
4,630,000
905,000
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Chapter 03 – Modified Accrual Accounting
3-9
3-12(A) (CONTINUED)
GENERAL LEDGER SUBSIDIARY LEDGER
DEBITS CREDITS DEBITS CREDITS
5A. BUDGETARY FUND BALANCE-
RESERVE FOR ENCUMBRANCES
ENCUMBRANCES CONTROL
10,810,000
10,810,000
ENCUMBRANCES LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,275,000
4,630,000
905,000
5B. EXPENDITURES CONTROL
CASH
10,785,000
10,785,000
EXPENDITURES LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,285,000
4,610,000
890,000
6. BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
250,000
250,000
APPROPRIATIONS LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
140,000
110,000
3-9
3-12(A) (CONTINUED)
GENERAL LEDGER SUBSIDIARY LEDGER
DEBITS CREDITS DEBITS CREDITS
5A. BUDGETARY FUND BALANCE-
RESERVE FOR ENCUMBRANCES
ENCUMBRANCES CONTROL
10,810,000
10,810,000
ENCUMBRANCES LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,275,000
4,630,000
905,000
5B. EXPENDITURES CONTROL
CASH
10,785,000
10,785,000
EXPENDITURES LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,285,000
4,610,000
890,000
6. BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
250,000
250,000
APPROPRIATIONS LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
140,000
110,000
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Chapter 03 – Modified Accrual Accounting
3-10
3-12(B)
CITY OF SPRINGFIELD
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED DECEMBER 31, 2020
BUDGETED AMOUNTS
ACTUAL
AMOUNTS
(BUDGETARY
BASIS)
VARIANCE
WITH FINAL
BUDGET
POSITIVE
(NEGATIVE)ORIGINAL FINAL
REVENUES:
PROPERTY TAXES
SALES TAXES
LICENSES AND PERMITS
MISCELLANEOUS
TOTAL REVENUES
$5,641,000
4,830,000
1,500,000
500,000
12,471,000
$5,641,000
4,830,000
1,500,000
500,000
12,471,000
$5,545,000
4,700,000
1,700,000
800,000
12,745,000
(96,000)
(130,000)
200,000
300,000
274,000
EXPENDITURES AND
ENCUMBRANCES:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
TOTAL EXPENDITURES AND
ENCUMBRANCES
5,285,000
4,210,000
1,000,000
10,495,000
5,425,000
4,320,000
1,000,000
10,745,000
5,285,000
4,610,000
890,000
10,785,000
140,000
(290,000)
110,000
(40,000)
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES AND
ENCUMBRANCES
FUND BALANCE, BEGINNING
FUND BALANCE, ENDING
1,976,000
753,000
$2,729,000
1,726,000
753,000
$2,479,000
1,960,000
753,000
$ 2,713,000
234,000
---
$234,000
3-10
3-12(B)
CITY OF SPRINGFIELD
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED DECEMBER 31, 2020
BUDGETED AMOUNTS
ACTUAL
AMOUNTS
(BUDGETARY
BASIS)
VARIANCE
WITH FINAL
BUDGET
POSITIVE
(NEGATIVE)ORIGINAL FINAL
REVENUES:
PROPERTY TAXES
SALES TAXES
LICENSES AND PERMITS
MISCELLANEOUS
TOTAL REVENUES
$5,641,000
4,830,000
1,500,000
500,000
12,471,000
$5,641,000
4,830,000
1,500,000
500,000
12,471,000
$5,545,000
4,700,000
1,700,000
800,000
12,745,000
(96,000)
(130,000)
200,000
300,000
274,000
EXPENDITURES AND
ENCUMBRANCES:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
TOTAL EXPENDITURES AND
ENCUMBRANCES
5,285,000
4,210,000
1,000,000
10,495,000
5,425,000
4,320,000
1,000,000
10,745,000
5,285,000
4,610,000
890,000
10,785,000
140,000
(290,000)
110,000
(40,000)
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES AND
ENCUMBRANCES
FUND BALANCE, BEGINNING
FUND BALANCE, ENDING
1,976,000
753,000
$2,729,000
1,726,000
753,000
$2,479,000
1,960,000
753,000
$ 2,713,000
234,000
---
$234,000
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Chapter 03 – Modified Accrual Accounting
3-11
3-13
TOWN OF RIVERSIDE
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED DECEMBER 31, 2020
BUDGETED AMOUNTS
ACTUAL
AMOUNTS
(BUDGETARY
BASIS)
VARIANCE
WITH FINAL
BUDGET
POSITIVE
(NEGATIVE)ORIGINAL FINAL
REVENUES:
PROPERTY TAXES
BUSINESS LICENSES
TOTAL REVENUES
$ 685,000
165,000
850,000
$ 685,000
135,000
820,000
$ 687,500
124,000
811,500
$ 2,500
(11,000)
8,500
EXPENDITURES AND
ENCUMBRANCES:
GENERAL GOVERNMENT
PARKS AND RECREATION
SANITATION
STREETS AND SIDEWALKS
TOTAL EXPENDITURES AND
ENCUMBRANCES
395,000
110,000
90,000
160,000
755,000
395,000
160,000
90,000
160,000
805,000
365,000
160,500
91,600
157,333
774,433
30,000
(500)
(1,600)
2,667
30,567
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES AND
ENCUMBRANCES
FUND BALANCE, BEGINNING
FUND BALANCE, ENDING
95,000
49,000
$ 144,000
15,000
49,000
$ 64,000
37,067
49,000
$ 86,067
22,067
---
$ 22,067
3-11
3-13
TOWN OF RIVERSIDE
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED DECEMBER 31, 2020
BUDGETED AMOUNTS
ACTUAL
AMOUNTS
(BUDGETARY
BASIS)
VARIANCE
WITH FINAL
BUDGET
POSITIVE
(NEGATIVE)ORIGINAL FINAL
REVENUES:
PROPERTY TAXES
BUSINESS LICENSES
TOTAL REVENUES
$ 685,000
165,000
850,000
$ 685,000
135,000
820,000
$ 687,500
124,000
811,500
$ 2,500
(11,000)
8,500
EXPENDITURES AND
ENCUMBRANCES:
GENERAL GOVERNMENT
PARKS AND RECREATION
SANITATION
STREETS AND SIDEWALKS
TOTAL EXPENDITURES AND
ENCUMBRANCES
395,000
110,000
90,000
160,000
755,000
395,000
160,000
90,000
160,000
805,000
365,000
160,500
91,600
157,333
774,433
30,000
(500)
(1,600)
2,667
30,567
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES AND
ENCUMBRANCES
FUND BALANCE, BEGINNING
FUND BALANCE, ENDING
95,000
49,000
$ 144,000
15,000
49,000
$ 64,000
37,067
49,000
$ 86,067
22,067
---
$ 22,067
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Chapter 03 – Modified Accrual Accounting
3-12
3-14. SOLUTIONS TO THE EXCEL BASED EXERCISES ARE ALSO AVAILABLE IN EXCEL ON THE
INSTRUCTOR’S WEBSITE
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual: General Fund
For The Year Ended December 31, 2020
Budgeted Amounts
REVENUES Original Final Actual
Amounts
Budgetary
Basis
Variance with
Final Budget
Property Taxes 14,677,000 14,677,000 15,361,830 684,830
Other Local Taxes 11,562,500 11,562,500 11,761,522 199,022
Charges for Services 1,613,011 1,613,011 1,601,435 (11,576)
Intergovernmental 7,892,080 8,047,907 7,098,698 (949,209)
Miscellaneous 1,504,977 1,388,385 1,262,549 (125,836)
TOTAL REVENUES 37,249,568 37,288,803 37,086,034 (202,769)
EXPENDITURES
Current
General Government 3,567,838 3,489,870 3,453,502 36,368
Judicial Administration 1,351,000 1,497,845 1,456,734 41,111
Public Safety 7,753,002 8,325,564 8,216,347 109,217
Public Works 4,541,651 4,984,353 4,602,273 382,080
Health and Welfare 4,823,267 4,440,167 4,418,294 21,873
Education 8,963,248 8,929,725 8,887,834 41,891
Parks and Recreation 2,983,861 3,097,528 3,055,325 42,203
Community Development 872,594 904,168 899,209 4,959
TOTAL EXPENDITURES 34,856,461 35,669,220 34,989,518 679,702
REVENUES OVER (UNDER) EXPENDITURES 2,393,107 1,619,583 2,096,516 476,933
OTHER FINANCING SOURCES (USES):
Transfers (to) other funds (3,560,000) (3,257,000) (3,256,899) 101
(3,560,000) (3,257,000) (3,256,899) 101
Excess of revenues and other sources over
(under) expenditures and other uses (1,166,893) (1,637,417) (1,160,383) 477,034
FUND BALANCE - Beginning of Year 12,338,963 12,338,963 12,338,963 -
FUND BALANCE - End of Year 11,172,070 10,701,546 11,178,580 477,034
The shaded information below is
provided in the student excel
template. Solution journal
entries appear on the next page.
3-12
3-14. SOLUTIONS TO THE EXCEL BASED EXERCISES ARE ALSO AVAILABLE IN EXCEL ON THE
INSTRUCTOR’S WEBSITE
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual: General Fund
For The Year Ended December 31, 2020
Budgeted Amounts
REVENUES Original Final Actual
Amounts
Budgetary
Basis
Variance with
Final Budget
Property Taxes 14,677,000 14,677,000 15,361,830 684,830
Other Local Taxes 11,562,500 11,562,500 11,761,522 199,022
Charges for Services 1,613,011 1,613,011 1,601,435 (11,576)
Intergovernmental 7,892,080 8,047,907 7,098,698 (949,209)
Miscellaneous 1,504,977 1,388,385 1,262,549 (125,836)
TOTAL REVENUES 37,249,568 37,288,803 37,086,034 (202,769)
EXPENDITURES
Current
General Government 3,567,838 3,489,870 3,453,502 36,368
Judicial Administration 1,351,000 1,497,845 1,456,734 41,111
Public Safety 7,753,002 8,325,564 8,216,347 109,217
Public Works 4,541,651 4,984,353 4,602,273 382,080
Health and Welfare 4,823,267 4,440,167 4,418,294 21,873
Education 8,963,248 8,929,725 8,887,834 41,891
Parks and Recreation 2,983,861 3,097,528 3,055,325 42,203
Community Development 872,594 904,168 899,209 4,959
TOTAL EXPENDITURES 34,856,461 35,669,220 34,989,518 679,702
REVENUES OVER (UNDER) EXPENDITURES 2,393,107 1,619,583 2,096,516 476,933
OTHER FINANCING SOURCES (USES):
Transfers (to) other funds (3,560,000) (3,257,000) (3,256,899) 101
(3,560,000) (3,257,000) (3,256,899) 101
Excess of revenues and other sources over
(under) expenditures and other uses (1,166,893) (1,637,417) (1,160,383) 477,034
FUND BALANCE - Beginning of Year 12,338,963 12,338,963 12,338,963 -
FUND BALANCE - End of Year 11,172,070 10,701,546 11,178,580 477,034
The shaded information below is
provided in the student excel
template. Solution journal
entries appear on the next page.
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Chapter 03 – Modified Accrual Accounting
3-13
3-14 General Ledger Subsidiary Ledger
a. Record the original budget Debits Credits Debits Credits
Revenues control account
Estimated Revenues Control 37,249,568
Estimated Other Financing Uses Control -
Budgetary Fund Balance 37,249,568
Estimated Revenues ledger:
Property Taxes 14,677,000
Other Local Taxes 11,562,500
Charges for Services 1,613,011
Intergovernmental Revenue 7,892,080
Miscellaneous 1,504,977
37,249,568
Appropriations control account
Budgetary Fund Balance 38,416,461
Appropriations Control 34,856,461
Estimated Other Financing Uses Control 3,560,000
Appropriations subsidiary ledger:
General Government 3,567,838
Juidicial Administration 1,351,000
Public Safety 7,753,002
Public Works 4,541,651
Health and Welfare 4,823,267
Education 8,963,248
Parks and Recreation 2,983,861
Community Development 872,594
34,856,461
Other Financing Uses subsidiary ledger:
Transfers out 3,560,000
General Ledger Subsidiary Ledger
b. Record the budget revisions Debits Credits Debits Credits
Estimated Revenues Control 39,235
Estimated Other Financing Uses Control 303,000
Budgetary Fund Balance 470,524
Appropriations Control 812,759
Revenues subsidiary ledger:
Intergovernmental Revenues 155,827
Miscellaneous 116,592
Appropriations subsidiary ledger:
General Government 77,968
Judicial Administration 146,845
Public Safety 572,562
Public Works 442,702
Health and Welfare 383,100
Education 33,523
Parks and Recreation 113,667
Community Development 31,574
Other Financing Uses subsidiary ledger:
Transfers out 303,000
3-13
3-14 General Ledger Subsidiary Ledger
a. Record the original budget Debits Credits Debits Credits
Revenues control account
Estimated Revenues Control 37,249,568
Estimated Other Financing Uses Control -
Budgetary Fund Balance 37,249,568
Estimated Revenues ledger:
Property Taxes 14,677,000
Other Local Taxes 11,562,500
Charges for Services 1,613,011
Intergovernmental Revenue 7,892,080
Miscellaneous 1,504,977
37,249,568
Appropriations control account
Budgetary Fund Balance 38,416,461
Appropriations Control 34,856,461
Estimated Other Financing Uses Control 3,560,000
Appropriations subsidiary ledger:
General Government 3,567,838
Juidicial Administration 1,351,000
Public Safety 7,753,002
Public Works 4,541,651
Health and Welfare 4,823,267
Education 8,963,248
Parks and Recreation 2,983,861
Community Development 872,594
34,856,461
Other Financing Uses subsidiary ledger:
Transfers out 3,560,000
General Ledger Subsidiary Ledger
b. Record the budget revisions Debits Credits Debits Credits
Estimated Revenues Control 39,235
Estimated Other Financing Uses Control 303,000
Budgetary Fund Balance 470,524
Appropriations Control 812,759
Revenues subsidiary ledger:
Intergovernmental Revenues 155,827
Miscellaneous 116,592
Appropriations subsidiary ledger:
General Government 77,968
Judicial Administration 146,845
Public Safety 572,562
Public Works 442,702
Health and Welfare 383,100
Education 33,523
Parks and Recreation 113,667
Community Development 31,574
Other Financing Uses subsidiary ledger:
Transfers out 303,000
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Chapter 03 – Modified Accrual Accounting
3-14
General Ledger Subsidiary Ledger
c. Record the Actual Revenues Debits Credits Debits Credits
Cash 37,086,034
Revenues Control 37,086,034
Revenues subsidiary ledger:
Property Taxes 15,361,830
Other Local Taxes 11,761,522
Charges for Services 1,601,435
Intergovernmental Revenue 7,098,698
Miscellaneous 1,262,549
37,086,034
General Ledger Subsidiary Ledger
d. Record the encumbrances Debits Credits Debits Credits
Encumbrances Control 34,989,518
Budgetary Fund Balance - Reserve for
Encumbrances
34,989,518
Encumbrances subsidiary ledger:
General Government 3,453,502
Juidicial Administration 1,456,734
Public Safety 8,216,347
Public Works 4,602,273
Health and Welfare 4,418,294
Education 8,887,834
Parks and Recreation 3,055,325
Community Development 899,209
34,989,518
General Ledger Subsidiary Ledger
e. Record the actual expenditures and
Encumbrance Reversals
Debits Credits Debits Credits
Budgetary Fund Balance - Reserve for
Encumbrances
34,989,518
Encumbrances Control 34,989,518
Encumbrances subsidiary ledger:
General Government 3,453,502
Judicial Administration 1,456,734
Public Safety 8,216,347
Public Works 4,602,273
Health and Welfare 4,418,294
Education 8,887,834
Parks and Recreation 3,055,325
Community Development 899,209
34,989,518
Expenditures Control 34,989,518
Accounts Payable 34,989,518
Expenditures subsidiary ledger:
General Government 3,453,502
Judicial Administration 1,456,734
Public Safety 8,216,347
Public Works 4,602,273
Health and Welfare 4,418,294
3-14
General Ledger Subsidiary Ledger
c. Record the Actual Revenues Debits Credits Debits Credits
Cash 37,086,034
Revenues Control 37,086,034
Revenues subsidiary ledger:
Property Taxes 15,361,830
Other Local Taxes 11,761,522
Charges for Services 1,601,435
Intergovernmental Revenue 7,098,698
Miscellaneous 1,262,549
37,086,034
General Ledger Subsidiary Ledger
d. Record the encumbrances Debits Credits Debits Credits
Encumbrances Control 34,989,518
Budgetary Fund Balance - Reserve for
Encumbrances
34,989,518
Encumbrances subsidiary ledger:
General Government 3,453,502
Juidicial Administration 1,456,734
Public Safety 8,216,347
Public Works 4,602,273
Health and Welfare 4,418,294
Education 8,887,834
Parks and Recreation 3,055,325
Community Development 899,209
34,989,518
General Ledger Subsidiary Ledger
e. Record the actual expenditures and
Encumbrance Reversals
Debits Credits Debits Credits
Budgetary Fund Balance - Reserve for
Encumbrances
34,989,518
Encumbrances Control 34,989,518
Encumbrances subsidiary ledger:
General Government 3,453,502
Judicial Administration 1,456,734
Public Safety 8,216,347
Public Works 4,602,273
Health and Welfare 4,418,294
Education 8,887,834
Parks and Recreation 3,055,325
Community Development 899,209
34,989,518
Expenditures Control 34,989,518
Accounts Payable 34,989,518
Expenditures subsidiary ledger:
General Government 3,453,502
Judicial Administration 1,456,734
Public Safety 8,216,347
Public Works 4,602,273
Health and Welfare 4,418,294
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