Chapter_2_Homework_Key

Chapter_2_Homework_Key - Chapter 2 Overview of Financial...

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Unformatted text preview: Chapter 2 Overview of Financial Reporting for State and Local Governments 2‐1. 2‐5 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. 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 assets). 3) The statement has four sections, rather than the three observed in FASB format statements. These include: • 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. • 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. 2‐7. CITY OF SOUTHERN SPRINGS STATEMENT OF NET ASSETS APRIL 30, 2009 Assets: Cash and Cash Equivalents Receivables Inventories Capital Assets, Net Total Assets Liabilities: Accounts Payable Noncurrent Liabilities Total Liabilities Net Assets: Invested in Capital Assets, Net of Related Debt Restricted for Debt Service Unrestricted Total Net Assets Governmental Activities $1,880,000 459,000 12,500,000 14,839,000 650,000 5,350,000 6,000,000 Business‐Type Activities $ 850,000 1,330,000 520,000 10,340,000 13,040,000 559,000 3,210,000 3,769,000 7,159,000 323,000 1,789,000 $9,271,000 Total $2,730,000 1,789,000 520,000 22,840,000 27,879,000 1,209,000 8,560,000 9,769,000 8,123,000 654,000 62,000 $8,839,000 15,282,000 977,000 1,851,000 $18,110,000 1‐C The solution to the continuous problem will be given following completion of the whole problem on July 27th. ...
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