Chapter%2003C

Chapter%2003C - The General Fund and Special Revenue Funds...

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The General Fund and Special Revenue Funds Chapter 3
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Learning Objectives Discuss similarities & differences between GF and SRFs Explain MFBA used for these funds Analyze common journal entries for transactions, including interfund activity Define special items and extraordinary items Prepare GF and SRF financial statements
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General Fund Used to account for and report all financial resources not be accounted for and reported in another fund. Only fund that all general purpose governments have.
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Special Revenue Funds Used to account for and report specific revenue sources that are restricted or committed to expenditure for specified. Exist as long as the government has resources dedicated to specific purposes.
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MFBA Measurement Focus (MF) is on current financial resources – what is expendable Basis of Accounting (BA) is modified accrual – recognition occurs for Expenditures when underlying liability is incurred, except for long-term debt principal and interest payments (when due)
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Basic Accounting Equation Related Liabilities Fund Balance Financial Assets
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Assumptions for this Chapter Transactions do not address budgetary Accounts maintained on GAAP basis during the year Second assumption rarely holds in practice, but makes instruction easier and more uniform
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Illustrative Entries Property tax levy Other revenues Orders and contracts Salary expenditures Interfund activity Short-term borrowing Extraordinary and special items Other transactions and events
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Property Tax Levy Notice use of allowance account in entry No bad debts expense – remember, a governmental fund does not use expenses Records revenue at the amount government expects to collect This form of entry assumes net amount will be available – other options discussed in Chapter 5
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Other Revenues Some revenues will be accrued when services are provided Other revenues may be recognized only when cash is received – no allowance necessary since all of revenue received
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Salary Expenditures Comprise about 75% of city General Fund expenditures and 85% of school board General Fund expenditures Effective control over these expenditures is essential
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Chapter%2003C - The General Fund and Special Revenue Funds...

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