Chapter 16 - Answers to Homework Questions

Chapter 16 - Answers to Homework Questions - Chapter 16 -...

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Unformatted text preview: Chapter 16 - Accounting for State and Local Governments (Part 1) CHAPTER 16 ACCOUNTING FOR STATE AND LOCAL GOVERNMENTS (PART 1) Chapter Outline I. State and local government units produce two complete and distinct sets of financial statements which are presented together in a comprehensive annual financial report. A. User needs for governmental financial information are so diverse that GASB requires two sets of statements to be prepared. The fund-based statements are more for the citizens whereas the government-wide statements are more for investors, such as bondholders. B. Fund-based financial statements are designed primarily to present information about the General Fund and other major activities. This approach stresses the governments fiscal accountability over its financial resources. a. For governmental funds, all current financial resources and claims to those financial resources are presented using modified accrual accounting for timing purposes. b. For proprietary funds and fiduciary funds, all economic resources are reported using accrual accounting for timing purposes. C. Government-wide financial statements (a statement of net assets and a statement of activities) are designed to present an overview of the government as a whole and emphasizes operational accountability. a. In these statements, all economic resources are measured using accrual accounting for timing purposes. b. The governmental funds and most of the internal service funds are combined and reported together as governmental activities. c. The enterprise funds and any remaining internal service funds are combined and reported as business-type activities. d. Because the government does not have control over the use of the assets held in the fiduciary funds, they are excluded from the government-wide financial statements. II. For internal purposes, governmental accounting records its individual activities within a number of self-balancing sets of accounts known as funds. A. Governmental funds account for activities where service to the public is the main emphasis. a. General fund b. Special revenue funds c. Capital projects funds d. Debt service funds e. Permanent funds B. Proprietary funds account for activities of the government where a user charge is assessed. a. Enterprise funds b. Internal service funds C. Fiduciary funds account for assets held in a trustee capacity for external parties. a. Investment trust funds 16-1 Chapter 16 - Accounting for State and Local Governments (Part 1) b. Private-purpose trust funds 16-2 Chapter 16 - Accounting for State and Local Governments (Part 1) c. Pension trust funds d. Agency funds III. Governmental accounting has traditionally stressed establishing control over current financial resources to ensure appropriate usage of the publics money....
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This note was uploaded on 07/27/2011 for the course ACCT 102 taught by Professor Huxhold during the Spring '11 term at UCSD.

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Chapter 16 - Answers to Homework Questions - Chapter 16 -...

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