Chapter 03D - 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 Prepare adjusting & closing entries 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 Revenues when measurable & available 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 accounting, reporting, & control issues 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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#1 Property Tax Levy [Page 72] Taxes Receivable – Current Allowance for Uncollectible Current Taxes Revenues – Property Taxes 200,000 3,000 197,000
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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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#2 Other Revenues [Page 73] Accounts Receivable Allowance for Uncollectible Accounts Receivable Revenues 36,000 1,000 35,000
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#3 Orders and Contracts [Pages 74 – 75] In this transaction, materials and equipment were ordered No GAAP effect – therefore, no journal entry It would have a budgetary effect, but that is discussed in the next chapter
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#4 Orders and Contracts [Page 74] Expenditures Vouchers Payable 29,900 29,900
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Orders and Contracts Preceding slide showed the general journal entry However, the details are in the subsidiary ledger effects – not demonstrated in slide show Most accounts are for current operating expenditures Last account affects capital assets, resulting in accounting in GCA-GLTL accounts
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GCA-GLTL Accounts GCA (Equipment) Net Assets GLTL +$6,100 +$6,100
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#5 Salary Expenditures [Page 74] Expenditures Vouchers Payable 40,000 40,000
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