Chapter 5 & 6 pp

Chapter 5 & 6 pp - Revenue Accounting: Governmental...

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Revenue Accounting: Governmental Funds Expenditure Accounting: Governmental Funds
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Learning Objectives Know the definition of revenue in governmental funds Know revenue classifications and additional transactions for each classification Know the definition of expenditure Know the classifications of expenditures and additional transactions for each classification
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Define Revenues in governmental funds Increases in net assets of a governmental fund that either: Result in a corresponding increase in net assets of governmental entity as a whole Result from exchange-like interfund services provided Can be non-exchange or exchange transactions
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Modified Accrual Revenue Recognition Recognize only revenues susceptible to accrual – others on a cash basis Requirements for susceptible to accrual 1. Objectively measurable and 2. Legally available (usable) to finance current period expenditures
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Modified Accrual Revenue Recognition, continued AVAILABLE means: Collected in the current period or soon enough thereafter (typically limited to a 60- day maximum) to be used to pay liabilities of the current period, and Money collected is legally usable to finance current period expenditures. Illustration 5-5
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Recommended Classes of Revenues Taxes Intergovernmental revenues Charges for services Fines and forfeits Miscellaneous, esheats
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Non-exchange Transactions that may be revenue are: Governed by GASBS #33 4 classifications Derived tax revenues Imposed tax revenues Government-mandated transaction Voluntary transaction Illustration 5-3
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Following are some examples of additional JE that relate to a Tax Revenue: Discounts Interest and Penalties Cash received in advance Tax sales - Reclassify a receivable to lien, then subsequent sale or conversion to GCA
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Tax levy with a discount- Both discount and uncollectible are considered revenue reductions . [pp190-191] Taxes Receivable – Current Taxes Receivable – Current Allowance for Uncollectible Allowance for Uncollectible Taxes – Current Taxes – Current Allowance for Discounts Allowance for Discounts Revenues Revenues 300,000 300,000 9,000 9,000 2,000 2,000 289,000 289,000 Gross billing of $300,000 with 3% estimated to be uncollectible and $2,000 estimated to be taken as a discount.
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Discounts taken and expired. [pp189-90] Collection within discount period Collection within discount period Cash Cash Allowance for Discounts on Taxes Allowance for Discounts on Taxes Taxes Receivable – Current Taxes Receivable – Current Discount period expires Discount period expires (increase Revenue) (increase Revenue) Allowance for Discounts on Taxes Allowance for Discounts on Taxes Revenues Revenues 150,000 150,000 1,500 1,500 500 500 151,500 151,500 500 500 What if Discounts taken exceed the Allowance?
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Chapter 5 & 6 pp - Revenue Accounting: Governmental...

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