Chapter+3+Solutions

Chapter+3+Solutions - Chapter 03 - Governmental Operating...

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Chapter 03 - Governmental Operating Statement Accounts; Budgetary Accounting CHAPTER 3: GOVERNMENTAL OPERATING STATEMENT ACCOUNTS; BUDGETARY ACCOUNTING Answers to Questions 3-1. The governmental fund financial statements report current financial resources information intended to help users assess current period fiscal accountability —whether revenues were raised only from authorized sources and expended for authorized purposes. As such, the governmental fund statements lack the mid- to long-term focus on economic resources and cost of services needed to assess operational accountability. 3-2. Using the net (expense) or revenue format, sometimes referred to as the “cost of services” approach, identifies the extent to which each function or program is self-supporting from fees and intergovernmental aid, or must be subsidized by general revenues of the government. 3-3. Depreciation expense is reported as a direct expense when it relates to capital assets that are clearly identified with a function or program because it captures a real cost of using capital assets to provide that service function or program. Even depreciation expense for infrastructure assets should be reported as a direct expense of the public works or transportation function, if that is the function responsible for those assets. 3-4. a. General revenues. b . Program revenues . c. Program revenues. d . Program revenues. e . Program revenues. f. General revenues. g. General revenues. 3-5. Extraordinary items are those items (gains or losses) that are both unusual in nature and infrequent in occurrence. Special items are either unusual in nature or infrequent in occurrence, but not both. Special items also differ from extraordinary items in that they are within the control of management. Both types of items are reported as separate line items below General Revenues in the statement of activities. 3-6. a . Organization unit f . Both character and object b . Function g . Program c . Activity h. Function d . Activity i. Organization unit e . Object j. Object 3-1
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Chapter 03 - Governmental Operating Statement Accounts; Budgetary Accounting 3-2
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Chapter 03 - Governmental Operating Statement Accounts; Budgetary Accounting Ch. 3, Answers (Cont’d) 3-7. Definitions of these terms are given in the Glossary of the text. Below are briefer statements: a. Expenditures and Encumbrances are both charges against appropriations. An encumbrance is a charge for an estimated amount at the time goods are ordered; an expenditure is a charge for an actual amount at the time the goods are received (accrual and modified accrual basis) or paid (cash basis). Encumbrance accounting is used only in those funds where it is needed to achieve budgetary control over expenditures. b.
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Chapter+3+Solutions - Chapter 03 - Governmental Operating...

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