Chapter+4+Solutions

Chapter+4+Solutions - Chapter 04 - Accounting for...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 04 - Accounting for Governmental Operating ActivitiesIllustrative Transactions and Financial Statements CHAPTER 4: ACCOUNTING FOR GOVERNMENTAL OPERATING ACTIVITIESILLUSTRATIVE TRANSACTIONS AND FINANCIAL STATEMENTS Answers to Questions 4.1. Under the GASB financial reporting model, governmental activities are reported on a long-term perspective at the government-wide level using the economic resources measurement focus and the accrual basis of accounting, similar to business accounting. This means that both current and noncurrent assets and liabilities are reported on the statement of net assets. Revenues and expenses, recognized on the accrual basis, are reported on the statement of activities. Conversely, the General Fund reports on a budget year perspective using the current financial resources measurement focus and the modified accrual basis of accounting. Therefore, the General Fund reports only current assets and liabilities. Revenues and expenditures and other financing sources and uses, recognized on the modified accrual basis, are reported on the statement of revenues, expenditures, and changes in fund balances. Examples of transactions or events that are recorded only in the General Fund general journal include budgetary entries and encumbrance transactions. Examples of transactions that are recorded only in the governmental activities general journal include depreciation expense on general capital assets and accrual of interest on long-term debt (as discussed in Chapter 6). Purchases of goods and services, salaries and wages, and most revenue items are examples of transactions that are recorded in both the General Fund general journal and the governmental activities journal. 4-2. The primary difference is that the government-wide statement of net assets focuses on total economic resources and consequently, uses the accrual basis of accounting; whereas, the General Fund focuses on current financial resources and employs the modified accrual basis of accounting. For that reason, capital assets and long-term liabilities are reported on the government-wide statement of net assets, but are reported as expenditures and other financing sources on the General Fund financial statement. Another difference is that the statement of net assets aggregates all governmental activities (including General Fund, special revenue, capital projects, debt service, permanent funds, and some internal service funds) and reports those in one column, whereas the balance sheet for governmental funds presents a column for the General Fund, each major fund, and one column for all other non-major funds. A further difference is that the statement of net assets can be presented either in the net assets format (assets minus liabilities equals net assets) or the traditional format required of the General Fund (assets equals liabilities plus fund equity)....
View Full Document

This note was uploaded on 03/28/2012 for the course ACIS 4124 taught by Professor Dr.easterwood during the Spring '12 term at Virginia Tech.

Page1 / 39

Chapter+4+Solutions - Chapter 04 - Accounting for...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online