ACCT 5390 Ch. 4 Lecture Notes WQ2019-1.docx

Measureable reasonable certainty of dollar amount

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Measureable = reasonable certainty of dollar amount - Available = collectible within current period or within 60 days after year-end Expenditures recognized when a liability is incurred with certain exceptions (e.g., unmatured interest is not accrued but only recorded when legally due) Note: Liabilities in the general fund and the special revenue fund represent claims against the fund’s current financial resources ; therefore, such liabilities are always short-term in nature. Monitoring required Accounts for revenue legally restricted or committed to specific purposes other than debt service or capital projects No concept of earning revenue For example, recognize salaries when paid; accrue salaries when not paid but due and payable Basic accounting cycle in general fund or special revenue fund: - Record budget - Record cash receipts - Let purchase orders - Encumber funds - Pay for goods ordered - Pay for other expenditures - Close accounts - Get financing as needed - Pay-off financing as required Chapter focuses on the General Fund and Special Revenue Fund. Such funds carry current items only. No fixed assets or long-term debt.
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