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Not-for-Profit Accounting, 7e
Chapter 5: The Governmental Fund
Accounting Cycle
General and Special Revenue Funds
(Continued)
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Chapter 5 Topics
Recognition and Measurement Principles
Property Tax Revenues and Receivables
Sales and Income Tax Revenues and
Receivables
Intergovernmental Grants and Other
Revenues
Expenditures and Fund Liabilities
Interfund Transactions
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Types of Liabilities in
Governmental Funds
Once incurred, normally paid in a timely
manner from current financial resources
Salaries, professional services, supplies,
utilities, and travel
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990,000
990,000
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15,000
10,000
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3,000
3,000
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9,000
9,000
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Tax Discounts
Discount for paying property taxes early
Entry when taxes levied
Property taxes receivable
600,000
Allowance for discounts on
property taxes
10,000
Revenuesproperty taxes
590,000
600,000
1,000
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2,000
2,000
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12,000
auctioneer: 1,500
former owner: 1,700
8,800
3,200
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Sales Taxes
State, which collects sales tax for city, remits payment to
city
Cash
300,000
Revenuessales taxes
300,000
Year-end accrual for taxes collected in last quarter
Sales taxes receivable
160,000
Revenuessales taxes
125,000
Deferred sales tax revenues
35,000
Note that city policy is to consider sales taxes available only if
collected by February 28th of following year. The city expects
$35,000 of sales taxes to be received in April.
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Intergovernmental Grants
Time requirements
Specify period when resources must be used
or when use may begin
Purpose restrictions
Specify activities for which the grant may be
used
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Intergovernmental Grants
Grant with purpose restrictions, but no time
requirements
City notified that it has received a state grant that must
be used to train police officers. City met all eligibility
requirements.
Due from state government
100,000
RevenuesIntergovernmental grants
100,000
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Intergovernmental Grants
Expenditure-driven grants
Reimbursement based grants
Allowable costs must be incurred by a government
as part of eligibility requirement.
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Intergovernmental Grants
Grant with expenditure incurrence and time
requirements
State grant to school district to pay 75% of special
education teacher salaries. To be eligible, school
district must be in applicable school year and have
incurred teacher salary costs.
State makes advance payment to school district.
Cash
200,000
Advance received on grant
200,000
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Intergovernmental Grants
Grant with expenditure incurrence and
time requirements (continued)
School district incurs teacher salary costs.
Expendituresspecial ed. teacher salaries 300,000
Cash
300,000
200,000
25,000
225,000
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50,000
50,000
50,000
50,000
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Interfund Transfers
Nothing in return
Most common interfund activity
Not revenues/expenses
Called other financing sources/uses
Example:
Subsidy to a debt service fund
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100,000
100,000
Interfund Loans
< 1 year: due to/from other funds
General Fund (Lender)
Due from Proprietary Fund
Cash
75,000
75,000
75,000
75,000
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Interfund Loans
> 1 year: advance to/from other funds
General Fund (Lender)
Advance to Proprietary Fund
Cash
Unassigned Fund Balance
Nonspendable Fund Balance
75,000
75,000
75,000
75,000
75,000
75,000
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Interfund Reimbursements
One fund pays bills for another
Example:
General Fund pays bill for Capital Projects Fund
Reimbursement to General Fund is required
General Fund entry
Due from Capital Projects Fund
Expendituresprofessional services
Capital Projects Fund entry
Expendituresprofessional services
Due to General Fund
Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall
7,000
7,000
7,000
7,000
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Inventories
Consumption method
Purchased $100,000 and used $85,000
Supplies inventory
Vouchers payable
Expendituressupplies
Supplies inventory
100,000
100,000
85,000
85,000
Purchases method
Purchased $100,000 of inventory
Expendituressupplies
Vouchers payable
100,000
100,000
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Inventories
Purchases method
Ending inventory of $15,000 and no beginning
inventory
Supplies inventory
Nonspendable fund balance
15,000
15,000
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100,000
100,000
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