Question

Determine how revenue is accounted for in each of the following situations in Governmental Funds:
Property taxes, sales taxes, income taxes, licenses and permits, fines, grants and donations, sales of capital assets and payments on behalf.

Answer 1

^{As per the general accepted accounted principles , governement fund recognise revenues in the accounting period when they become measurable and available to finance the expenditures of that fiscal period}

^{Property taxes should be recorded in the governmental funds by using the modified accrual basis of accounting (recorded when they are both measurable and available).A receivable is usually recognized at the time an enforceable legal claim arises.If the Revenue collected is for a subsequent fiscal period then the same would be recorded as deferred revenue. When taxes are levied, the revenue and related receivable should be recognized, net of estimated uncollectible amounts}

^{Sales Tax & Income Tax :- Sales Tax is recognised in the Period when underlying exchange has occured and resources are available but any receipts which has been received in advance should be reported as unearned revenues. Any interest and penalities levied should also be recognised}

^{Fines & Forefeits : Revenue usually recognized on a cash basis, Large fines might be accrued}

^{Sale of Capital Assets : Net proceeds from sales reported as an Other Financing Source}

^{Payment on Behalf : If any payment has been done within governement funds , it should be called interfund service transaction}

^{Licenses & Permits:- Normally rates are established by ordinance for specified period , hence it is recognised in the year it is accrued}