Question

1.Briefly describe the two types of financial statements that government are required to issue under GASB 34

2.and Why do governments make a journal entry to record the budget?

Answer 1

Ans:1

The two types of financial statements that local and state government are required to issue under GASB 34 are Statement of Net Assets and a Statement of Activities ans two governmental fund statements such a Balance Sheet and a Statement of Revenue, Exenditure and Change in Fund Balance.

The Govermment wide financial statements such as Statement of Net Assets and and Statement of Activities are are prepared using economic resources measurement focus and accrual basis of accounting. The statements should report all of the assets, liabilities, revenues, expenses, and gains and losses to the government. Each statement should distinguish between goverment and business type activities of the primary government and between total primary government and its discretely presented component units by reporting each in separate columns. Fiduciary activities whose reports are not available to finance the goverment's program should be excluded from governments financial statements.

Statement of Net Assets include current assets and liabilities where the current refers to a 12 month window and is more expansive definition than under fund reporting. The statement of activities reports all revenues and cost of providing government services during the year or not , not just those received or paid in the current year or soon thereafter.

Governmental fund financial statements consisting of a series of statements that focus on information about the government's major governmental and enterprise funds, its blended component units. Fund financial statemnts also should report about the goverment's fiduciary funds and component units that are fiduciary in nature. Governmental fund financial statements should be prepared using current financial resources measurement focus and the modified accrual basis of accounting.Proprietory fund financial statements,fiduciary fund financial statements should be prepared using economic resource measurement focus and the accrual basis of accounting.

Ans:2

Budget shows the projection for a future period and for prfitable companies or corporates, usually do not record Budeget in their journal entries, But in government accounting, they do make journal entries for recording budget. That is only for a budgetary purpose. The jounal entry is made at the begginning of the period and it closed(reversed) at the end of the period. It will never impact the fund balance. Therefore no actual transaction recorded in these accounts. Usually cash inflows and cash outflows i.e estimated revenues and appropriation controls respectively.