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In: Accounting

The Purchases Method of accounting for inventory in Government Funds a. Requires a debit to a...

The Purchases Method of accounting for inventory in Government Funds

	a.	Requires a debit to a current asset account for the cost of inventory purchased
	b.	Requires a debit to expenditures for the cost of inventory when purchased
	c.	Requires a credit to a current asset account when inventory from a stock of supplies is issued to a user department
	d.	Can be used with either a Perpetual or Periodic inventory tracking system

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Which of the following would be included in the amount of property tax revenues recognized and reported for the current year by a Government Fund?

	a.	Property taxes collected during the 2^nd month of the current year that were levied during the 1^stmonth of the current year to pay for future year expenditures
	b.	Property Tax discounts granted to property owners that paid property taxes before the due date on a property tax levied this year to be used to pay for current year expenditures
	c.	Property taxes collected on behalf of another government entity

D.Delinquent property taxes collected during the 3rd month of the current year that were levied during the previous year to pay for previous year expenditures

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Which of the following year-end financial statements must be prepared by State and Local Government (“SLG”) Government Funds?

	a.	Statement of Revenues, Expenditures, and Changes in Fund Balance
	b.	Statement of General Government Capital Assets and Long-term Liabilities
	c.	Statement of Cash Flows
	d.	Comprehensive Annual Financial Report

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A city’s General Fund records expenditures for uncollectable general government property tax revenues

	a.	When current property tax receivables are reclassified as delinquent
	b.	When the property taxes are levied
	c.	Never; no expenditures would be recorded
	d.	When the property taxes are written off as uncollectable

Expert Solution

Ans

The Purchase method for accounting in inventory in Government funds :

-(b) Requires a debit to expenditure for cost of inventory purchased.

INTERPRETATION: In the inventory purchase routed through accounts payable system , debit will be the expenditure on purchase of the raw materials and inventory whereas credit is given to accounts payable account and not current assets account.

Which of the following would be included in amount of property tax revenues recognized and reported for the current year by a government fund:

(b) Property Tax discounts granted to property owners that paid property taxes before the due date on a property tax levied this year to be used to pay for current year expenditures.

INTERPRETATION: Any item that is included in the property tax revenues of current year by a government must be related to the current year itself. No item related to past or future year or any other government entity will be included in the current year tax revenue calculation.

Which of the following year-end financial statements must be prepared by State and Local Government (“SLG”) Government Funds:

-(d) Comprehensive Annual Financial Report

INTERPRETATION: A local or state governments records financial items just like a private company that shows details regarding income, expenditure, government assets, and liabilities, cash flow and fund flow statements etc. Thus all of these statements are reported through the Annual financial report prepared and published at the end of every year.

A city’s General Fund records expenditures for uncollectable general government property tax revenues:

(a) When current property tax are reclassified as dilinquent.

INTERPRETATION: Dilinquent receivable are those receivables whose payment remain unpaid for 61 days or more from original due date. For such a situation, similar amount which was due and is estimated as uncollectible is recorded as an bad debt expense in the same period as the related tax payment. This approach of dealing with uncollectible tax helps to show a much fairer balance sheet valuation for the government body.

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ekkarill92 answered 2 years ago

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