Question

Discuss and explain the process and journal entries required to prepare Government-Wide Financial Statements?

Answer 1

Financial Reporting – process about “ Government wide Financial Statement and required reconciliation with few Journal Entries

Fund financial statements are the necessary foundation for the Government wide Financial Statement

Conversion process from “ fund Information “ to G-W information occurs at the end of the Year

In general source of Information for “ conversion process “ includes :

a) Government funds are affected by the adjustment

b) Limited adjustment in case of Enterprise Fund

c) Internal service fund will be eliminated

d) Fiduciary fund is not included in Govt wide Financial Statement

General Capital Asset + Long term Investment

Contract Revenue measurement from current financial resources – Modified accrual to Accrual

Need to consider following step as conversion process :

Enter Government funds financial statement total column amount

Enter adjustment to be made in tjis information to convert Government

Notes on Balance Sheet conversion includes – listed accounts as on Government fund Balance Sheet , Accounts are italic words mean “ conversion process “

Fund balance / Net Asset shown on single

Journal entries summarize what recorded i worksheet

Revenue deferment because availability criteria not met will be recognised as revenue in Government wide financial statement as long as they are earned and related to current period

Intra government fund receivable and payable cancel each oterh unit

GCA Adjustment – Journal Entry :

Change in Net Asset A/c – Dr

Expenditure – Capital Outlay Construction A/c- Cr

Expenditure capital outlay – Equipment A/C – Cr

Depreciation relates adjustment entry

Depreciation Expenses

General Government A/c = Dr

Public safety A/c – Dr

Highway Street A/c –Dr

Others A/c --- Dr

Change in Net Asset A/C === Cr

Sale sof GCA

OFS – GCA Sales Proceeds A/c – Dr

Gain on Sale of GCA A/c –Cr

Change in Net Assets A/C – Cr

Some other adjustment –

Capital Outlay expenditure that do not meet capitalization threshold would be reclassified as functional expenses

Bond entries

OFS Bond A.c – Dr

OFR Premium on Bond A/c Dr

Change in Net Asset A/c – Cr

Change in Net Asset A/c -0 Dr

Interest A/c =Cr

Interest mut be adjusted for amortization premium , discounts , bonds issue cost , deferred charges , accrual adjustment

Revenue adjustment mainly two part :

a) Increase in revenue from deferral on balance Sheet conversion

b) Decrease in revenue foe collections made in current year but recognized as revenue in previous years

Couple of reconciliation like :

Fund Balance to Net Assets , Change in Fund Balance to change in net Assets