Question

indicate which fund or funds would be used by the state to record each of the following events.

-service revenue fund       -Investment Trust fund   

-debt service fund           - Private-purpose fund

-capital projects fund           - Agency Fund

-enterprise fund           -Internal Service Fund

a.) The state collected personal income tax to finance its day to day activities

b.) The state collected gasoline taxes which in accordance to state law were dedicated solely to the maintenance of state roads

c.)The state collected sales tax on behalf of certain counties. All taxes were deposited in a fund pending county-by-county analysis of all sales tax returns to determine amounts due to each county

d.) as authorized by public referendum, the state sold 55 million of bonds to finance a new highway construction program. The debt proceeds were deposited into a fund.

e.) the state received 15 million from the federal government for the federal share of the costs of constructing the highways.

f.)the state office of general services performs centralized printing services for all state agencies and bills the state agencies at cost for each printing project. The office sent bill to the state compiler for printing the states annual financial report.

g.)the office of the state lottery sells lottery tickets to the public. In accordance with state law, 5% of all lottery ticket sales must be used to finance major capital projects including the acquisition of land for parks. The state received a check from the office of the state lottery for the state share of lottery ticket sales.teh state also paid the payroll of personnel who maintain the state roads referred to in the transactions above.

h.) The state paid the regular bi-weekly payroll of the state police.

i.) the state deposited funds received from three county governments into a fund. The state will invest the funds and send quarterly checks to the county governments on the interest earned by the fund.

j.) The employees retirement system, a state operated agency that administers the payment pensions to retired state employees, paid the monthly pensions.

k.) The state paid interest and principle on the debt that had been issued earlier to finance the construction of highways

Answer 1

Answer :

a. Service Revenue Fund : Collection of taxes forms the basic revenue for any state government. Hence, service revenue fund will be used to finance this event.

b. Private Purpose Fund : It is assumed that private purpose funds are used for special purpose funds. Since, gasoline taxes collected were dedicated solely for state roads, hence, for this event, private purpose funds shall be used.

c. Agency Fund : The state in this case is performing an agency function by collecting taxes on behalf of different counties and paying them. Hence, for this event, funds will be routed through Agency Fund.

d. Capital Projects Fund : Sale of Bonds in this case is for financing a new highway construction program. Hence, the proceeds will here be routed to capital projects fund.

e. Capital Projects Fund : The state received their respective federal share for construction of highways. Hence, this also forms part of capital projects fund.

f. Enterprise Fund : The state office centrally carries on printing process on behalf of state agencies at the cost of each printing project. Here, the office has sent the billing to the compiler for printing of the state's annual financial statements which forms an integral activity to the state hence, the funds here will be routed through enterprise fund.

g. Capital Projects Fund : 5 % of the lottery sales proceeds will be put in capital projects fund as mentioned. The remaining proceeds shall either be deposited in enterprise fund or service revenue fund.

h. Enterprise Fund : This fund is basically used for administrative purposes of the state. Hence, biweekly payroll payment of state police will be routed through this fund.

i. Investment Trust Fund : This is a clear case of investment, and also, quarterly checks shall be sent to the county governments on interest earned by the fund. Hence, the funds shall be deposited in the investment trust fund.

j. Service Revenue Fund : The employees retirement system administers the payment of pensions to the retired state employees. Their basic objective will be to collect contributions and pay the pension which is operating in nature. Hence, this type of payment will be routed through service revenue fund.

k. Debt Service Fund : Mostly, principle and interest on long term loans/ debts are paid through this fund. Here, in this case state paid interest and principle on debt that had been issued earlier to finance the construction of highways. This answer is on the basis of assumption that the construction of highways is completed and the interest and principle amount is still being paid. If the capital project is still under construction, then the interest costs shall be capitalised and routed to capital project fund, hence, increasing the cost of project.