Explain how to convert fund specific financials on a modified accrual accounting basis to a full...

Explain how to convert fund specific financials on a modified accrual accounting basis to a full accrual basis.

Expert Solution

Process of conversation of fund specific financials on a modified accrual to a full accrual basis:-

Government fund entries are recorded as per modified accrual basis and government wise statement prepared on full accrual basis .

Example of fund specific financial : Transfer $ 2,000,000 from general fund to a specific fund ( debt service fund)

In modified accrual accounting journal entries are as follows

SL NO	Detais	amounts ( Dr)	Amounts ( Cr)
1	Transfer out to debt service fund	$ 2,000,000
	Cash		$ 2,000,000
2	Cash	$ 2,000,000
	Transfer in from general fund		$ 2,000,000

In full accrual basis there will be only one adjustment journal entry :-

SL NO	Details	Amounts (Dr)	Amounts (Cr)
1	Transfer out to debt service fund	$ 2,000,000
	Transfer in from general fund		$ 2,000,000

Ultimately in government wise financial statement there will be no effect for it in year end .Because Cash account is nullified by crediting and debiting simultaneously and both the above mention account are settled against each others.

ekkarill92 answered 1 year ago

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