Question

Why might differences exist between the amount of property tax revenues recorded for the current year by governmental funds and the amount of property tax revenues recorded for the current year for governmental activities in a given year?

Answer 1

Property tax revenues are those revenues that are collected from the citizens of the district's service area and governmental and nongovernmental entities. This forms 1 of the 3 categories of funds that are generally presented in the financial statements of Government funds. The amount of time after the end of the fiscal year during which collections can be considered available and thus recorded as revenue is called the period of availability. Accounting standards specify that the period of availability for property taxes is 60 days. Governments should disclose, in the summary of significant accounting policies, the length of time it used to define availability for its other revenues.

Deferred revenues refer to resources a government has received that are attributable to a future period. For instance, a government may receive a payment in the current year that is for the following year's property tax bills. That amount would be reported as deferred revenue until the next year. However, under modified accrual, revenues may be deferred because the resources are not available—they have not been received during the year or soon enough thereafter to be used to finance current-period expenditures. If a given year's tax payments were not received by the government in time to be considered available, then the revenue would be deferred until the payments were received.

Hence, because of this mismatch, there may be a difference between property tax revenues recorded by Government funds and those recorded by Government activities, during a given financial accounting year