Chapter 03 – Modified Accrual Accounting
3-1
`
CHAPTER 3: MODIFIED ACCRUAL ACCOUNTING:
INCLUDING THE ROLE OF FUND BALANCES AND BUDGETARY AUTHORITY
3-1. THE SOLUTION TO THIS AND THE FIRST EXERCISE OF CHAPTERS 1 AND 2 AND 4 THROUGH 9
3-2.
RESTRICTED
– INTERGOVERNMENTAL GRANTS
– EMERGENCY SERVICES
COMMITTED
– RAINY DAY FUND
– CAPITAL PROJECTS
ASSIGNED
UNASSIGNED
3-3. RAINY DAY FUNDS ARE CLASSIFIED AS COMMITTED ONLY IF THEY ARE CREATED BY A
RESOLUTION OR ORDINANCE THAT IDENTIFIES THE SPECIFIC CIRCUMSTANCES UNDER WHICH
CITY OF OXBOW
PARTIAL BALANCE SHEET – GENERAL FUND
AS OF DECEMBER 31, 2015
FUND BALANCES
TOTAL FUND BALANCE
$ 1,622,000
Chapter 03 – Modified Accrual Accounting
3-2
3-4.
CREDITS
A.
ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE
9,700,000
300,000
B.
ESTIMATED REVENUES CONTROL
BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
10,000,000
C.
ESTIMATED REVENUES CONTROL
ESTIMATED OTHER FINANCING SOURCES
CONTROL
APPROPRIATIONS CONTROL
ESTIMATED OTHER FINANCING
USES CONTROL
BUDGETARY FUND BALANCE
9,700,000
1,100,000
500,000
D.
ESTIMATED REVENUES CONTROL
ESTIMATED OTHER FINANCING
SOURCES CONTROL
BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
ESTIMATED OTHER FINANCING
USES CONTROL
10,000,000
1,300,000
Chapter 03 – Modified Accrual Accounting
3-3
3-5.
VILLAGE OF SYCAMORE
GENERAL JOURNAL
DEBITS
CREDITS
A.
ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE
1,100,000
988,000
112,000
B.
CASH
REVENUES CONTROL
1,007,000
1,007,000
C.
ENCUMBRANCES CONTROL
BUDGETARY FUND BALANCE –
RESERVE FOR ENCUMBRANCES
488,000
488,000
D.
BUDGETARY FUND BALANCE –
RESERVE FOR ENCUMBRANCES
ENCUMBRANCES CONTROL
EXPENDITURES CONTROL
ACCOUNTS PAYABLE
482,000
480,000
482,000
480,000
E.
EXPENDITURES CONTROL
ACCOUNTS PAYABLE
460,000
460,000
F.
ACCOUNTS PAYABLE
CASH
940,000
940,000
Chapter 03 – Modified Accrual Accounting
3-4
3-6.
A. (1) EXCHANGE TRANSACTIONS ARE TRANSACTIONS “IN WHICH EACH PARTY RECEIVES
AND GIVES UP ESSENTIALLY EQUAL VALUES.” (2) NONEXCHANGE TRANSACTIONS ARE
TRANSACTIONS “IN WHICH A GOVERNMENT GIVES (OR RECEIVES) VALUE WITHOUT
DIRECTLY RECEIVING (OR GIVING) EQUAL VALUE IN EXCHANGE.”
B. THE FOUR ELIGIBILITY REQUIREMENTS ARE
NOT TO BE RECOGNIZED UNTIL THE CONTINGENCY HAS BEEN MET.
C. THE FOUR CLASSES OF NONEXCHANGE REVENUES ARE (1) IMPOSED NONEXCHANGE
TRANSACTIONS, (2) DERIVED TAX REVENUES, (3) GOVERNMENT–MANDATED NONEXCHANGE
TRANSACTIONS, AND (4) VOLUNTARY NONEXCHANGE TRANSACTIONS.
AN EXAMPLE OF IMPOSED NONEXCHANGE REVENUES WOULD BE PROPERTY TAXES.
ACCOMPLANIED BY STATE LAW THAT MAINSTREAMING TAKE PLACE. ASSETS AND
REVENUES SHOULD BE RECOGNIZED WHEN ELIGIBILITY REQUIREMENTS HAVE BEEN MET.
Chapter 03 – Modified Accrual Accounting
3-5
3-7.
A. UNDER MODIFIED ACCRUAL ACCOUNTING, REVENUES SHOULD BE RECOGNIZED WHEN
MEASUREABLE AND AVAILABLE TO FINANCE EXPENDITURES OF THE CURRENT PERIOD.
SERVICE.
3-8. (1) GAAP BASIS IS THE ACCOUNTING PRINCIPLES USED TO REPORT IN THE GENERAL FUND
BALANCE SHEET AND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND
BALANCE. IT IS THE RESULT OF APPLYING GASB STANDARDS FOR GOVERNMENTAL FUND
Chapter 03 – Modified Accrual Accounting
3-6
3-9. CITY OF SOUTH DUNDEE
APPROPRIATION, EXPENDITURES, AND ENCUMBRANCES LEDGER
GENERAL FUND: PUBLIC SAFETY – POLICE
MONTH: JULY, 2014
UNEXPENDED
APPROPRIATION
BALANCE
TRANSACTION
REFERENCE
APPROPRIATIONS
ENCUMBRANCES
EXPENDITURES
= SUM
1
BUDGET
($9,200,000)
($9,200,000)
2
PURCHASE ORDERS
ISSUED
$600,000
($8,600,000)
3
INVOICES RECEIVED
AND APPROVED FOR
PAYMENT
($428,000)
$423,500
($8,604,500)
4
PAYROLLS
$298,000
($8,306,500)
5
BUDGET REVISION
$20,000
($8,286,500)
TOTAL
($9,180,000)
$172,000
$ 721,500
($8,286,500)
$ AMOUNTS IN ( ) DENOTE CREDITS
3-10.
1. THE CITY APPROVED A BUDGET PROVIDING APPROPRIATIONS TO THE PUBLIC SAFETY
DEPARTMENT IN THE AMOUNT OF $ 254,000.
Chapter 03 – Modified Accrual Accounting
3-11 (A)
CITY OF VIENNA
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
FOR THE YEAR ENDED DEC. 31, 2015
VARIANCE
Budgeted
(Budgetary
with Final
Original
Final
Basis)
Budget
Revenues:
Taxes
6,500,000
6,465,000
6,480,000
15,000
Licenses
230,000
230,000
225,000
(5,000)
Intergovernmental
1,200,000
1 ,200,000
1,200,000
0
Miscellaneous
120,000
104,000
105,000
1,000
Total Revenues
8,050,000
7,999,000
8,010,000
11,000
Expenditures and Encumbrances
General Government
2,700,000
2,602,000
2,473,500
128,500
Public Safety
4,050,000
4,200,000
4,215,000
(15,000)
Health and Welfare
1,220,000
1,200,000
1,198,000
2,000
Total Expenditures and
Encumbrances.
7,970,000
8,002,000
7,886,500
115,500
Net Change in Fund Balance
80,000
(3,000)
123,500
126,500
Fund Balance – Beginning
350,000
350,000
350,000
0
Fund Balance – Ending
430,000
347,000
473,500
126,500
3-11 (B)
GENERAL LEDGER
SUBSIDIARY LEDGER
DEBITS
CREDITS
DEBITS
CREDITS
BUDGETARY FUND BALANCE
ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
83,000
51,000
32,000
REVENUES LEDGER:
TAX REVENUES
MISCELLANEOUS REVENUES
APPROPRIATIONS LEDGER:
GENERAL GOVERNMENT
98,000
35,000
16,000
Chapter 03 – Modified Accrual Accounting
3-12(A). CITY OF SPRINGFIELD
GENERAL FUND -GENERAL JOURNAL
YEAR ENDED DECEMBER 31, 2015
GENERAL LEDGER
SUBSIDIARY LEDGER
DEBITS
CREDITS
DEBITS
CREDITS
1. ESTIMATED REVENUES CONTROL
BUDGETARY FUND BALANCE
12,000,000
12,000,000
REVENUES LEDGER:
PROPERTY TAXES
SALES TAXES
LICENSES AND PERMITS
MISCELLANEOUS REVENUES
5,700,000
4,300,000
1,500,000
500,000
2. BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
10,900,000
10,900,000
APPROPRIATIONS LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,400,000
4,500,000
1,000,000
3. CASH
REVENUES CONTROL
12,285,000
12,285,000
REVENUES LEDGER:
PROPERTY TAXES
SALES TAXES
LICENSES AND PERMITS
MISCELLANEOUS REVENUES
5,285,000
4,500,000
1,700,000
800,000
4. ENCUMBRANCES CONTROL
BUDGETARY FUND BALANCE –
RESERVE FOR ENCUMBRANCES
10,855,000
10,855,000
ENCUMBRANCES LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,300,000
4,650,000
905,000
Chapter 03 – Modified Accrual Accounting
3-12(A) (CONTINUED)
GENERAL LEDGER
SUBSIDIARY LEDGER
DEBITS
CREDITS
DEBITS
CREDITS
5A. BUDGETARY FUND BALANCE–
RESERVE FOR ENCUMBRANCES
ENCUMBRANCES CONTROL
10,855,000
10,855,000
ENCUMBRANCES LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,300,000
4,650,000
905,000
5B. EXPENDITURES CONTROL
CASH
10,797,550
10,797,550
EXPENDITURES LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
5,296,000
4,610,000
891,550
6. BUDGETARY FUND BALANCE
APPROPRIATIONS CONTROL
250,000
250,000
APPROPRIATIONS LEDGER:
GENERAL GOVERNMENT
CULTURE AND RECREATION
140,000
110,000
Chapter 03 – Modified Accrual Accounting
3-10
3-12(B) CITY OF SPRINGFIELD
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED DECEMBER 31, 2015
BUDGETED AMOUNTS
ACTUAL
AMOUNTS
(BUDGETARY
BASIS)
VARIANCE
WITH FINAL
BUDGET
POSITIVE
(NEGATIVE)
ORIGINAL
FINAL
REVENUES:
PROPERTY TAXES
SALES TAXES
LICENSES AND PERMITS
MISCELLANEOUS
TOTAL REVENUES
$5,700,000
4,300,000
1,500,000
500,000
12,000,000
$5,700,000
4,300,000
1,500,000
500,000
12,000,000
$5,285,000
4,500,000
1,700,000
800,000
12,285,000
(415,000)
200,000
200,000
300,000
285,000
EXPENDITURES AND
ENCUMBRANCES:
GENERAL GOVERNMENT
CULTURE AND RECREATION
HEALTH AND WELFARE
TOTAL EXPENDITURES AND
ENCUMBRANCES
5,400,000
4,500,000
1,000,000
10,900,000
5,540,000
4,610,000
1,000,000
11,150,000
5,296,000
4,610,000
891,550
10,797,550
244,000
0
108,450
352,450
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES AND
ENCUMBRANCES
FUND BALANCE, BEGINNING
FUND BALANCE, ENDING
1,100,000
753,000
$1,853,000
850,000
753,000
$1,603,000
1,487,450
753,000
$ 2,240,450
637,450
—
$637,450
Chapter 03 – Modified Accrual Accounting
3-13 TOWN OF RIVERSIDE
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED DECEMBER 31, 2015
BUDGETED AMOUNTS
ACTUAL
AMOUNTS
(BUDGETARY
BASIS)
VARIANCE
WITH FINAL
BUDGET
POSITIVE
(NEGATIVE)
ORIGINAL
FINAL
REVENUES:
PROPERTY TAXES
BUSINESS LICENSES
TOTAL REVENUES
$ 770,000
170,000
940,000
$ 770,000
150,000
920,000
$ 788,800
137,202
926,002
$ 18,800
(12,798)
6,002
EXPENDITURES AND
ENCUMBRANCES:
GENERAL GOVERNMENT
PARKS AND RECREATION
SANITATION
STREETS AND SIDEWALKS
TOTAL EXPENDITURES AND
ENCUMBRANCES
430,000
110,000
90,000
160,000
790,000
430,000
132,000
90,000
160,000
812,000
429,000
131,345
91,600
157,333
809,278
1,000
655
(1,600)
2,667
2,722
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES AND
ENCUMBRANCES
FUND BALANCE, BEGINNING
FUND BALANCE, ENDING
150,000
55,000
$ 205,000
108,000
55,000
$ 163,000
116,724
55,000
$ 171,724
8,724
—
$ 8,724
Chapter 03 – Modified Accrual Accounting
3-12
3-14. SOLUTIONS TO THE EXCEL BASED EXERCISES ARE ALSO AVAILABLE IN EXCEL ON THE
INSTRUCTOR’S WEBSITE
CITY OF SALEM
Schedule of Revenues, Expenditures and Changes in Fund Balance –
Budget and Actual: General Fund
For The Year Ended December 31, 2015
Budgeted Amounts
REVENUES
Original
Final
Actual
Amounts
Budgetary
Basis
Variance with
Final Budget
Property Taxes
14,666,000
14,666,000
15,361,830
695,830
Other Local Taxes
11,562,500
11,562,500
11,761,522
199,022
Charges for Services
1,613,011
1,613,011
1,601,435
(11,576)
Intergovernmental
7,892,080
8,047,907
7,098,698
(949,209)
Miscellaneous
1,504,977
1,388,385
1,262,549
(125,836)
TOTAL REVENUES
37,238,568
37,277,803
37,086,034
(191,769)
EXPENDITURES
Current
General Government
3,567,838
3,489,870
3,353,502
136,368
Judicial Administration
1,321,048
1,497,845
1,456,734
41,111
Public Safety
7,753,002
8,325,564
8,216,347
109,217
Public Works
4,541,651
4,984,353
4,602,273
382,080
Health and Welfare
4,823,267
4,440,167
4,418,294
21,873
Education
8,963,248
8,929,725
8,887,834
41,891
Parks and Recreation
2,983,861
3,097,528
3,055,325
42,203
Community Development
872,594
904,168
899,209
4,959
TOTAL EXPENDITURES
34,826,509
35,669,220
34,889,518
779,702
REVENUES OVER (UNDER)
EXPENDITURES
2,412,059
1,608,583
2,196,516
(971,471)
OTHER FINANCING SOURCES (USES):
Transfers (to) other funds
(3,560,000)
(3,257,000)
(3,256,899)
101
(3,560,000)
(3,257,000)
(3,256,899)
101
Excess of revenues and other sources over
(under) expenditures and other uses
(1,147,941)
(1,648,417)
(1,060,383)
588,034
FUND BALANCE – Beginning of Year
12,338,963
12,338,963
12,338,963
–
FUND BALANCE – End of Year
11,191,022
10,690,546
11,278,580
588,034
The shaded information below is
provided in the student excel
template. Solution journal
entries appear on the next page.
Chapter 03 – Modified Accrual Accounting
3-13
3-14
GENERAL LEDGER
SUBSIDIARY LEDGER
(A) RECORD THE ORIGINAL BUDGET
DEBITS
CREDITS
DEBITS
CREDITS
ESTIMATED REVENUES CONTROL
37,238,568
ESTIMATED OTHER FINANCING USES CONTROL
–
BUDGETARY FUND BALANCE
37,238,568
REVENUES LEDGER:
PROPERTY TAXES
14,666,000
OTHER LOCAL TAXES
11,562,500
CHARGES FOR SERVICES
1,613,011
INTERGOVERNMENTAL REVENUE
7,892,080
MISCELLANEOUS
1,504,977
37,238,568
BUDGETARY FUND BALANCE
38,386,509
APPROPRIATIONS CONTROL
34,826,509
ESTIMATED OTHER FINANCING USES CONTROL
3,560,000
APPROPRIATIONS LEDGER:
GENERAL GOVERNMENT
3,567,838
JUDICIAL ADMINISTRATION
1,321,048
PUBLIC SAFETY
7,753,002
PUBLIC WORKS
4,541,651
HEALTH AND WELFARE
4,823,267
EDUCATION
8,963,248
PARKS AND RECREATION
2,983,861
COMMUNITY DEVELOPMENT
872,594
34,826,509
OTHER FINANCING USES LEDGER:
TRANSFERS OUT
3,560,000
GENERAL LEDGER
SUBSIDIARY LEDGER
(B) RECORD THE BUDGET REVISIONS
DEBITS
CREDITS
DEBITS
CREDITS
ESTIMATED REVENUES CONTROL
39,235
ESTIMATED OTHER FINANCING USES CONTROL
303,000
BUDGETARY FUND BALANCE
500,476
APPROPRIATIONS CONTROL
842,711
REVENUES LEDGER:
INTERGOVERNMENTAL REVENUES
155,827
MISCELLANEOUS
116,592
APPROPRIATIONS LEDGER:
GENERAL GOVERNMENT
77,968
JUDICIAL ADMINISTRATION
176,797
PUBLIC SAFETY
572,562
PUBLIC WORKS
442,702
HEALTH AND WELFARE
383,100
EDUCATION
33,523
PARKS AND RECREATION
113,667
COMMUNITY DEVELOPMENT
31,574
OTHER FINANCING USES LEDGER:
TRANSFERS OUT
303,000
Chapter 03 – Modified Accrual Accounting
3-14
GENERAL LEDGER
SUBSIDIARY LEDGER
(C) RECORD THE ACTUAL
REVENUES
DEBITS
CREDITS
DEBITS
CREDITS
CASH
37,086,034
REVENUES CONTROL
37,086,034
REVENUES LEDGER:
PROPERTY TAXES
15,361,830
OTHER LOCAL TAXES
11,761,522
CHARGES FOR SERVICES
1,601,435
INTERGOVERNMENTAL REVENUE
7,098,698
MISCELLANEOUS
1,262,549
37,086,034
GENERAL LEDGER
SUBSIDIARY LEDGER
(D) RECORD THE ENCUMBRANCES
DEBITS
CREDITS
DEBITS
CREDITS
ENCUMBRANCES CONTROL
34,889,518
BUDGETARY FUND BALANCE – RESERVE FOR
ENCUMBRANCES
34,889,518
ENCUMBRANCES LEDGER:
GENERAL GOVERNMENT
3,353,502
JUDICIAL ADMINISTRATION
1,456,734
PUBLIC SAFETY
8,216,347
PUBLIC WORKS
4,602,273
HEALTH AND WELFARE
4,418,294
EDUCATION
8,887,834
PARKS AND RECREATION
3,055,325
COMMUNITY DEVELOPMENT
899,209
34,889,518
(E). RECORD THE EXPENDITURES AND
ENCUMBRANCE REVERSALS
GENERAL LEDGER
SUBSIDIARY LEDGER
DEBITS
CREDITS
DEBITS
CREDITS
BUDGETARY FUND BALANCE – RESERVE FOR
ENCUMBRANCES
34,889,518
ENCUMBRANCES CONTROL
34,889,518
ENCUMBRANCES LEDGER:
GENERAL GOVERNMENT
3,353,502
JUDICIAL ADMINISTRATION
1,456,734
PUBLIC SAFETY
8,216,347
PUBLIC WORKS
4,602,273
HEALTH AND WELFARE
4,418,294
EDUCATION
8,887,834
PARKS AND RECREATION
3,055,325
COMMUNITY DEVELOPMENT
899,209
34,889,518
EXPENDITURES CONTROL
34,889,518
ACCOUNTS PAYABLE
34,889,518
EXPENDITURES LEDGER:
GENERAL GOVERNMENT
3,353,502
JUDICIAL ADMINISTRATION
1,456,734
PUBLIC SAFETY
8,216,347
PUBLIC WORKS
4,602,273
HEALTH AND WELFARE
4,418,294
EDUCATION
8,887,834
PARKS AND RECREATION
3,055,325
COMMUNITY DEVELOPMENT
899,209
34,889,518
Chapter 03 – Modified Accrual Accounting
3-15
3-15. SOLUTIONS TO THE EXCEL BASED EXERCISES ARE ALSO AVAILABLE IN EXCEL ON THE
INSTRUCTOR’S WEBSITE
CITY OF GRAFTON
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE –
BUDGET AND ACTUAL: GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2015
Budgeted Amounts
REVENUES
Original
Final
Actual
Amounts
Budgetary
Basis
Variance with
Final Budget
Property Taxes
$ 3,205,000
3,205,000
3,212,000
$ 7,000
Licenses and permits
800,000
800,000
803,000
3,000
Intergovernmental
300,000
290,000
290,000
–
Miscellaneous
200,000
197,000
195,000
(2,000)
TOTAL REVENUES
4,505,000
4,492,000
4,500,000
8,000
EXPENDITURES AND ENCUMBRANCES
Current
General Government
900,000
898,000
898,000
–
Public Safety
2,125,000
2,125,000
2,107,000
18,000
Health and Welfare
1,400,000
1,400,000
1,398,000
2,000
TOTAL EXPENDITURES
4,425,000
4,423,000
4,403,000
20,000
REVENUES OVER (UNDER) EXPENDITURES
80,000
69,000
97,000
28,000
OTHER FINANCING SOURCES (USES):
Transfers (to) other funds
(120,000)
(120,000)
(120,000)
–
TOTAL OTHER FINANCING SOURCES (USES)
(40,000)
(120,000)
(120,000)
–
Excess of revenues and other sources over
(under) expenditures and other uses
40,000
(51,000)
(23,000)
28,000
FUND BALANCE – Beginning of Year
1,038,000
1,038,000
1,038,000
–
FUND BALANCE – End of Year
$ 1,078,000
987,000
1,015,000
$ 28,000