Chapter 18 – Governmental Entities: Special Funds and Government–Wide Financial Statements
CHAPTER 18
Q18-1 A governmental entity would use a special revenue fund rather than a general
Q18-2 Operating budgets are prepared for the general fund, special revenue funds,
Q18-3 Interest on long-term debt is accounted for in the debt service fund for only the
Q18-4 The major differences between a special revenue fund and an enterprise fund
are
Special Revenue
Enterprise
Fund
Fund
Measurement focus
Current financial resources
Economic resources
Accounting basis
Modified accrual
Accrual
Budgetary basis
Operating budget
None required
Long-term assets
No
Yes
Long-term debt
No
Yes
Encumbrances
Yes
No
Financial statements
Governmental type
Business type
Q18-5 The basis of accounting used in the proprietary funds is the accrual basis
Q18-6 The financial statements that must be prepared for the governmental funds are
the balance sheet and the statement of revenues, expenditures, and changes in fund
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C18-1 Basis of Accounting and Reporting Issues
a. In the accrual basis of accounting, revenue should be recognized in the accounting
period in which it is earned and becomes measurable.
In the modified accrual basis of accounting, revenue should be recognized in the
Copyright © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded,
distributed, or posted on a website in whole or part.
10. Further Deliberations by the Board. The Board receives comments on the ED and
standard.
11. Statements of Governmental Accounting Standards or Statements of Governmental
Accounting Concepts. A majority of the Board must vote in favor of adopting a
C18-6 Summarizing a Recent GASB Exposure Draft
Note to the Instructor: This case provides your students with the opportunity to be on the
leading edge of a proposed governmental accounting or reporting standard. Students can
learn about some of the specifics of an expected, new GASB Statement.