————–———————-————–—————CHAPTER 4—————–———–————–—–
REVIEW QUESTIONS
Q4–1 The General Fund is more than the formal definition implies. The definition implies that the General
Fund is a “catch–all” fund for all transactions not recorded in some fund. Actually, the General Fund is
Q4-2 The minimum number of Special Revenue Funds that a government might be expected to have is
Q4–3 The General Fund and Special Revenue Funds generally perform the same types of operating
services. They are both governmental type funds and therefore use the same measurement focus and basis
Q4–4 The implication of a budgetary entry that records less estimated revenues than appropriations is that
Q4-5 The difference between the full accrual and modified accrual basis of accounting applies both to
revenues and expenditures. Under full accrual accounting, revenues are recognized when earned; under
Q4-6 A revenue source that can be accrued under the modified accrual basis of accounting is property tax
revenue. The reason an accrual can be made is that revenues are recognized under the modified accrual
Q4-7 Liabilities that must be accrued under the modified accrual basis of accounting are those that, once
Q4-8 A voucher is a document that authorizes payment for services or supplies and that shows the
Q4-9 A balance sheet and a statement of revenues, expenditures, and changes in fund balance is required to
Q4–10 A credit balance in the fund balance accounts signifies that cumulative revenues and other financing
Q4–11 No. A credit balance in the fund balance accounts does not mean there is sufficient cash to pay
DISCUSSION SCENARIOS AND ISSUES
D4-1 The village manager should tell the chief of Public Works that his “better” idea may get both of them
in trouble because it is illegal. The village manager is accountable for spending the grant in accordance
D4-2 The mayor probably violated the laws by spending moneys that had not been appropriated by the
legislative body. The mayor could have asked the legislative body to make an appropriation for emergency
D4-3 There are some expenditure accruals when the modified accrual basis of accounting is used. GASB
standards regarding expenditure recognition under modified accrual accounting say that items that “should
EXERCISES
E4-1 (5 minutes)
Estimated revenues – property taxes 200,000
Estimated revenues – licenses 25,000
E4-2 (10 minutes)
Estimated revenues – property taxes 3,600,000
Estimated revenues – investment income 100,000
Estimated revenues – miscellaneous income 50,000
E4-3 (10 minutes)
Aug. 10 Encumbrances 50,000
Budgetary fund balance reserved for
encumbrances 50,000
E4-4 (10 minutes)
Expenditures – instruction 2,160,000
E4-5 (15 minutes)
Apr. 25 Encumbrances 80,000
Budgetary fund balance reserved for
encumbrances 80,000
E4-6 (15 minutes)
1. Cash 100,000
2. Expenditures – interest 917
3. Investments 50,000
4. Cash 50,375
Investments 50,000
E4-7 (20 minutes)
1. Expenditures – parks department salaries 7,000
2. Encumbrances 1,000
3. Budgetary fund balance reserved for encumbrances 1,000
Encumbrances 1,000
4. Vouchers payable 1,000
5. Expenditures – parks department other than salaries 2,000
6. Expenditures – parks department salaries 4,000
7. Expenditures – parks department other than salaries 3,000
E4-8 (25 minutes)
1. Estimated revenues – property taxes 600,000
Estimated revenues – licenses and fees 30,000
2. Property taxes receivable 600,000
Revenues – property taxes 600,000
To record property tax levy.
3. Expenditures – public safety salaries 580,000
Cash 580,000
4. Encumbrances 60,000
Budgetary fund balance reserved for
encumbances 60,000
E4-9 (5 minutes)
Appropriations 305,000
Estimated revenues 300,000
E4–10 (5 minutes)
Appropriations 750,000
Budgetary fund balance 50,000
Estimated revenues 800,000
PROBLEMS
P4-1 (20 minutes)
1. Estimated revenues – traffic fines 900,000
2. Cash 890,000
3. Expenditures – parks and recreation salaries 870,000
Empire State
Trails Special Revenue Fund
Statement of Revenues, Expenditures, and Changes in Fund Balance
For the Year Ended December 31, 2013
Revenues – parking fines $890,000
P4-2 (50 minutes)
1. Estimated revenues – general admissions fees 260,000
Estimated revenues – big cat zoo admissions fees 140,000
2. Cash 410,000
3. Encumbrances 38,000
4. Budgetary fund balance reserved for encumbrances 38,000
Encumbrances 38,000
5. Budgetary fund balance 10,000
6. Expenditures – parks and recreation salaries 270,000
Cash 270,000
7. Expenditures – parks and recreation cat food 68,000
Vouchers payable 68,000
To record receipt of cat food.
Ketzel Park Special Revenue Fund
Statement of Revenues, Expenditures, and Changes in Fund Balance
For the Year Ended December 31, 2013
Revenues:
Total expenditures 384,000
Excess of revenues over expenditures and
net change in fund balance 26,000
Vouchers payable 37,000
Total liabilities $ 46,000
Fund Balance:
Ketzel Park Special Revenue Fund
Budgetary Comparison Schedule
For the Year Ended December 31, 2013
Original Final
Budget Budget Actual Variance
Revenues:
Expenditures:
Salaries 280,000 280,000 279,000 1,000
Supplies 40,000 40,000 37,000 3,000
P4-3 (60 minutes)
1. Estimated revenues – property taxes 850,000
Estimated revenues – licenses and fees 70,000
2. Property taxes receivable 850,000
3. Cash 910,000
4. Temporary investments 50,000
Cash 50,000
5. Encumbrances 80,000
6. Budgetary fund balance reserved for encumbrances 80,000
Encumbrances 80,000
To reverse encumbrance.
7. Expenditures – salaries 770,000
8. Expenditures – salaries 25,000
City of Senasqua
General Fund
Statement of Revenues, Expenditures, and Changes in Fund Balance
For the Year Ended December 31, 2013
Revenues:
Property taxes $850,000
Total expenditures 926,000
City of Senasqua
General Fund
Balance Sheet
December 31, 2013
Assets:
Cash $ 65,000
City of Senasqua General Fund
Budgetary Comparison Schedule
For the Year Ended December 31, 2013
Original
and Final
Budget Actual Variance
Revenues:
Property taxes $850,000 $850,000 $ 0
Expenditures:
Salaries 800,000 795,000 5,000
Utilities 50,000 49,000 1,000
P4-4 (20 minutes)
1. d
2. a
P4-5 (25 minutes)
1. Encumbrances 50,000
2. Encumbrances 30,000
3. Budgetary fund balance reserved for encumbrances 50,000
Encumbrances 50,000
4. Encumbrances 10,000
5. Budgetary fund balance reserved for encumbrances 30,000
Encumbrances 30,000
6. Expenditures – supplies and equipment 250
Cash 250
Appropriations Ledger
Encumbrances___ Available
Item Debit Credit Expenditures Balance
Appropriation 95,000
2. Record PO 2 30,000 15,000
4. Record PO 3 10,000 5,000
P4-6 (20 minutes)
1. Encumbrances 25,000
2. Encumbrances 30,000
3. Budgetary fund balance reserved for encumbrances 25,000
Encumbrances 25,000
4. Vouchers payable 27,000
Appropriations Ledger
Encumbrances___ Available
Item Debit Credit Expenditures Balance
Appropriation 80,000
P4-7 (40 minutes)
Radnor City
General Fund
Statement of Revenues, Expenditures, and Changes in Fund Balance
For the Year Ended December 31, 2013
Revenues:
Property taxes $497,000
Intergovernmental 154,000
Excess of revenues over expenditures and
net change in fund balance 9,000
Radnor City
General Fund
Balance Sheet
December 31, 2013
Assets:
Cash $ 35,600
Radnor City
General Fund
Budgetary Comparison Schedule
For the Year Ended December 31, 2013
Original
and Final
Budget Actual Variance
Revenues:
Property taxes $500,000 $497,000 $ (3,000)
Expenditures:
Public safety 446,000 441,000 5,000
General government 159,000 150,500 8,500
When it prepared its budget, Radnor City anticipated that its 2013 expenditures would exceed revenues
P4-8 (20 minutes)
1. Expenditures – other than salaries 57,000
2. Cash 500,000
Tax anticipation notes payable 500,000
3. Short-term investments 300,000
Cash 300,000
4. Budgetary fund balance reserved for encumbrances 40,000
Encumbrances 40,000
P4-9 (90 minutes)
Journal entries
Estimated revenues – property taxes 335,000
1. Property taxes receivable 335,000
2. Cash 300,000
3. Encumbrances – supplies and utilities 18,000
4. Budgetary fund balance reserved for encumbrances 18,000
Encumbrances 18,000
To reverse encumbrance.
5. Cash 383,000
Property taxes receivable 330,000
6. Vouchers payable 8,000
Expenditures – salaries 340,000
7. Tax anticipation notes payable 300,000
8. Appropriations – salaries 2,000
9. Expenditures – salaries 2,000
E. Staatsboro
General Fund
Pre-closing Trial Balance
December 31, 2013
Budgetary accounts
Estimated revenues – property taxes 335,000
Financial accounts
Cash 18,500
Property taxes receivable 5,000
Accrued expenditures payable 3,000
E. Staatsboro
General Fund
Balance Sheet
December 31, 2013
Assets:
Cash $ 18,500
Property taxes receivable 5,000
E. Staatsboro
General Fund
Statement of Revenues, Expenditures, and Changes in Fund Balance
For the Year Ended December 31, 2013
Revenues:
Property taxes $335,000
Licenses and fees 38,000
Fines and penalties 15,000
E. Staatsboro
General Fund
Budgetary Comparison Schedule
For the Year Ended December 31, 2013
Original Final
Budget Budget Actual Variance
Revenues:
Property taxes $335,000 $335,000 $335,000 $ –
Excess of revenues over
expenditures and net
change in fund balance 7,000 7,000 13,500 6,500
Revenues – property taxes 335,000