Quiz 8: Government-Wide Statements, Capital Assets, Long-Term Debt
The solution to this and the first exercise of Chapters 1 through 8 will differ from student to student assuming each has a different CAFR.
Non-exchange revenue is receiving value in money without directly providing approximately equal value in exchange or non-exchange revenue is receiving value from another entity without directly giving approximately equal value in exchange. There are mainly 4 types of non-exchange revenues. They are as under. 1. Derived tax revenue where assessments-imposed taxes, penalties are received. For example, income tax, sales tax and any other imposed taxes on earnings or consumption. They are derived based on facts considered valid to be tax assessed to be imposed. 2. Imposed non exchange revenue where assessments-imposed taxes are levied on nongovernmental entities including individuals. For example, property tax, fines and penalties. 3. Government mandated non exchange transactions where a government provides resources to another government, may be a local government or a local governing body for a purpose. For example, federal programs that state or local government are bound to perform. 4. Voluntary non-exchange transaction resulted by legislations or contractual agreement entered willingly by the parties for other than exchanges. For example, Donations, grants. These are the four kind of non-exchange revenues that affect in the timing of recognition between accrual and modified accrual bases of accounting. However, GASB's statement 33 provides guidance on timing of recognition for each type non-exchange revenue.
Internal service fund can be defined as a fund authorized and recognized to fund or finance for good and or services provided by one governmental department to another governmental department and reimbursed or paid on a cost to cost basis. In other words, internal service fund are those funds that would commonly provide good and or services to governmental department subjected to governmental activities. It may be noted that the revenues and expenditure of internal service fund are reported and included with the governmental activities on the statement of activities. This causes difference between the net change in the fund balance reported on the statement of revenues, expenditure and changes in fund balances of the governmental fund and change in the net assets of the governmental activities reported on the statement of activities. Because of this, the net change in the fund balances of governmental activities will increase. However, it may be noted that internal service fund revenues and expenses are not reported in the governmental fund financial statement because of which net change in fund balances of the governmental funds does not include internal service fund revenues and expenses. And because of this reason, internal service fund is more commonly displayed as governmental activities to reconcile the change in the net assets of the governmental activities with the net change in the fund balances of the governmental funds.