Quiz 9: Advanced Topics for State and Local Governments
The solution to this problem will differ from student to student, assuming each has a different college financial report.
Governmental funds balance sheet Government activities are financed by taxes, intergovernmental revenue and other revenue. The revenue from these activities are reported in government fund and internal service fund. Special purpose government fund undertakes one single type of government activity and these funds can combine fund and government wide financial statement. This is undertaken by preparing reconciliation. In case of special purpose entity balance sheet or statement of net assets is prepared. The first three column of statement is prepared using current financial resources measurement focus and modified accrual basis of accounting. After that adjustment column is added to convert to economic resource measurement and accrual basis of accounting which is needed in government wide statement. a. In case of government engaged in governmental type of activities need not prepare separate fund and government wide statement. They can combine both the statement together. Also, special purpose government engaged in only governmental type of activities are required to provide complete financial reporting which is part of their financial statement. They need to provide notes to financial statement, details on enterprise fund statement and other supplementary information. b. In case of government engaged in only business type activities are required to prepare proprietary funds statement of net assets, statement of revenue, expenses and changes in fund net assets and cash flow statement. c. In case of governments engaged in only fiduciary type of services the statement required to be prepared include statement of fiduciary net assets, changes in fiduciary net assets, notes to financial statement.
Usually the balance sheet of any firm, institution or government is prepared and reported to indicate the position of assets and liabilities year over year. However the balance sheet reporting for firms and governments differs in its nature of transactions also the firm balance sheets are reported as per the FASB or GAAP but whereas the balance sheet of governments are reported as per the GASB. The GASB has classified the reporting as general purpose and special purpose balance sheet on the basis of activities in which government is involved. Balance sheet: Balance sheet is a statement of financial position. It is one of the main reports in financial statements. It shows the financial position of the company. Balance sheet will be prepared for a specific period. It summarizes a company's assets, liabilities and shareholders' equity. It is prepared by using accounting equation that is 'Assets = Liabilities + Stockholders' Equity'. Steps to compute net position: • Total assets are derived from current assets, long term investments, property, plant, and equipment, and intangible assets. • The total liability is derived from current liability, long term debt, contributed capital, and retained earnings. • Then enter net investment in capital assets, restricted and unrestricted. • Add net investment in capital assets, restricted and unrestricted to arrive at total net position. Therefore, Total net position is $167,500.
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