All copyright violation item if any will be removed. Chapter 5: Accounting for General Capital Assets and Capital Projects. If the taxpayer holds the asset for more than a year before selling, the gain is generally taxed at a maximum 15% rate but could be taxed as high as 20% for high income taxpayers. Financial reports must satisfy numerous and diverse needs or objectives, including short-term financial position and liquidity, budgetary and legal compliance, and issues having a long-term focus such as capital budgeting and maintenance. Employees should also have a means for communicating the effectiveness and efficiency of these systems to upper levels of management.
Reestablish the prior year's Encumbrances Debit Encumbrance-2010 Credit Fund Balance 2. In this case, Competition Bikes needs to finance its expansion and is considering five capital structure alternatives, which include various combinations of bonds and stock. Required: Record this transaction in both the General Fund and governmental activities journal. Fiduciary fund information is presented by type of fund rather than by major funds. Given the tax rate of 30. Additionally, certain types of control activities may not be relevant in small entities. General computer controls include the usual elements of effective internal control, that is, an individual or group responsible for control procedures and monitoring activities.
Chapter 11: Auditing of Governmental and Not-for-Profit Organizations. Required: Record this transaction in both the General Fund and governmental activities journal. Reported earnings may be positive, but operations are actually consuming rather than generating cash. At the governmentwide level, you should assume the city uses the periodic inventory method. Chapter 7: Accounting for the Business-Type Activities of State and Local Governments. Access controls, however, do not prevent individuals who have authorized access to assets from misappropriating them.
Keith Lam Associate Professor of Finance Office: L217 Ext. This reduces the number of funds presented on the face of the financial statements and directs the focus on the significant funds of the reporting entity. Required: Record this transaction in the General Fund and governmental activities journals. Managers of the information systems function usually monitor the performance of general computer controls. If detective control procedures such as physical inventory counts are appropriately performed, shortages should be discovered in a timely manner. All these controls, however, can be classified within one of the basic categories of controls described below.
Note: You should consider the beginning of year balances in fund balance accounts in calculating the amounts to be reclassified. Additional guidance on these issues is given in. Prepare the appropriate journal entry in the General Fund to reclassify amounts between Fund Balance— Unassigned and the fund balance accounts corresponding to the constraints shown below. The transaction has no effect at the government-wide level since it occurs between two governmental activities. If, however, you would like to avoid having these accounts appear in the post-closing trial balance, you can opt to close Encumbrances to Encumbrances Outstanding. In small entities, procedures will be less formal than in large entities. Thus, district accounting systems must have the ability to account for transactions at a level of detail beyond that required by other governments.
Note: You should consider the beginning of year balances in fund balance accounts in calculating the amounts to be reclassified. Such reviews could be performed in both computer and manual systems. Chapter 3: Governmental Operating Statement Accounts; Budgetary Accounting. The City of Smithville does not record encumbrances for payrolls. Any funds available for buying machinery are shown on the balance sheet as liquid assets with debit balances. Internal service funds are excluded from the major fund reporting requirements. The original maturity is determined from the date of acquisition of the investment by the entity, not the date of original issuance of the security.
Detailed control procedures or monitoring activities may be included in each of these categories, depending on the size of the entity and the sophistication of the particular control environment. Chapter 2: Principles of Accounting and Financial Reporting for State and Local Governments. Chapter 8: Accounting for Fiduciary Activities—Agency and Trust Funds. It was estimated that 3 percent of the levy would be uncollectible. The investors need to select the most advantageous security that produces the best possible outcome. Each fund is a separate fiscal entity and is established to conduct specific activities and objectives in accordance with statutes, laws, regulations, and restrictions or for specific purposes.
If accounting information is routinely used in making operating decisions, management is likely to establish effective controls and hold lower-level managers and employees accountable for performance. The method to account for governmental activity expenses is shown as well, followed by accounting for payrolls. The vision of these original authors continues to be reflected in this 17th edition, and their strategy of providing a large and innovative set of instructional support materials prepared and tested in the classroom by the authors continues to be a guiding principle today. Higher variability in inventory balances C. It is important for governments to provide their constituencies with effective financial information presented in a consistent and clear format. It ensures that jobs are scheduled and processed as planned, data are properly stored on the system or tapes, and reports are distributed in a timely and accurate fashion. It is a comprehensive governmental and not-for-profit accounting text written for students who will be auditing and working in public and notfor- profit sector entities.
Required: Record this transaction in both the General Fund and governmental activities general journals. Thus, the internal control environment and related procedures are key areas of concern to an entity's external auditor. Chapter 4: Accounting for Governmental Operating Activities—Illustrative Transactions and Financial Statements. Both criteria must be met in the same element assets, liabilities, etc. Thus, revenues are recognized in the accounting period in which they are earned and become measurable without regard to availability, and expenses are recognized in the period incurred, if measurable. Regardless of the method you choose, we recommend that you refer to the illustrative journal entries in Chapter 4 of the Reck, Lowensohn, and Wilson textbook 16h edition for guidance in making all entries.