governmental and notforprofit accounting 5th chapter 3 solution.docx

governmental and notforprofit accounting 5th chapter 3 solution.docx

《governmental and notforprofit accounting 5th chapter 3 solution.docx》由会员分享，可在线阅读，更多相关《governmental and notforprofit accounting 5th chapter 3 solution.docx（36页珍藏版）》请在冰点文库上搜索。

governmentalandnotforprofitaccounting5thchapter3solution

Chapter3

IssuesofBudgetingandControl

QuestionsforReviewandDiscussion

1.Capitalbudgetsarecloselytiedtooperatingbudgetsinthatgovernmentsandothernot-for-profitsmustincludecurrentyearcapitalexpendituresintheiroperatingbudgets.Inaddition,iftheyissuedebttofinancecapitalprojects,theygenerallymustserviceitoutofoperatingfunds.Further,oncetheycompletetheprojects,theymustmaintainandrepairthemoutofoperatingfunds.

2.Aflexiblebudgetmaybemoreimportanttobusiness-typethantogovernment-typeactivitiesbecausebusiness-typeactivitiesaredrivenbythemarketandcanbeexpectedtovarymorewidelywithchangesincustomerdemand.Thelevelofgovernment-typeactivities,bycontrast,isoftenestablishedbythebudget.

3.Themainvirtueofanobjectclassificationbudgetisthatitfacilitatescontrol,specifyingindetailhoweverydollarwillbespent.However,byfocusingonandcontrollingindividualexpenditures,itmayignoretherelationshipbetweencostsandorganizationalobjectives.Itmaytherebydiscourageeffectiveplanningandevaluation.

Performancebudgetsrequirethespecificationofcostsandoutcomesandthereforeencouragemanagerstoconsiderthebenefitsorsacrificesthatwillresultfromachangeinspending.Inshort,inperformancebudgeting,theemphasisisonwhattheentityaccomplishesratherthanonhowitaccomplishesit.

4.Onlyacash-basisbudget,notanaccrualbasisbudget,permitsagovernmenttoproperlyplanitscashreceiptsanddisbursements.Governmentsmustpayforgoodsandservicesincashwhentheirbillscomedue.Thetimingofpaymentsisnotnecessarilyconcurrentwiththeeconomicimpactoftherelatedactivities.Similarlytheymustestablishtheamountandtimingoftheirtaxcollectionssoastobesurethattheyhavesufficientcashonhandtomeettheircashrequirements.

5.“Favorable”budgetvariancesarenotnecessarilyindicativeofeffectivegovernmentalmanagement.Thegoalofagovernmentisneithertomaximizerevenuesnortominimizeexpenditures.Anexcessofactualoverbudgetedrevenuesmaybeevidencethattaxeswerehigherthannecessary.Anexcessofbudgetedoveractualexpendituresmaydenotethatthequantityorqualityoftheservicesthatthegovernmentprovidedwerelessthananticipated.

6.Allotmentsareperiodicallocationsoffundstodepartmentsoragencies,usuallymadebythechiefexecutive,toassurethatanentireyear’sappropriationisnotdissipatedearlyintheperiod.Theyprovideanaddedmeasureofcontroloverexpenditures.

7.Agovernment’syear-endresults,reportedinaccordancewithgenerallyacceptedaccountingprinciples,maynotbecomparablewithitslegallyadoptedbudgetowingtodifferencesin:

∙basisofaccounting（e.g.,cashversusmodifiedaccrual）;

∙timingofspecificrevenuesandexpenditures（e.g.,whethergoodsorservicesarerecognizedasexpenditureswhenorderedratherthanwhenreceived）;

∙perspective（e.g.,programversusline-item）,and

∙reportingentity（e.g.,whethercertainlegallyindependent,buteconomicallyrelated,organizationsareincluded）.

8.Thevariancesinbudgettoactualcomparisonsmaybeofnovalueinrevealingthereliabilityofbudgetestimatesmadeatthestartoftheyearbecausetheycomparetheamendedbudgetwithactualresults.Amendmentsmaybemadethroughthelastdayoftheyearandevenafteryear-end.Therationaleforthispracticeisthatthecomparisonisintendedtodemonstratelegalcompliance,noteffectivemanagement.Governmentsneedonlyadheretotheirbudgetsasamended,nottheirinitiallyadoptedbudgets.However,GASBStatementNo.34requiresthattheoriginalbudgetbepresentedalongwiththefinalbudgetforreportingpurposes.

9.Budgetaryentrieshavenoimpactonyear-endfinancialstatements.Theyareclosed-outatyear-endandnotreportedoneitherthebalancesheetoroperatingstatement.Encumbrancesarealsoclosed-outandhavenoimpactontheoperatingstatement.However,therelatedreserveforencumbrancesisareservationoffundbalanceand,accordingly,isreportedonthebalancesheetaspartoffundequity.

10.Appropriationbudgetsandrelatedbudgetaryentriesareintendedmainlytohelpcontrolexpenditures—toassurethatgovernmentsdonotspendmorethanwasauthorizedinanyparticularyear.Capitalprojectsfundsfocusoncontrollingcostsbyprojectandmaynotbeintendedtocontrolexpendituresonthebasisofperiods.Moreover,necessarycontrolcanbeadequatelyestablishedbyothermeans.Theresourcesavailableforexpenditureinacapitalprojectsfundarenormallyeithertransferred-infromotherfundsorreceivedasproceedsfrombonds.Expenditurescanthusbecontrolledbylimitingthetransfers（i.e.,throughthebudgetsofthetransferringfunds）ortheamountofthebondsissued.

Exercises

EX3-1

1.c

2.a

3.c

4.c

5.d

6.a

7.b

8.d

9.a

10.b

EX3-2

1.a

2.a

3.c

4.d

5.d

6.c

7.b

8.c

9.d

10.d

EX3-3

a.JournalEntries

（1）

Estimatedrevenues$860

Fundbalance$860

Torecordestimatedrevenues

Fundbalance$850

Appropriations$850

Torecordappropriations

（2）

Encumbrances$20

Reserveforencumbrances$20

Torecordtheorderofsupplies

（3）

Salariesexpenditure$610

Repairsexpenditure40

Rentexpenditure25

Utilitiesexpenditure41

Otheroperatingexpenditures119

Cash $835

Torecordvariousexpenditures

（4）

Encumbrances$9

Reserveforencumbrances$9

Torecordtheorderofequipment

（5）

Reserveforencumbrances$9

Encumbrances$9

Toreversetheencumbranceentry

Equipmentexpenditures$10

Accountspayable$10

Torecordtheexpenditureforthepurchaseofequipment

（6）

Reserveforencumbrances$20

Encumbrances$20

Toreversetheencumbranceentry

Suppliesexpenditure$20

Accountspayable$20

Torecordtheexpenditureforsupplies

（7）

Cash $865

Revenues$865

Torecordrevenues

b.Closingentries

Appropriations$850

Fundbalance10

Estimatedrevenues$860

Toclosebudgetaryaccounts

Revenues$865

Fundbalance$865

Toclosetherevenuesaccount

Fundbalance$865

Salariesexpenditure$610

Repairsexpenditure40

Rentexpenditure25

Utilitiesexpenditure41

Suppliesexpenditure20

Equipmentexpenditures10

Otheroperatingexpenditures119

Tocloseexpenditureaccounts

c.Itwouldmakenodifferenceintheyear-endfinancialstatementsifthecountyhadnotmadethebudgetaryentries.Thebudgetentrieswerereversedatyear-endandwouldhavehadnoimpactoneitherthebalancesheetorthestatementofrevenuesandexpenditures.

EX3-4

a.Journalentries

2011

（1）

Cash $310

Bondproceeds$310

Torecordtheissuanceofthebonds

（2）

Encumbrances$310

Reserveforencumbrances$310

Toencumberthecostofconstructingthesportscomplex

（3）

Expenditure$114

AccountsPayable$114

Torecordtheconstructionexpenditure

Reserveforencumbrance$114

Encumbrances$114

Toreversetheencumbranceentryfortheportionofthecontractcompleted

（4）

AccountsPayable$114

Cash $114

Torecordthecashpayment

（C/E1—2011）

Fundbalance$310

Expenditures$114

Encumbrances196

Tocloseexpendituresandencumbrances

（C/E2—2011）

BondProceeds$310

Fundbalance$310

Toclosebondproceeds

2012

（5）

Expenditures$190

Accountspayable$190

Torecordtheconstructionexpenditure

（6）

Accountspayable$190

Cash $190

Torecordthecashpayment

（C/E—2012）

Reserveforencumbrance$190

Expenditures$190

Tocloseexpenditures

2013

（7）

Expenditures$7

Accountspayable$7

Torecordtheconstructionexpenditure

Note:

Somegovernmentswouldrequireanapprovedrevenuesourceandalegislativeappropriationbeforeauthorizingthecostoverrun.

（8）

Cash $1

Transfer-infromgeneralfund$1

Torecordtransferofcashfromgeneralfund

（9）

Accountspayable$7

Cash $7

Torecordthecashpayment

（C/E1—2013）

Reserveforencumbrance$6

Fundbalance1

Expenditures$7

Tocloseexpenditures

（C/E2—2013）

Transfer-infromgeneralfund$1

Fundbalance$1

Toclosethetransfer-inaccount

b.Thetransferfromthegeneralfundwould,ofcourse,berecordedinthegeneralfund.Theconstructioninprocess,andthecompletedstadiumwouldberecordedinthescheduleofgeneralfixedassets.Thebondspayablewouldberecordedinthescheduleofgenerallong-termdebt.Bothwould,ofcourse,alsobereportedonthegovernment-widestatements.

EX3-5

1.Budgetaryentries

Estimatedrevenues—propertytaxes$7.5

Estimatedrevenues—salestaxes2.1

Estimatedrevenues—other1.6

Fundbalance$11.2

Torecordestimatedrevenues

Fundbalance$10.6

Appropriations—wagesandsalaries$6.2

Appropriations—supplies3.1

Appropriations—other1.3

Torecordappropriations

2.Actualrevenuesandexpenditures

Cash $11.5

Revenues—propertytaxes$7.6

Revenues—salestaxes2.4

Revenues—other1.5

Torecordrevenues

Expenditures—wagesandsalaries$6.1

Expenditures—supplies3.0

Expenditures—other1.2

Cash $10.3

Torecordexpenditures

3.Closingentries

Revenues—propertytaxes$7.6

Revenues—salestaxes2.4

Revenues—other1.5

Estimatedrevenues—propertytaxes$7.5

Estimatedrevenues—salestaxes2.1

Estimatedrevenues—other1.6

Fundbalance0.3

Tocloserevenuesandestimatedrevenues

Appropriations—wagesandsalaries$6.2

Appropriations—supplies3.1

Appropriations—other1.3

Expenditures—wagesandsalaries$6.1

Expenditures—supplies3.0

Expenditures—other1.2

Fundbalance0.3

Tocloseappropriationandexpenditures

4.Thenetchangeinfundbalanceequals$1.2—thedifferencebetweenactualrevenuesandexpenditures.

EX3-6

1.Journal