Sample Paper on Account for Different types of Government Revenues and Expenditures

  • Case Study 1

    General funds: These are funds established to account for resources devoted to financing the general services which the governmental units perform for its citizens.  These include general administration, protection of life and property

    Income Statement
    For The Period ended 31st December, 2010
    $ $
    Incomes
    Revenue  438,100.00
    Proceeds from sale of Beach Property  8,000.00
    Extraordinary Item-Insurance Recovery Proceeds  5,750.00
     451,850.00
    Transfers
    Transfer from Special Revenue Fund  10,000.00
    Transfer to Enterprise Fund (6,000.00)
    Transfer to Debt Service Fund (5,000.00) ( 1,000.00)
    Total Income  450,850.00
    Expenditure
    Expenditures ( 399,250.00)
    Correction of prior year error ( 300.00)
    Total Expenditure ( 399,550.00)
    Excess of Revenues and transfers over Expenditures  51,300.00
    Fund Balance brought forward  11,000.00
    Fund Balance carried forward  62,300.00
     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

           
    General Fund
    Statement of Assets and Liabilities
    As at 31st December, 2010
    $ $
    Assets
    Cash & Cash Equivalents  51,850.00
    Investments at market value  10,000.00
    Accrued Interest Receivable  400.00
    Taxes Receivable  20,000.00
    Less : Allowance for Uncollectible Taxes (3,000.00)  17,000.00
    Penalties Receivable on taxes  550.00
    Less: Allowance for uncollectible interest and penalties (50.00)  500.00
    Accounts Receivables  19,600.00
    Less: Allowance for uncollectible accounts receivable (600.00) 19,000.00
    Dues from Special Revenue Fund  11,500.00
    Less Due to Internal Service Fund (7,500.00)  4,000.00
    Net Assets  102,750.00
    Liabilities
    Vouchers payable  25,200.00
    Notes Payable 15,000.00
    Accrued interest payable  250.00
    Total Liabilities  40,450.00
    Fund Equity
    Fund Balance  62,300.00
    Capital Employed  102,750.00

     

    Assumptions

    1. Investments are assumed to be at their market value.
    2. We assume no change in the allowance for uncollectible interest and penalties hence it is not expensed in the income statement.
    3. We also assume that the allowance for uncollectible taxes and allowance for uncollectible accounts receivables remained the same throughout the year and hence not treated as expenses in that fiscal year.
    4. There was under appropriation in the previous year and therefore the error is corrected by recognizing it as an expense in the income statement.
    Accounting principles used:
    • Commitment Accounting

    This accounting system recognises transactions when the organisation is committed to them.  It means the transaction is not recognised when cash is paid or received, nor when an invoice is received or issued, but at an early stage where orders are received and placed.  This accounting method is meant to ensure that government units do not overspend because transactions will only be entered into after checking committed balances.

    • Accrual Accounting

    The accruals concept states that revenues and costs are recognised as they are earned and incurred.  Most of the organisations in the private sector prefer this method.  However, under public sector accounting, both cash and accrual accounting can be used by different entities or kinds of organisations; e.g. if a part of an organisation is charged with the responsibility of running activities on the same basis as commercial organisations, such an entity may adopt accrual accounting irrespective of the accounting techniques adopted by the main organisation.

     

     

     

    Case Study 2

    Mesa County Special Revenue Fund
    Income Statement
    For The Fiscal Period ended 31st December, 2010
    $ $
    Incomes
    Revenue  798,000.00
     798,000.00
    Transfers
    Transfer from Capital Project Fund  35,000.00
    Advance to Enterprise Fund (45,000.00)
    Transfer to Debt Service Fund (15,000.00) ( 25,000.00)
    Total Income  773,000.00
    Expenditure
    Expenditures (789,000.00)
    Correction of prior year error ( 12,000.00)
    Total Expenditure (801,000.00)
    Excess of Expenditures over Revenues and transfers ( 28,000.00)
    Fund Balance brought forward  42,000.00
    Fund Balance carried forward  14,000.00
     

     

     

     

     

     

     

     

     

     

    Mesa County Special Revenue Fund
    Statement of Assets and Liabilities
    As at 31st December, 2010
    $ $
    Assets
    Cash & Cash Equivalents  25,000.00
    Accrued Receivable  9,000.00
    Taxes Receivable  70,000.00
    Less Allowance for Uncollectible Taxes (10,000.00)  60,000.00
    Dues from General Fund  16,000.00
    Less Due to Internal Service Fund (4,000.00)  12,000.00
     106,000.00
    Liabilities
    Vouchers payable  21,000.00
    Accrued Payables  6,000.00
     27,000.00
    Fund Equity
    Fund Balance  14,000.00
    Reserve for Inter Fund Advance  45,000.00
    Reserve for Encumbrances  20,000.00
     106,000.00

     

    Case study 3
    City of Savanna General Fund  
    Statement of Revenues, Expenditure and Changes in Fund Balance    
    For The Period ended 31st December, 2011  
    $ ‘000’ $ ‘000’  
    Revenues  
    Property tax Revenue  10,000.00  
    Licence and Fees Revenue  1,400.00  
    Grant Revenue  700.00  
     12,100.00  
    Total Revenue  12,100.00  
     
    Expenditure  
    General Government Expenditure (1,900.00)  
    Public Safety Expenditure (3,000.00)  
    Highway & Street Expenditure (3,200.00)  
    Judicial Expenditure (1,800.00)  
    purchase of equipment (1,700.00) ( 11,600.00)  
    Interest Expense ( 210.00)  
    Total Expenditure ( 11,810.00)  
    Excess of Revenues over Expenditure  290.00  
     
    Transfers  
    Transfer to reserve for encumbrances ( 50.00)  
    Advance to Capital Stores Fund (1,000.00)  
    Transfer to Debt Service Fund ( 380.00) ( 1,430.00)  
    Change in fund account during the year ( 1,140.00)  
     
    Fund Balance brought forward  11,000.00  
    Fund Balance carried forward  9,860.00  
     

     

         

     

     

     

     

     
     
    Notes to the Accounts

    Note 1

     
    Interest expense  
    Cash  120.00  
    Accrued interest on short term notes  40.00  
    Accrued interest on long term notes  50.00  
    Charged to Revenue and expenditure account  210.00      
     

    Note 2.

       
    Encumbrances  
    Fund balance b/f      300.00  
    less, encumbrances

    Equipment

    (72.00)    
    General Government purposes (144.00)      
    Highway and Street purposes (134.00)   (350.00)  
    Transfer from fund balance     50.00  

     

     

    Encumbrances account records the commitments that the government have entered into but the services contracted services have not been received. The aim of recording the commitments in the account is to ensure that the amount of budgeted appropriations are not exceeded. Through this, the accounting officers can guard against the risk of over expenditure.

     

     

     

     

    Case Study 4
    1. Statement of Revenues, Expenditure and changes in Fund Balance
    City of Savanna General Fund
    Statement of Revenues, Expenditure and Changes in Fund Balance
    For The Period ended 31st December, 2011
    $ ‘000’ $ ‘000’
    Revenues
    Property tax Revenue  65,163.00
    Sales Tax Revenue  47,082.00
    Business Tax Revenue  7,691.00
    Licence/Permit Revenue  1,442.00
     121,378.00
    Investment Income  2,691.00
    Inspection fees  2,941.00
    Intergovernmental Revenues  2,438.00
    Charges for services  22,745.00
    Penalties Receivable on taxes  746.00
    Fines and Forfeitures  3,854.00
    Miscellaneous Revenue  1,082.00  33,806.00
    Total revenue  157,875.00
    Expenditure
    General Administration expenditure ( 2,394.00)
    Management & Financial Services Expenditure ( 7,994.00)
    Facilities maintenance ( 20,923.00)
    Police Expenditure ( 52,370.00)
    Court Expenditure ( 1,934.00)
    Fire Expenditure ( 19,378.00)
    Other Governmental Services ( 14,103.00)
    Leisure services expenditure ( 12,877.00)
    Social & Cultural expenditure ( 2,034.00)
    Economic Development expenditure ( 5,349.00)
    Total Expenditure ( 139,356.00)
    Excess of Revenues over Expenditure  18,519.00
    Changes in fund balance
    Excess of Revenues over Expenditure  18,519.00
    Transfers
    Transfers in  5,562.00
    Transfers out ( 22,243.00) ( 16,681.00)
    Change in fund balance during the year  1,838.00
    Fund balance brought forward  18,072.00
    Fund balance carried forward  19,910.00
    City Of Savanna
    Statement of Assets and Liabilities
    As at 31st December, 2011
    Assets
    Cash & Investments  59,800.00
    Restricted Cash and Investments  3,467.00
    Taxes Receivable  14,849.00
    Less Allowance for Uncollectible Taxes ( 707.00)  14,142.00
    Prepaid items  4.00
    Intergovernmental receivables  40.00
    Dues from Other Funds  2,671.00
    Less : Dues to Other Funds ( 42,813.00) ( 40,142.00)
     37,311.00
    Liabilities
    Accounts payable  3,260.00
    Accrued Liabilities  1,896.00
    Escrow Deposits Payable  3,467.00
    Deferred Revenue  8,778.00  17,401.00
    Fund Equity
    Fund Balance  19,910.00
     37,311.00

     

     

     

    The Taxes receivables are recorded at their net realizable value