Deck 20 Flashcards
Journal entry to record a cash dividend
Date of declaration: Dr. RE and Cr. dividend payable
Costs related to a patent that should be capitalized include:
Successful patents and legal costs
Calculation of a gain for a non monetary exchange that has commercial substance
FV asset given up - BV asset given up
Calculation of a gain for a non monetary exchange that lacks commercial substance
Gain is determined by the proportion of cash (boot) received to the total consideration
Value of a machine in the company’s balance sheet at lease inception
Record at the lessor of the fair value of the asset or lease cost (guaranteed residual value + required payments)
Cash received from bond issuance =
sales price + accrued interest
Definition of a fund
A checkbook; self balancing set of accounts
Government-wide vs. Fund-financial statements
Gov’t wide: accrual method (economic resources focus); fund-financials: modified accrual (current financial resources focus)
Governmental funds vs. Proprietary funds vs. Fiduciary funds
Gov’t: modified accrual (current focus); Proprietary and Fiduciary: accrual (economic focus)
Modified accrual method
Revenue is recognized when it is: measurable and available (not exceed 60 days after year end); expenses are recognized when the fund liability is incurred
Journal entry for property taxes levied:
Dr. property taxes receivable; Cr. Allowance for uncollectible taxes and revenue
Journal entry for recording a budget:
Dr. Estimated revenues; Cr. appropriations
Journal entry for encumbrances (purchase order)
Dr. Encumbrances; Cr. Budgetary control
Journal entry for expenditures (When goods are received)
Dr. expenditures and cr. vouchers payable; Also need to reverse the encumbrance journal entry
Under the general fund, what is included in expenditures:
General fixed assets (ex: receiving equipment)
Available appropriations =
Budget appropriations - expenditures - encumbrances (ignore vouchers payable)
Revenues included in budgetary accounting
Taxes (income, sales, and property tax), fines/penalties, debt proceeds, and inter fund transfers
Appropriations
Approved spending
Derived tax revenue examples (gov’t accounting):
Income and sales tax
Imposed non-exchange revenues (gov’t accounting):
Real estate taxes and fines/penalties
