M6 - Deriving Government-wide Financial Statements and Reconciliation Requirements

Question 1

The reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance to the Government-Wide Statement of Activities is computed using the CPAS RIDES mnemonic.

Answer 1

Changes in governmental fund balance
C     +Capital outlay
P     +Principal payments on debt
A     -Asset disposals
S     -Sources (uses) financing
R    +Revenue (accrual)
I      -Interest expense (accrual)
DE  -Depreciation Expense
S    +internal Service net income
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Change in net position in government wide F/S

Question 2

The difference between the accounting treatment for asset disposals in governmental fund F/S and government-wide F/S is the book value of the property sold. (true or false)

Answer 2

True

Governmental funds account for asset disposals as proceeds classified as either “other financing sources” or a “special item” depending on their materiality.

Government wide F/S account for the disposal as a gain or loss. An asset’s sale proceeds ( on the fund F/S) minus the assets net book value equals the gain or loss on the government-wide F/S.

The difference between the 2 reported amounts is the NBV and that amount is subtracted from FUND financial statement results to arrive at GOVERNMENT-WIDE amounts.

Question 3

The reconciliation of the governmental funds balance sheet to the government-wide statement of net position is computed using the CANS mnemonic.

Answer 3

C +Captial Assets net of
A -Accumulated Depreciation
N -Non-current liabilities
S +Service (internal service fund) net position

Question 4

Measurable but unavailable revenues would be recorded as deferred inflow in governmental fund F/S. Recognition of governmental fund revenues for full accrual accounting requires a workpaper adjusting entry to debit deferred inflows and credit the affected revenue accounts. (true or false)

Answer 4

True

It would be recorded as:
DR: Taxes Receivable
CR: Deferred Inflows

It would need to change to:
DR: Deferred Inflows (to close it for the full accrual)
CR: Tax Revenue