P. 2-1

Government-wide statements report on assets and liabilities that are denied recognition on funds statements.

Entrepreneurs Consultants, a state agency, was established to provide consulting services to small businesses. It maintains only a single general fund and accounts for its activities on a modified accrual basis.

During its first month of operations, the association engaged in, or was affected by, the following transactions and events:

1.It received an unassigned grant of $100,000. 2.It purchased five computers at $2,000 each.

CONTINUING PROBLEM

PROBLEMS

3.It paid wages and salaries of $6,000. 4.It borrowed $24,000 from a bank to enable it to purchase an automobile. It gave the bank a longterm

note. 5.It purchased the automobile for $24,000. 6.It made its first payment on the noteinterest of $200.

7.It destroyed one of its computers in an accident. The computer was not insured. a. Prepare journal entries in the general fund to record each of the transactions or other events. b. Prepare a balance sheet and a statement of revenues and expenditures for the general fund. c. Prepare a governmentwide statement of net position (balance sheet) and statement of activities.

These should be on a full accrual basis. Assume that the capital assets have a useful life of five years and that no depreciation is to be charged on the computer that was destroyed.

(Granof 84-85)

Granof, Michael H., Saleha Khumawala, Thad Calabrese, Daniel Smith. Government and Not-for-Profit Accounting: Concepts and Practices, 7th Edition. Wiley, 12/2015. VitalBook file.

Note the Textbook homework questionP.2-9"See thebalancesheet of a not-for-profit hospital presented on page 83."

Actually, P.2-9 is referring to the balance sheet on page 91.

Thanks

P. 2-9

A hospitals balance sheet tells much about its basis of accounting. See the balance sheet of a notforprofit hospital presented on page 83. It is intended to display the hospitals

fund structure. Inasmuch as it does not conform to FASB standards, it is inappropriate for external reporting.

Problems 89

90

CHAPTER 2

Fund Accounting

1.On what basis of accounting is the general fund maintained? How can you tell?

2.Are the plant replacement and expansion funds on a cash basis of accounting? How can you tell?

3.Why do you suppose that the unrestricted fund assets whose use is limited [designated] by board for capital improvements are not reported in a restricted fund?

4.Suppose the hospital were to present its balance sheet in three columns, one each for unrestricted, temporarily restricted, and permanently restricted resources. Which of the funds would most likely be reported in each of the columns?

(Granof 89-90)

Granof, Michael H., Saleha Khumawala, Thad Calabrese, Daniel Smith. Government and Not-for-Profit Accounting: Concepts and Practices, 7th Edition. Wiley, 12/2015. VitalBook file.