EX 26 Typical transactions can often be identified with spec

EX. 2-6 Typical transactions can often be identified with specific types of funds A city maintains the following funds: 1. General 2. Special revenue 3. Capital projects 4. Debt service 5. Enterprise 6. Internal service 7. Permanent (trust) 8. Agency For each of the following transactions, indicate the fund in which each transaction would most likely be recorded: a. The city collects $3 million of taxes on behalf of the county in which it is located. b. It spends $4 million to pave city streets, using the proceeds of a city gasoline tax dedicated for road and highway improvements c. It receives a contribution of $5 million. Per the stipulation of the donor, the money is to be invested in marketable securities, and the interest from the securities is to be used to maintain a city park.

Solution

Solution:

a

Agency

b

Special revenue

c

Permanent (Trust)

d

Enterprise

e

Debt service

f

Capital projects

g

General

h

Internal service

Explanation:

1) An agency fund refers to assembling of funds that one government agency is holding on behalf of another government agency

b) A special revenue fund is an account established by a government for the collection of money which needs to be used for a specific project

c) Among the five governmental fund types established by GAAP permanent fund is one of it\'s type

d) Enterprise fund provides goods or services to the public for a fee which makes the entity self-supporting

e) A debt service fund refers to a reserve in cash that is utilized to pay for the interest and principal payments on specific types of debt.

f) In governmental accounting capital projects fund is utilised for tracking the financial resources used to acquire main capital asset

g) The general fund is utilised to account for receipts and payments which do not belong to another fund.

h) An Internal Service fund refers to a fund that mainly provides either goods or benefits or services to other funds, departments, or agencies of government on a cost-reimbursement basis, with the motive to \'break-even\' instead of making a profit.

a	Agency
b	Special revenue
c	Permanent (Trust)
d	Enterprise
e	Debt service
f	Capital projects
g	General
h	Internal service