Week 4 Assignment 2 - Financial Reporting Review of Local Government

ACC410 Week 1 Homework Answers Submission Sheet Summer 2021

Name: Tammy Cooper

Homework Due	Points Possible	Points Received
Exercise 1-2	4
Problem 1-1	8
Exercise 2-2	4
Continuing	8
Problem 2-1	8

Chapter 1:

Exercise 1-2 (Questions 1 through 10) textbook pages 28-29

(Enter the letters a, b, c, or d next to the question number)

1. b

2. b

3. d

4. b

5. a

6. c

7. a

8. b

9. a

10. b

Problem 1-1 textbook page 30

(Enter the answer to the question next to the letter (a, b, c, d) asking the question)

a. 7.4 million

b. 6.5 million

c. 16.5 million

d. Extent to which the authority’s budgeting and taxing policies promote interperiod equity –

The taxpayers will have to pay for the equipment in the 10th year for the services that the equipment provided during the previous 10 years.

Recommended changes –

I would recommend amortizing the bonds payable over 10 years. There would be less tax burden on current and future taxpayers for highway maintenance.

Chapter 2:

Exercise 2-2 (Questions 1 through 12) textbook pages 79-80

Enter the letters a, b, c, or d next to the question number)

1. a

2. c

3. d

4. d

5. d

6. a

7. a

8. b

9. c

10. c

11. a

12. d

Continuing Problem (Questions 1 through 4) textbook pages 82-83 – 2020 Town of Cary, NC CAFR is used for these questions found at https://www.townofcary.org/home/showpublisheddocument?id=25355

(Enter the answer to the question next to the question number and letter if present)

1. 1. Introductory Section

2. Financial Section

3. Statistical Section

2. a. Yes

Significance –

This indicates that the report met the CAFR’s standards.

b. Key issues addressed in letter of transmittal –

Legal requirements for the presentation of a CAFR, statement of fact that the CAFR is the responsibility of management, and the results of the audit.

3. a. _Cherry Bekaert___________________________________________________________________

b. Yes –

If no, why not? –

n/a

c. Management Discussion and Analysis – Yes –

If yes, key issues are –

d. Reconciliation between total governmental net position per government-wide statement of net position – and – total governmental fund balances per the governmental fund balance sheet –No –

If yes, what are the main reconciling items –

e. Major governmental funds maintained by the Town of Cary, NC in 2019 –

Capital Project Fund – consisting of street project fund, downtown project fund, parks, recreation and cultural resources project fund, general governmental project fund, and a general capital reserve fund.

Town of Cary’s fund structure conforms to its organizational structure – Yes

f. Report contains “required supplemental information” – Yes

If yes, main areas addressed –

Law enforcement officers’ special separation allowance, Local government employee retirement system, Other post-employment benefits

g. Report includes “combining statements” – Yes

If yes, nature of those statements –

Sub-fund breakdown of the information from the financial statements

h. Report contains “other supplemental information” – Yes

If yes, types of information provided –

Capital project fund – sub-fund combining balance sheet and combining schedule of revenues, expenditures, and changes in fund balance Street project sub-fund, downtown project sub-fund, parks, recreation and cultural projects sub-fund, fire project sub-fund, general government project sub-fund, general capital reserve sub-fund - combining schedule of revenues, expenditures, and changes in fund balance for each

4. a. Population –

b. Town of Cary’s major employer – SAS Institute, Inc.

c. Types of information included in statistical section –

financial trends, revenue capacity, debt capacity, demographic and economic, operating information

Problem 2-1 textbook page 83

a. Journal entries –

	Debit	Credit
(1)
Cash	100,000
Grant Revenue		100,000
(2)
Computer Expenditure	10,000
Cash		10,000
(3)
Wage Expenditure	6,000
Cash		6,000
(4)
Cash	24,000
Proceeds from Borrowing		24,000
(5)
Automobile Expenditure	24,000
Cash		24,000
(6)
Internet Expenditure	200
Cash		200
(7)
No Journal Entry

b. Balance Sheet

General Fund

Assets
Cash	83,800
Fund Balance	83,800

Statement of Revenues, Expenditures, and Other Changes in Fund Balances

Revenues
Grants	100,000
Expenditures
Acquisition of Computers	10,000
Acquisition of Automobile	24,000
Wages	6,000
Interest	200
Total Expenditures	40,200
Excess Revenue over Expenditures	59,800
Other Changes in Fund Balances
Proceeds from Borrowing	24,000
Addition to Fund Balances	83,800

c. Statement of Net Position

Assets
Cash		83,800
Computers	8,000
Automobile	24,000
Capital Assets	32,000
Less Accumulated Depreciation	6,400	25,600
Total Assets		109,400
Liabilities
Notes Payable		24,000
Total Liabilities	24,000
Net Position		85,400
Total Liabilities		109,400

Statement of Activities

Expenses
Wages	6,000
Interest	200
Depreciation	6,400
Loss on Computer	2,000
Total Expenses	14,600
Revenues
Grants	100,000
Increase in Net Position	85,400

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