I.
a) Outline revenue recognition criteria under modified accrual accounting.
Include specific requirements for property tax revenue.
Under modified accrual accounting, revenues are recognized when they are both
measurable and available to finance expenditures of the current period. Property taxes
are measurable before collection because the government determines the amount
assessed and estimates any portion that will ultimately prove to be uncollectible
(textbook, page 88).
Revenue Recognition—Property Taxes, by modifying the definition of available as the
term relates to property tax revenue recognition using the modified accrual basis of
accounting. The effect of this amendment is to remove the "due" consideration from the
definition of available established in NCGA Interpretation 3. It does not, however,
change the stipulation that the collection period after year-end shall not exceed sixty
days (GASB, Summary of Interpretation No. 5).
http://www.gasb.org/jsp/GASB/Pronouncement_C/GASBSummaryPage&cid=11761567
08508
b) Outline expenditure recognition criteria under modified accrual accounting.
Include the general case, recognition of debt service expenditures, and
recognition of expenditures for item such as compensated absences.
The expenditures under modified accrual accounting are decreases in net financial
resources and are generally recognized when the related liability is incurred.
Expenditures may be for current proposes for capital outlay, or for debt service. GASB
interpretation 6, clarifies expenditures should be recognized when using modified
accrual accounting (textbook, page 89).
Expenditures are recorded and fund liabilities are recognized when goods and services
are received. The most important exception is debt service expenditures for principal
and interest are recorded when due. It means debt service expenditures are not
accrued, but are recognized and fund liabilities are recorded on the maturity date.
(Textbook, page 89)
the recognition of expenditures for item – compensated absences, according from
GASB interpretation 6: Liabilities for compensated absences, claims and judgments,
special termination benefits, and landfill closure and postclosure care costs are
"normally expected to be liquidated with expendable available financial resources," and
should be recognized as governmental fund liabilities, to the extent that they mature
each period. The accumulation of financial resources in a governmental fund for
eventual payment of unmatured liabilities (for example, compensated absences) does
not constitute an outflow of current financial resources or result in the recognition of an
additional governmental fund liability or expenditure.
http://www.gasb.org/jsp/GASB/Pronouncement_C/GASBSummaryPage&cid=11761567
08391
Moreover about compensated absences according GASB, Statement No. 11
Measurement Focus and Basis of Accounting—Governmental Fund
Operating Statements
Compensated absences for other than sick leave should be recognized as expenditures
when the benefits are earned by the employees. An expenditure accrual for earned sick
leave should be made only if a vesting benefit is expected to result in a termination
payment; otherwise, expenditures for sick leave benefits should be recognized as
expenditures when the leave is taken.
http://www.gasb.org/jsp/GASB/Pronouncement_C/GASBSummaryPage&cid=1176156676266
II. Distinguish between the (1) GAAP basis and (2) budgetary basis of reporting
for the General Fund.
Compare the both report in general fund. The GAAP is presented in columnar form with
other government type funds in statement of revenues, expenditures, and changes in
fund balances for governmental funds. The Budgetary basis appears in the repaired
supplementary information. Note the required reconciliation between the budgetary
basis and GAAP basis reporting of expenditure in the bottom of the budgetary
comparison that has additional difference or explanation. (Textbook, page 106)
Reference
Copley, P. (2011). Essentials of Accounting for Governmental and Not-for-Profit
Organizations. (10th ed.). Boston: McGraw-Hill Irwin
http://www.gasb.org