1. Can you identify the correct classification in the cash flow statement of the following cash transactions if they were transactions of a government enterprise fund in the first column, and if they were cash transactions of a business firm in the second column?
Transaction Type Government Classification Business Classification
Capital asset acquisition/sale
Capital debt issue/retirement
Noncapital debt issue/retirement
Interest paid on capital debt
Interest paid on noncapital debt
Receipt of investment earnings
MY SOLUTION:
Transaction Type Government Classification Business Classification
Capital asset acquisition/sale Capital and Related Financing Investing
Capital debt issue/retirement Capital and Related Financing Financing
Noncapital debt issue/retirement Noncapital Financing Financing
Interest paid on capital debt Capital and Related Financing Operating
Interest paid on noncapital debt Noncapital Financing Operating
Receipt of investment earnings Investing Operating
2. What are some of the factors that should be considered, when deciding if a particular undertaking by a government should be accounted for as an Enterprise Fund or as part of general governmental activities?
3. A public college had tuition and fees for the year ended June 30th, 2007, in the amount of $45,000,000. Scholarships, for which no services were required, amounted to $2,500,000. Graduate assistantships, for which services were required, amounted to $2,300,000. First, compute the amount to be reported by the college for net tuition and fee revenue. Second, state the source of the rule that you relied on to make the computations. Third, on what statement would the net tuition be reported?
$45,000 – $2,500 = $42,500 as amount reported for net tuition & fee revenue.
4. Briefly, what is meant by a worksheet approach to a conversion and what is meant by a dual-track approach to recording the data?
5. How can a worksheet approach be used to convert the fund statements to government-wide statements?
