Homework Answers
Answer (1)-
Administration and accounting department is responsible for managing the city's expenditures within the budget and maintaining the accounting, budget and financial reporting.
Following reports are prepared by a municipal body -
(a) Income statement -
It shows the result of municipality's operation by calculating difference between revenue and expenditure.
(b) Statement of activities -
It shows the balances of municipality's net assets at the end of fiscal year. Change in the net asset balances shows efficiency of funds management.
(c)- Statement of net position -
It shows assets and liabilities at the end of fiscal year
(d)- Required supplementary information -
It comprises of statement of net cost, reconciliation of net operating cost and budget and statement of social insurance.
(e)- Notes to financial statement.
(f)- Management's discussion and analysis-
It analysis financial conditions and result of operations.
(g)- Letter of transmittal -
It is a citizen guide to municipality's financial report.
(h)- Statistical section -
It shows budget of municipality.
Government Accounting Standard Board (GASB) guides the preparation of municipal financial reports.
Answer(2)-
In accrual accounting we record all the monetary transactions when they actually took place irrespective of when the paymens are made or received it is aligned with matching concept of accounting.
The modified accrual basis accounting is combination of accrual accounting and cash accounting.
In this method income is recorded as per the accrual accounting and expenses are recorded when the payments are actually made.
Modified accrual basis accounting allows the municipalities to adjust its budget as per changing requirement.
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Note:
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