Question

P. 16-4

Federal agency financial statements were illustrated but not discussed in detail in this chapter. Nevertheless, despite some unusual terminology, they are readily understandable.

Examine the following financial statements, which are condensed versions of those of a federal agency responsible for collecting taxes and duties and transferring them to the Treasury.

Statement of Custodial Activity for Year Ended September 30 (in millions)
Tax revenues for others
Collections	$ 4,900
Increase in taxes receivable	200
Total revenues for others	$5,100
Disposition of revenues
Amounts transferred to the treasury	$4,800
Increase in amounts to be transferred	300
Total disposition of revenues	$5,100
Net custodial activity	$ 0
Statement of Net Cost for Year Ended September 30 (in millions)
Personnel costs	$ 300
Other costs	500
Net cost of operations	$ 800
Statement of Net Changes in Net Position for Year Ended September 30 (in millions)
Financing sources—appropriations used	$ 775
Less: net cost of operations	800
Net results of operations	$ (25)
Increase in unexpended appropriations	125
Increase in net position	$ 100
Net position, beginning of year	450
Net position, end of year	$ 550

Balance Sheet as of September 30 (in millions)
Assets
Fund balance with treasury	$ 125
Taxes receivable	615
Plant, equipment, and other assets (net of accumulated depreciation)	285
Total assets	$1,025
Liabilities
Custodial liability	$450
Other liabilities	25
Total liabilities	$ 475
Net position
Unexpended appropriations	$ 125
Cumulative results of operations	425
Total net position	$ 550
Total liabilities and net position	$1,025

Statement of Budgetary Resources for Year Ended September 30 (in millions)
Budgetary resources made available
Current appropriations	$ 900
Status of budgetary resources
Obligations incurred	$ 775
Unobligated balance not available (expired allotments)	125
Total, status of budgetary resources	$ 900
Outlays
Obligations incurred	$ 775
Add: obligated fund balance and accounts payable, beginning of year	70
Deduct: obligated fund balance and accounts payable, end of year	(60)
Total outlays	$ 785

Statement of Financing for Year Ended September 30 (in millions)
Obligations and nonbudgetary resources
Obligations incurred	$ 775
Increase in goods and services ordered but not yet received	(5)
Costs capitalized on the balance sheet and not expensed
Acquisition of capital assets	(10)
Expenses that do not require budgetary resources
Depreciation	40
Net cost of operations	$ 800

1. How much did the agency actually collect in taxes? How much did it submit to the Treasury? How much did it owe the Treasury at year‐end for both taxes collected and taxes receivable (i.e., its custodial liability per the balance sheet)? How much did it owe at the beginning of the year?
2. How much did it cost the agency to carry out its activities during the year?
3. Of its operating costs, how much was financed by federally appropriated funds?
4. What was the total amount that the agency was appropriated during the year? What was the balance that was not used? Is this amount available for immediate use by the agency? If not, why not? Did the agency have a balance in unexpended appropriations at the start of the year? How can you tell?
5. What was the total amount of goods and services ordered by the agency during the year? How much of goods or services was received (including amounts ordered in the previous year but received in the current year)? How much was paid for?
6. Per the statement of financing, the agency ordered $775 of goods and services (obligations incurred), but the net cost of operations per both the statement of financing and the statement of net cost is $800. How can the net cost of operations exceed the amount of goods and services ordered? Explain and account for the differences.

Answer 1

Refer to the below images for the above asked questions, in a detailed way of explanation.

0. Reas prenent collected Igency at year-end per the statement of custodial activity, the agency colle & 4900 in toxes and submitted $4800 to the treasury. per the balance sheet it owed the treasury $450 at year-e In as much as the amount to be transferred (per statement of custodial activity) increased by $300, it must have owried the treasury & 150 at the start of the year an amount consistent with the following analysis? Beginning Balance & Tax revenue - payments - Ending balance .. Beginning Balance = Erding balance & payments - Jax Revenue - $4.50 +44800 - 5000* $150 Tax 6 Revenue = collections plus increase in recervables. cost the agency $800 Rejointment per to The carry Statement of net cost, it out its operations. Reasonnement, per the Statement of Changes operations were financed with in net $ 775 position, the agency's of appropriations.

Requirement 4 per the Statement of budgetary resources, the agency was appropriated $ 900. It incurred $ 775 in obligations tappropriations, per the statement of changes in net position), and hence had an unused balance of $125 (increase in Unexpended appropriations per the statement of changes in net position and the knobligated balance not available per the Statement of budgetary resources). This amount was unavailable for use because the reapsire allotments had expired. If the ageney is to use it it must be reallotted per the balance sheet the year-en chexpended appropriations were only $125 - an amount equal e increase during the year. Efence it apparently had no balance at the start of the year. © -, Realuirement per the statement of financing the agency ordered (ie, obligated 3775 of goods & services - $7701 ss less than the obligated was received per the Statement of budgetary resources, the agency paid for $785 of goods & services Coutlays). @ Requirement The cost of service is measured on an aceroal bass, whereas obligations incorred are measured by the placement of orders. As indicated in the Statement of financing the ageny charged deprecation of $40, an amount included in the cost of operations but not obligated during the current year. This was offset In part by the acajuisition of s10 in fixed assets - an obligated amount, but not an expense. Moreover, the agency ordered $5 more goods than it received - also an obligated amount but not an expense.