Accounting: Revenues Journal Entries

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What is the purpose of the Estimated Revenues budgetary control account in the General Fund?

To show the amount of revenue expected to be collected during the year.

Define Appropriations in the context of budgetary control accounts.

An authorization granted by law to make expenditures for specific purposes.

What does the Encumbrances account represent?

The estimated amount of purchase orders or contracts.

Explain the purpose of Estimated Other Financing Sources in budgetary control.

The amount of financial resources expected to be received from inter fund transfers. Signup and view all the answers

What is the role of Estimated Other Financing Uses in the budgetary control process?

Disbursing financial resources for other funds. Signup and view all the answers

List three major revenue source classes commonly used in the Estimated Revenues account.

Taxes, Special Assessments, Licenses and Permits. Signup and view all the answers

What is the purpose of an operating transfer?

Shifting of resources from one fund to another fund Signup and view all the answers

How does an operating transfer impact the journal entries of the transferring fund?

Cash is debited, and Operating transfer out account is credited Signup and view all the answers

What journal entry is made in the receiving fund for an operating transfer in?

Cash is credited, and Operating transfer in account is debited Signup and view all the answers

What are residual equity transfers?

Non-routine transfers from an existing fund to establish a new fund Signup and view all the answers

How are residual equity transfers recognized in terms of accounting treatment?

As other financing sources and uses instead of revenue and expenditure Signup and view all the answers

Provide an example of a residual equity transfer scenario.

Transfer of $120,000 from the general fund to establish an internal service fund Signup and view all the answers

Why is it important for administrators to review each purchase order and contract before it is signed?

To ensure that a valid and sufficient appropriation exists to cover the expenditure. Signup and view all the answers

What term is used to describe the status of an appropriation when a purchase order or contract is issued?

Encumbered Signup and view all the answers

Why is the word 'encumbered' used instead of 'expended' when referring to the amount of a purchase order or contract?

Because the amount is only an estimate of the liability that will be incurred when the purchase order is filled or the contract executed. Signup and view all the answers

What could happen if an administrator incurs liabilities for an amount in excess of the appropriation?

Penalties may be imposed by law. Signup and view all the answers

In what situation would a purchase order or contract legally be issued according to the text?

When a valid appropriation exists with an available balance sufficient to cover the amount of the purchase order or contract. Signup and view all the answers

Why is it important to record that an appropriation has been encumbered when a purchase order or contract is issued?

To indicate that the amount is reserved for the liability that will be incurred. Signup and view all the answers

What is the purpose of the encumbrance procedure in governmental accounting?

To reserve funds for future expenditures and prevent overspending. Signup and view all the answers

Why might the invoice amount differ from the amount on the government unit's purchase order?

Due to additional charges like shipping costs, sales taxes, and price adjustments. Signup and view all the answers

When should both expenditures and the liability account be recorded at the actual amount in governmental accounting?

When the government unit agrees to pay the vendors for goods or services received. Signup and view all the answers

Why does the difference between estimated and actual amounts not pose accounting difficulties?

As long as goods or services are received in the same fiscal period as ordered. Signup and view all the answers

In what situation might a governmental unit decide not to follow the encumbrance procedure for certain expenditures?

For salaries and wages of governmental employees with recurring, relatively constant amounts. Signup and view all the answers

When would a department follow the encumbrance procedure for personal service appropriations?

When the department's payrolls fluctuate greatly seasonally. Signup and view all the answers

What is the journal entry when revenues are collected in cash?

Cash xxx Revenues xxx Signup and view all the answers

How should revenues from sources like licenses and permits be accrued under the modified accrual basis of accounting?

Debit to a receivable and a credit to Revenues Signup and view all the answers

What is the total amount of revenues collected in cash during fiscal year 2008 by the Town of Hawassa?

$259,200 Signup and view all the answers

What is the purpose of an appropriation when enacted into law?

Legal authorization for administrators to incur liabilities Signup and view all the answers

What are some examples of sources for revenues not measurable until received in cash?

Licenses, permits, fines, forfeits, charges for services Signup and view all the answers

How should revenues from sources not measurable until received in cash be accounted for under the modified accrual basis?

Accrued by recording a debit to a receivable and a credit to Revenues Signup and view all the answers