flow of current financial resources
Current financial resources
resources include cash, receivables, marketable securities, prepaid items, and supplies inventories.
such as land, buildings, and equipment are not accounted for in governmental funds, but rather in governmental activities.
modified accrual accounting
forecasted revenues are less than authorized expenditures. Does not necessarily indicate poor financial management. To provide a reserve for revenue shortfalls or unexpected expenditure needs, many governments maintain a "target" ratio of Unreserved fund Balance (the amount available at the beginning of the year) to General Fund Revenues in the range of 10-20%. If the fund balance is larger than desired, the governing body may intentionally budget a deficit to reduce fund balance.
Before a department can order materials and supplies or equipment, the department should verify that a sufficient unexpended appropriation exists to cover the items being ordered
This process is sometimes referred to as "preauditing"
Accounting for Payroll
similar for a governmental fund and a for-profit entity, except Expenditures rather than Expenses are recorded.
for full amount of payroll and credit liabilities for with holdings from employees pay; credit Cash for the amount paid to employees.
for the employer's payroll costs, including employer's share of FICA and credit a liability to federal government.
Issuance of Tax Anticipation Notes (TANs)
Revenues from property taxes are often collected during one or two months of the year
Expenditure demands may occur more or less uniformly during the year
A local bank may extend a line of credit in the form of TANs to meet short-term cash needs since the notes will be backed by the power of lien over taxable properties
is the amount of unrealized estimated revenues to date (estimated revenues minus actual revenues)
is the amount of appropriations that has not yet been expended or encumbered. It is one component of Fund Equity at an interim point during the year.