About government and non profit accounting subject

Q1. State whether these statements are true or false.  Discuss why the false statements are false.

1. An entity is likely to be a governmental entity if a controlling majority of its governing body is appointed by governmental officials.
2. The objective of a government is to provide services to its constituents.
3. AICPA pronouncements have approximately the same level of authority as articles appearing in the Journal of Accountancy.
4. The objective of a not-for-profit organization is to provide services to its constituents.
5. By definition, all funds have cash, financial resources, and capital resources.
6. The objective of a business organization is to enhance the wealth of its owners.

Q2. A department of a local government began operations at the beginning of the current fiscal year with $250,000 cash.  During the fiscal year, the department made cash disbursements for the following:

#    Salaries and other personnel costs, $100,000

#    Office rent and utilities, $24,000

#    Retirement of debt principal, $10,000; payment of interest, $2,200

#    Purchased equipment at the beginning of the fiscal year for $30,000; the equipment is expected to last 6 years and have a salvage value of $6,000

#    Photocopier rental, $10,500

Based on the preceding transactions, compute total annual expenditures for this department assuming it performs governmental-type activities and is accounted for in the General Fund.

Then compute total annual expenses for this department assuming it performs activities within an Enterprise Fund.

Q3. The council of the Town of Tulia approved the 2013 budget as follows:

Budgeted 2013 revenues from:

Property taxes                                                                             $5,000,000

Sales taxes                                                                                  $1,000,000

Appropriations for 2013:

Salaries                                                                                       $4,600,000

Materials                                                                                    $1,200,000

Equipment                                                                                     $100,000

During 2013, the town’s mayor presented the council with a budget revision to increase the amount of appropriation for salaries by $10,000.  The council approved this budget revision.

Required:

1. Prepare the general journal entry necessary to initially record the budget.
2. Prepare the general journal entry necessary to record the budget revision.

Q4. Following is a trial balance for Nadia Day Care, as of July 31, 2013, the end of its first month of business. Based on the trial balance, prepare an income statement for the month ended July 31, 2013, and a balance sheet as of July 31, 2013.

Debits        Credits

Cash                                                                                       $27,400

Accounts receivable                                                                      500

Prepaid rent                                                                                2,500

Equipment                                                                                  6,000

Accumulated depreciation, equipment                                                          $100

Accounts payable                                                                                             300

Salaries payable                                                                                                240

Interest payable                                                                                                133

Notes payable                                                                                              20,000

Capital                                                                                     10,000

Revenues                                                                                                     11,500

Operating expense                                                                     1,000

Salary expense                                                                           1,840

Utility expense                                                                              300

Interest expense                                                                            133

Rent expense                                                                              2,500

Depreciation expense                                                                    100                  

Totals                                                                                $42,273       $42,273