Applied Practice: Recording Governmental Transactions
Transaction 1: Payroll
The General Fund pays $84,000 in salaries and wages for the pay period, all in cash.
Reveal the answer
Fund level: Dr. Expenditures — Salaries and Wages 84,000 / Cr. Cash 84,000
Government-wide: Dr. Expenses — Instruction (or relevant function) 84,000 / Cr. Cash 84,000
Fund level hits an Expenditures account under modified accrual. Government-wide hits Expenses under full accrual, classified by function rather than object.
Transaction 2: Grant Receipt
The district receives a $50,000 federal grant, deposited directly to the General Fund. It’s a reimbursement-type grant, funds are received only after qualifying expenditures are made and documented, and all qualifying expenditures have already occurred.
Reveal the answer
Fund level: Dr. Cash 50,000 / Cr. Revenues — Intergovernmental 50,000
Government-wide: Dr. Cash 50,000 / Cr. Program Revenues — Operating Grants and Contributions 50,000
Both levels recognize revenue here since it’s a reimbursement grant and the eligibility requirement, qualifying expenditures, has already been met. Government-wide classifies it as program revenue since it’s restricted to a specific program.
Transaction 3: Equipment Purchase
The General Fund purchases classroom furniture for $12,000 cash, a general capital asset.
Reveal the answer
Fund level: Dr. Expenditures — Capital Outlay 12,000 / Cr. Cash 12,000
Government-wide: Dr. Equipment (capital asset) 12,000 / Cr. Cash 12,000
This is the module’s key concept. Governmental funds don’t track capital assets, the purchase is just an expenditure at the fund level. At the government-wide level it becomes an asset, to be depreciated over its useful life instead.
Transaction 4: Interfund Transfer
The General Fund transfers $25,000 to a Special Revenue Fund to support a specific program.
Reveal the answer
General Fund: Dr. Other Financing Uses — Transfers Out 25,000 / Cr. Cash 25,000
Special Revenue Fund: Dr. Cash 25,000 / Cr. Other Financing Sources — Transfers In 25,000
Government-wide: No entry. Both funds are governmental activities, so this transfer is eliminated, it’s money moving within the same reporting entity.