ExpertMedium1 markMultiple Choice
CPA · Question 45 · Area III: State & Local Governments
A city levies $1,000,000 in property taxes for the fiscal year ending December 31. <br/>- Collected during the year: $900,000<br/>- Collected in Jan-Feb of next year: $50,000<br/>- Collected in March of next year: $30,000<br/>- Estimated uncollectible: $20,000<br/><br/>What amount of revenue should be recognized in the General Fund for the year?
A city levies $1,000,000 in property taxes for the fiscal year ending December 31. <br/>- Collected during the year: $900,000<br/>- Collected in Jan-Feb of next year: $50,000<br/>- Collected in March of next year: $30,000<br/>- Estimated uncollectible: $20,000<br/><br/>What amount of revenue should be recognized in the General Fund for the year?
Answer options:
A.
$1,000,000
B.
$900,000
C.
$950,000
D.
$980,000
How to approach this question
Apply the '60-day rule' for property taxes. Revenue = Collected in Year + Collected within 60 days of Year-End.
Full Answer
C.$950,000✓ Correct
C
Under the modified accrual basis, property tax revenue is recognized when it is measurable and available. 'Available' typically means collected within the current period or within 60 days after the end of the period. <br/>Revenue = $900,000 + $50,000 = $950,000.
Common mistakes
Including amounts collected after 60 days; recognizing the full levy.
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