ExpertHard1 markMultiple Choice
CPA · Question 37 · Area I: Financial Reporting
Lakeside City's General Fund reports the following for the fiscal year:<br/>- Property tax revenue: $5,000,000<br/>- Sales tax revenue: $1,200,000<br/>- Federal grant revenue (spent on qualifying expenditures): $800,000<br/>- Bond proceeds: $2,000,000<br/>- Transfer to Capital Projects Fund: $300,000<br/>- General government expenditures: $4,500,000<br/>- Public safety expenditures: $1,800,000<br/><br/>What is the General Fund's change in fund balance for the fiscal year?
Lakeside City's General Fund reports the following for the fiscal year:<br/>- Property tax revenue: $5,000,000<br/>- Sales tax revenue: $1,200,000<br/>- Federal grant revenue (spent on qualifying expenditures): $800,000<br/>- Bond proceeds: $2,000,000<br/>- Transfer to Capital Projects Fund: $300,000<br/>- General government expenditures: $4,500,000<br/>- Public safety expenditures: $1,800,000<br/><br/>What is the General Fund's change in fund balance for the fiscal year?
Answer options:
A.
$400,000 increase
B.
$2,400,000 increase
C.
$700,000 increase
D.
$100,000 increase
How to approach this question
Calculate change in fund balance as: Revenues + Other financing sources - Expenditures - Other financing uses. Bond proceeds are other financing sources; transfers out are other financing uses.
Full Answer
B.$2,400,000 increase✓ Correct
Under GASB, governmental fund operating statements show: Revenues + Other financing sources - Expenditures - Other financing uses = Change in fund balance. Total revenues = $7,000,000; Bond proceeds = $2,000,000; Total expenditures = $6,300,000; Transfer out = $300,000. Net change = $2,400,000 increase.
Common mistakes
Treating bond proceeds as revenue, omitting transfers as other financing uses, or calculation errors in summing revenues and expenditures
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