A city levies $1,000,000 in property taxes for Year 1. It collects $800,000 in Year 1, $100,000 in the first 60 days of Year 2, and expects to collect the remaining $100,000 later in Year 2. Estimated uncollectible amount is $0. What amount of Property Tax Revenue should be recognized in the General Fund for Year 1?

Answer options:

$1,000,000

$800,000

$900,000

$950,000

How to approach this question

Rule: Revenue = Collected in Year + Collected within 60 days of Year End.

Full Answer

C.$900,000✓ Correct

Under modified accrual, revenue is recognized when measurable and available. 'Available' for property taxes is defined as collected within the current period or within 60 days after year-end. $800,000 + $100,000 = $900,000.

Common mistakes

Recognizing the full levy; ignoring the 60-day rule.

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