(Analyzing a governmental entity's financial statements) The ...

[sam.t96]

(Analyzing a governmental entity's financial statements)
 
  The following data comes from the 2013 financial statements of the Village of Matthews.
 
  Although presented in summarized format, the balance sheet debits and credits are equal and the operating statement information is complete.
 
  General Fund - Balance Sheet Elements
   Cash 1,200,000
   Short-term investments 405,000
   Property taxes receivable - delinquent 282,000
   Due from other funds 58,000
   Accounts payable and other accrued liabilities 900,000
   Assigned fund balance 90,000
   Unassigned fund balance 935,000
 
  General Fund - Operating Statement Elements
   Revenues, including property taxes of 6,125,000 8,350,000
   Expenditures (total) 7,510,000
   Transfer to Debt Service Fund 400,000
   Excess of revenues and other sources over expenditures
   and other uses 440,000
 
  Debt Service Fund - Balance Sheet Elements
   Cash and cash equivalents 230,000
   Restricted fund balance 230,000
 
  Debt Service Fund - Operating Statement Elements
   Debt service expenditures:
   Principal 100,000
   Interest 200,000
   Operating transfer from General Fund 400,000
   Excess of revenues and other sources over
   expenditures and other uses 100,000
 
  Required: Calculate the following ratios for the Village of Matthews:
   a. Current ratio - General Fund
   b. Quick ratio - General Fund
   c. Property tax receivable delinquency rate
   d. Budgetary cushion for the General Fund (Assume all assigned fund balance is available.)
   e. Debt service burden
   f. Excess of revenues and other sources over expenditures and other uses, as a percentage of revenues - Combined, General Fund and Debt Service Fund (Hint: The transfers out and in cancel each other. Therefore, use the revenues for the denominator.)

Question 2

Which of the following statements is false?
 a. Most computerized accounting systems use principles from manual systems.
  b. Subsidiary ledgers and special journals are only useful when a business doesn't have a large number ofsimilar transactions.
  c. Even small companies use computerized accounting systems.
  d. Large companies often integrate their accounting system with their automated business systems.

[SAUXC]

Answer to Question 1

(Problem 30)
a. Current ratio = Current assets / Current liabilities
= (1,200,000 + 405,000 + 282,000 + 58,000) / 900,000
= 1,945,000 / 900,000 = 2.16

b. Quick ratio = (Cash + investments) / Current liabilities
= (1,200,000 + 405,000) / 900,000 = 1,605,000 / 900,000
= 1.78

c. Property tax receivable delinquency rate= Delinquent taxes / Tax revenues = 282,000 / 6,125,000 = 4.60

d. Available fund balance / Revenues = 1,025,000 / 8,350,000 = 12.28

e. Debt service burden = Debt service expenditures / Revenues = 300,000 / 8,350,000 = 3.59

f. Excess of revenues and other sources over expenditures and other uses / Revenues = 440,000 (GF) + 100,000 (DSF) / 8,350,000 = 540,000 / 8,350,000 = 6.47

Answer to Question 2

b