Effective Financial Management A Agencies -Myassignmenthelp.Com

Question: Discuss About The Effective Financial Management A Agencies? Answer: Introduction The present study is based on preparing journal entries for Preston Village for recording it in the appropriate government funds by considering both Modified accrual accountingand full accrual accounting method. Further prepared journal entries for reflecting the transactions on government-wide statements will be justified by describing significant for both sets of financial statements. Modified accrual accountingis meant for realizing proceeds when they turn into accessible and measurable having some exceptions while recognizing expenses during the occurrence of liabilities (McKinney, 2015). Journal entries according to modified accrual basis are as follows: Preston Village issued $20million to acquire a new building for municipal office in a capital project fund; the profits were recorded. Cash a/c Dr. $20,000,000 Bonds a/c Cr. $20,000,000 The company purchased the specified building by giving the amount of $20 million. Expenditure a/c Dr. $20,000,000 Cash a/c Cr. $20,000,000 The company recorded the transaction by making depreciation on $300000 on the municipal vehicles. A) Modified accrual none Transfer of $2060000 has been made from general fund to debt service fund. Transfer out to debt service fund a/c Dr. $2,060,000 Cash a/c Cr. $2,060,000 Cash a/c Dr. $2,060,000 Transfer from general fund $2,060,000 The company made a payment of $60000 with interest on a long-term debt while repaying $2 million on the same debt. Expenditure-principle a/c Dr. $2,000,000 Expenditure-interest a/c Dr. $60,000 Cash a/c Cr. $2,060,000 A village land was sold for $5 million which has been purchased for $4million. The profits were further recorded in the general fund. Cash a/c Dr. $5,000,000 Proceeds-land a/c Cr. $5,000,000 The full accrual basis of accounting is meant for recognizing financial impacts of activities on an entity on an accounting period, despite the fact that, if or if not the cash was earned or spent (Bloch, 2016). In context with business, full accrual accounting is used to identify an appropriate net profit, to evaluate the financial performance of the business and to consider income with expenditures during an accounting period (Cunha, 2015). In context with business, the measurement of net profit is not considered as the main objective, however, in accordance with the GASB 34, GWFS are showed by making use of full accrual method. Journal entries according to full accrual basis are as follows: Preston Village issued $20million to acquire a new building for a municipal office. In a capital project fund, the profits were recorded. Cash a/c Dr. $20,000,000 Bonds payable a/c Cr. $20,000,000 The company purchased the specified building by giving the amount of $20 million. Building a/c Dr. $20,000,000 Cash a/c Cr. $20,000,000 The company recorded the transaction by making depreciation on $300000 on the municipal vehicles. Depreciation expense a/c Dr. $300,000 Accum depn a/c Cr. $300,000 Transfer of $2060000 has been made from general fund to debt service fund The company made a payment of $60000 with interest on a long-term debt while repaying $2 million on the same debt. Expenditure-bond a/c Dr. $60,000 Bonds payable a/c Dr. $2,000,000 Cash a/c Cr. $2,060,000 A village land was sold for $5 million which has been purchased for $4million. The profits were further recorded in the general fund. Given that, the government entities are justified in preparing two sets of financial statements, as these deliver different rationales for entities (Granof, Khumawala Smith, 2016). One financial statement is meant to reflect the budgetary requirements for entities during the reporting period, and the another reports the entity as a large and its achievements on inter-period equity Conclusion In accordance with the present study conclusion can be drawn that similar to corporate entities, government entities are also required to record their accounting transactions in an appropriate manner. By considering accounting principles of South Africa, government entities are justified in preparing two sets of financial statements, one financial statement offers a holistic image of government as well as the full accrual both based on the inter-period equity. Further, the other fund statement gives more consideration towards the budget, References Bloch, R. (2016). Assessing the Impact of GASB Statement No. 34: The Perceptions of Municipal Bond Analysts.Municipal Finance Journal,37(2). Cunha, C. D. (2015). Better Measurement of Governments through the Application of Accrual Accounting for Government-Wide Financial Statements. Granof, M. H., Khumawala, S. B., Smith, D. L. (2016).Government and Not-for-profit Accounting, Binder Ready Version: Concepts and Practices. John Wiley Sons. McKinney, J. B. (2015).Effective financial management in public and nonprofit agencies. ABC-CLIO.