| Course | ACC 460 Government and Non-Profit Accounting (ACC/460) |
|---|---|
| Week | 1 |
| Paper type | Fund structure and reporting entity paper |
| Length | about 1,069 words, 4 double-spaced pages plus title page and references |
| Format | APA 7 student paper |
| School | University of Phoenix |
| Program | BS in Accounting |
| Updated | September 2026 |
Free sample paper for ACC 460 Week 1
Eleven Funds and Two Component Units: Mapping a Composite City's Fund Structure and Deciding Which Related Organizations Belong in Its Financial Report
[Student Name]
University of Phoenix
ACC/460: Government and Non-Profit Accounting
Week 1 Assignment
[Instructor Name]
[Date]
The city, its funds and its related organizations are composites written for a model paper; standards and research findings come from the sources listed.
A composite city of 42,000 residents in the Mountain West provides police, fire, streets, parks and planning, runs a water and sewer utility and maintains a fleet of about 180 vehicles. Its annual comprehensive financial report runs to more than 200 pages, and a first-year analyst in the finance department has been asked to explain its structure to a new city council member. A city does not keep one set of books because it does not have one set of promises; each fund shows that money given for a purpose was spent on it. This paper maps the city's funds and decides which related organizations belong in its report.
Why Funds
A business measures success largely by profit. A government is judged instead by whether it raised and spent resources as the law, voters and grantors required. Fund accounting divides the government's resources into separate fiscal and accounting entities, each with its own self-balancing accounts, so that restricted money can be shown separately from general resources. The Governmental Accounting Standards Board (GASB) sets standards for state and local governments, and its reporting model requires both fund financial statements and government-wide statements (Governmental Accounting Standards Board, 1999).
Governmental Funds
Governmental funds account for the city's basic services financed mainly by taxes and grants. The general fund holds most operations: police, fire, streets and administration. A special revenue fund accounts for the voter-approved parks sales tax, restricted to parks. A second special revenue fund holds federal community development grants. A capital projects fund accounts for the construction of a new fire station financed by bonds, and a debt service fund accumulates resources to pay principal and interest on the city's general obligation bonds. A permanent fund holds a cemetery endowment whose earnings, but not principal, may be spent on upkeep.
Governmental funds use the current financial resources measurement focus and the modified accrual basis, recognizing revenues when measurable and available and expenditures generally when a liability is incurred. They focus on what can be spent in the near term.
Proprietary Funds
Proprietary funds account for activities financed mainly by charges, as a business would be. The water and sewer utility is an enterprise fund, charging residents for service, and so is the municipal golf course. The fleet garage, which maintains city vehicles and bills departments for fuel and repairs, is an internal service fund, since its customers are other city departments. Proprietary funds use the economic resources focus and full accrual basis, reporting capital assets, depreciation and long-term debt.
Fiduciary Funds
Fiduciary funds hold resources for others and cannot be used for the city's programs. The police and fire pension plan is a pension trust fund. A custodial fund holds county property taxes that the city collects for a few weeks before remitting them. Fiduciary funds also use the economic resources focus and full accrual.
That makes eleven funds: six governmental, three proprietary and two fiduciary.
Major Funds
Fund financial statements do not show every fund in its own column. The general fund is always a major fund. Any other governmental or enterprise fund is major if its assets, liabilities, revenues or expenditures are at least 10% of the total for its fund category and at least 5% of the combined total for governmental and enterprise funds. The capital projects fund for the fire station and the water and sewer utility both meet the tests this year, so each has its own column; the remaining governmental funds are combined in a column for nonmajor funds, with detail in supplementary schedules. A government may also report any fund it considers important to users as major, and the city does so for the parks fund because voters approved the tax and want to follow it.
The Reporting Entity
The reporting entity includes the primary government and organizations for which it is financially accountable, and others whose exclusion would be misleading (Governmental Accounting Standards Board, 1991). Financial accountability exists when the government appoints a voting majority of an organization's board and either can impose its will on the organization or has a potential financial benefit or burden relationship with it, or when the organization is fiscally dependent on the government (Governmental Accounting Standards Board, 2010).
The Library District
The public library district is legally separate. The city council appoints all five of its trustees, approves its budget and levies a property tax on its behalf. Appointment of a majority and the ability to impose will through budget approval make the city financially accountable, so the district is a component unit. It serves the public rather than the city government itself, and its board is not the city council, so it is discretely presented in a separate column.
The Economic Development Corporation
The economic development corporation is a nonprofit whose board is the city council itself, sitting in a separate capacity, and whose staff are city employees. Because the governing bodies are substantively the same and city management has operational responsibility, the corporation is blended into the city's statements as if it were a special revenue fund.
The Transit Authority
The regional transit authority serves four cities and the county. The city appoints two of eleven board members, cannot approve its budget and has no obligation for its debt. The city is not financially accountable, and excluding the authority would not be misleading, so it is left out of the report, with a note describing the city's participation.
Why the Structure Serves Users
Citizens want to know whether the parks tax was spent on parks, bondholders want to know whether the debt service fund holds enough to pay them and grantors want proof that grant money was spent as agreed. Plummer et al. (2007) found evidence that the government-wide information introduced by the current model was related to bond ratings and other measures of fiscal condition, which supports the view that the structure provides useful information to creditors, not only compliance.
Conclusion
The city's eleven funds separate general resources from restricted ones and business-type activities from governmental ones. Of three related organizations, the library district is a discretely presented component unit, the economic development corporation is blended and the transit authority is excluded. The structure is designed around accountability for resources, which is why it looks so different from a company's annual report.
References
Governmental Accounting Standards Board. (1991). The financial reporting entity (Statement No. 14).
Governmental Accounting Standards Board. (1999). Basic financial statements, and management's discussion and analysis, for state and local governments (Statement No. 34).
Governmental Accounting Standards Board. (2010). The financial reporting entity: Omnibus, an amendment of GASB Statements No. 14 and No. 34 (Statement No. 61).
Plummer, E., Hutchison, P. D., & Patton, T. K. (2007). GASB No. 34's governmental financial reporting model: Evidence on its information relevance. The Accounting Review, 82(1), 205-240. https://doi.org/10.2308/accr.2007.82.1.205
What the ACC 460 Week 1 instructions ask
The first task in ACC 460 Week 1 is usually to set out the purpose of fund accounting and the structure of governmental financial reporting. Common requirements include describing the three fund categories and the fund types within each, explaining the measurement focus and basis of accounting used by each, identifying major funds and applying the criteria for the financial reporting entity, including financial accountability and the distinction between blended and discretely presented component units. Some sections add the differences between governmental and nonprofit reporting or the users of government financial statements. The paper is usually a short analysis of a real or described government, with GASB standards cited in APA style.
How this ACC 460 Week 1 example is built
A mid-sized city gives the paper a realistic set of funds, including a water utility and a fleet garage, and a ring of related organizations whose relationships to the city differ in ways that matter. The paper first explains why governments use funds at all, then places each of the city's funds in its category with its measurement focus. The reporting entity section applies the financial accountability test to three organizations one at a time, showing the facts that lead to each result. A final section explains how the structure serves the users of government reports, such as citizens, bondholders and oversight bodies, and why it differs from business reporting.
ACC 460 Week 1 grading rubric: where the points go
Faculty tend to grade this opening paper on accurate classification of funds, correct statements of measurement focus and basis of accounting and a correct application of the reporting entity criteria. Governmental funds should be described as using the current financial resources focus and modified accrual basis, proprietary and fiduciary funds the economic resources focus and accrual basis. Component unit decisions should rest on appointment of a voting majority, imposition of will or financial benefit or burden and fiscal dependence, with blending justified by the stated conditions. Explaining the purpose of the structure for users earns more. Citations of the specific GASB statements, clear organization and a professional tone complete the rubric.
ACC 460 Week 1 help: mistakes to avoid
ACC 460 Week 1 papers often list fund types without saying why governments need them. Start with the idea that restricted resources must be shown separately to demonstrate that they were used as required. Another common error is assigning a utility to the general fund; business-type activities charged to users belong in enterprise funds. Students also treat every related organization as a component unit. Apply the financial accountability tests one by one and state which facts meet them. Distinguish blending from discrete presentation with the specific conditions. Avoid business terms such as profit for governmental funds. Finally, name the users of the report and what each of them needs to learn from it.
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- ACC 460 Week 4: Government-Wide and Fund Statements
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ACC 460 Week 1 questions, answered
What does ACC/460 Week 1 usually cover?
It usually covers fund accounting, the governmental, proprietary and fiduciary fund categories, measurement focus and basis of accounting and the financial reporting entity, including component units.
Where can I find a free ACC 460 Week 1 sample paper?
The composite city's fund structure and component unit analysis is laid out on this page, with margin comments, for anyone to read. Send the government in your assignment and we will prepare a first paper free.
What is a component unit?
A legally separate organization for which a primary government is financially accountable, or whose exclusion would make the government's report misleading.
What is the difference between blended and discretely presented component units?
Blended units are reported as if they were part of the primary government, usually because they serve it almost exclusively or share its governing body; discretely presented units appear in separate columns.
What basis of accounting do governmental funds use?
Governmental funds use the current financial resources measurement focus and the modified accrual basis, while government-wide statements use the economic resources focus and full accrual.
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