| Course | ACC 460 Government and Non-Profit Accounting (ACC/460) |
|---|---|
| Week | 3 |
| Paper type | Governmental revenue and expenditure recognition paper |
| Length | about 1,008 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 3
When Is Tax Money Revenue? Modified Accrual Recognition of Property Taxes, Sales Taxes and a Reimbursement Grant, and the Expenditures a Composite Town Records for Salaries, a Fire Truck and Its Bonds
[Student Name]
University of Phoenix
ACC/460: Government and Non-Profit Accounting
Week 3 Assignment
[Instructor Name]
[Date]
The town and all figures are composites written for a model paper; standards and research findings come from the sources listed.
A composite town of 22,000 people in the Midwest runs its police, fire, streets, parks and administration from a general fund. Its fiscal year ends June 30. The town's finance director is preparing the general fund's operating statement and must decide, for each tax, grant and payment, whether it belongs in this year. In a governmental fund, the test for revenue is not only whether the town has earned the money but whether the money will be in hand soon enough to pay this year's bills. This paper applies that test.
The Property Tax Levy
The town levied $18.0 million of property taxes for the fiscal year. Experience shows that about 2% will never be collected. The entry at levy debits property taxes receivable for $18.0 million, credits an allowance for uncollectible taxes for $360,000 and credits revenue for the net amount. In a governmental fund, the uncollectible estimate reduces revenue directly, since no expense is involved.
During the year the town collected $16.9 million. At year end $740,000 remained receivable net of the allowance. Under the modified accrual basis, revenues are recognized when measurable and available, and for property taxes the town treats cash arriving during the year or within the first 60 days afterward as available, since that is soon enough to settle the year's bills. The town expects to collect $500,000 of the remaining taxes in July and August. That amount is revenue. The other $240,000, expected later, is moved from revenue to a deferred inflow of resources for unavailable property taxes. Property tax revenue for the year is $17.4 million.
Sales Taxes
Sales taxes are derived tax revenues, imposed on exchange transactions made by others. The state collects the town's 1% local sales tax and remits it about two months after the month of sale. Derived tax revenues are recognized when the underlying sale occurs and the resources are available (Governmental Accounting Standards Board, 1998). May and June sales taxes of $610,000, received from the state in July and August, are accrued as revenue and a receivable from the state.
A Reimbursement Grant
The town received a federal grant of up to $900,000 to replace lead water service lines serving parks and town buildings. The grant reimburses allowable costs as they are incurred. Incurring allowable costs is an eligibility requirement, so revenue is recognized only as costs are incurred. By June 30, the town had spent $560,000 and recognized $560,000 of grant revenue. Had the federal agency advanced the full $900,000, the unspent $340,000 would have been a liability, unearned revenue, not revenue.
Operating Expenditures
Salaries and benefits are recorded as expenditures when earned by employees and payable from available resources. Employees' accrued vacation that will be paid only when they leave is a long-term liability; only the portion due to employees who had resigned or retired by June 30 and would be paid from current resources is reported as a fund liability and expenditure.
A Fire Truck
The town bought a pumper truck for $750,000 to replace one that had served for 24 years. In the general fund, the purchase is recorded as a capital outlay expenditure, debiting expenditures and crediting cash. No asset is recorded in the fund, because the fund measures only current financial resources, and the truck will not be spent to pay bills.
Debt Service
The town's general obligation bonds require a principal payment of $1.2 million and interest of $480,000 each December 1. Principal and interest are recorded as expenditures in the debt service fund when due, and interest accrued from December to June 30 is not recorded in the fund, because it is not due until the following December.
Charges, Fines and Transfers
Charges for services, such as building permits and recreation program fees, are recognized when received in cash in most small governments, because they are not measurable with reasonable certainty until then. Fines from traffic court follow the same practice. The general fund also transferred $300,000 to the capital projects fund to help pay for a new salt storage building. Interfund transfers are not revenues or expenditures; they are reported as other financing sources and uses, below the line for expenditures, so that revenue and spending totals reflect dealings with outside parties only. The debt service fund, in turn, received a transfer from the general fund for the December bond payment, reported the same way.
Fund Balance
Revenues, including property taxes, sales taxes, the grant, charges for services and fines, totaled $27.8 million. Expenditures, including the fire truck, totaled $27.3 million. The general fund's balance rose by $500,000. Under GASB's fund balance classifications, part of the balance is restricted by the grant agreement, part committed by council resolution for street repairs and the rest unassigned (Governmental Accounting Standards Board, 2009).
The Government-Wide Contrast
On the full accrual basis used in the government-wide statements, the town will show the fire truck as a capital asset with depreciation, the bonds as a liability reduced by principal payments, interest accrued through June 30 and property tax revenue recognized for the full year's net levy without the availability test (Governmental Accounting Standards Board, 1999). The fund statements show whether the town had the resources to cover this year's spending; the government-wide statements show the full cost of services and the town's long-term position. Gore (2004) found that local governments' disclosure choices were related to their reliance on bond markets, a reminder that creditors are among the readers who use both views.
Conclusion
The town recognized $17.4 million of property tax revenue out of a $18.0 million levy, accrued sales taxes the state had not yet remitted, recognized grant revenue only as allowable costs were incurred and recorded a fire truck and bond principal as expenditures. Each decision follows the modified accrual logic of measuring current financial resources, and each is reversed or adjusted in the government-wide statements.
References
Gore, A. K. (2004). The effects of GAAP regulation and bond market interaction on local government disclosure. Journal of Accounting and Public Policy, 23(1), 23-52. https://doi.org/10.1016/j.jaccpubpol.2003.11.002
Governmental Accounting Standards Board. (1998). Accounting and financial reporting for nonexchange transactions (Statement No. 33).
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. (2009). Fund balance reporting and governmental fund type definitions (Statement No. 54).
What the ACC 460 Week 3 instructions ask
ACC 460 Week 3 generally asks students to apply the modified accrual basis to governmental fund revenues and expenditures. Typical requirements include property tax levies with allowances for uncollectibles and the availability criterion, derived tax revenues such as sales and income taxes, government-mandated and voluntary nonexchange transactions such as grants with eligibility requirements, fines and charges for services and expenditures for operations, capital outlay, debt service and long-term obligations such as compensated absences. Many prompts include journal entries and the fund's resulting operating statement, and some ask how each item would differ in the government-wide statements. Students should explain each recognition decision and cite GASB standards in APA style.
How this ACC 460 Week 3 example is built
A town's general fund provides each major kind of revenue and expenditure in a single year. The paper takes property taxes first, working from the levy to the allowance, collections and the 60-day window, so the reader can see why revenue is less than the levy. Sales taxes illustrate derived tax revenue and accrual of amounts the state has collected but not remitted. The grant shows how eligibility requirements drive timing. Expenditures follow, with the fire truck and bond payments chosen because they differ most from business accounting. Each item includes its entry and a sentence on its timing, and the final section contrasts fund and government-wide treatment so the logic of both bases is clear.
ACC 460 Week 3 grading rubric: where the points go
The grading for this week usually emphasizes correct application of the measurable and available criteria, correct classification of nonexchange revenues and correct recognition of expenditures. Faculty check that property tax revenue excludes amounts not collected within the availability period, that uncollectible estimates reduce revenue rather than creating an expense, that reimbursement grants are recognized as allowable costs are incurred and that capital outlays and debt principal are recorded as expenditures rather than assets and liability reductions. Journal entries must be accurate, with account names that match governmental practice. Explaining the contrast with government-wide accrual accounting adds credit, as does noting how interfund transfers are reported, and citations of GASB statements support the analysis.
ACC 460 Week 3 help: mistakes to avoid
One persistent ACC 460 Week 3 mistake is recording bad debt expense for property taxes; in governmental funds, estimated uncollectible taxes reduce revenue directly. Another is recognizing the full levy as revenue even though part will not be collected within the availability period; the rest is a deferred inflow. Students also capitalize a fire truck in the general fund. In a governmental fund it is an expenditure, and it becomes a capital asset only in the government-wide statements. Record bond principal as an expenditure when due. For grants, look for eligibility requirements, such as a need to spend first, before recognizing revenue. Finally, show each entry, since graders check account names carefully.
Related ACC 460 sample papers
Other ACC 460 week samples
- ACC 460 Week 1: Funds and the Reporting Entity
- ACC 460 Week 2: Budgets and Budgetary Control
- ACC 460 Week 4: Government-Wide and Fund Statements
- ACC 460 Week 5: Nonprofit Accounting and Reporting
More BS in Accounting sample papers
- ACC 423 Week 3: Accounting for Income Taxes
- ACC 455 Week 3: Credits and Book-Tax Differences
- ACC 456 Week 3: Deductions and Credits
- ACC 491 Week 3: Materiality and Audit Risk
ACC 460 Week 3 questions, answered
What does ACC/460 Week 3 usually cover?
It usually covers modified accrual recognition of revenues and expenditures in governmental funds, including property taxes, derived taxes, grants, capital outlay and debt service.
Where can I find a free ACC 460 Week 3 sample paper?
This page presents a town's property taxes, sales taxes, grant and expenditures worked under modified accrual, annotated in the margin and free to read. Give us your own government's facts for a first custom draft at no charge.
When are property taxes recognized as revenue in a governmental fund?
In the year for which they are levied, to the extent they are collected during the year or soon enough afterward to pay current liabilities, generally within 60 days.
Why is a capital asset purchase an expenditure in a governmental fund?
Governmental funds measure current financial resources, so buying equipment uses resources and is reported as a capital outlay expenditure; the asset appears only in government-wide statements.
What is a deferred inflow of resources?
An acquisition of net assets that applies to a future period, such as property taxes receivable not yet available, reported separately from liabilities.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official University of Phoenix document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
Request this one custom, free · All ACC 460 week samples · All courses