| Course | ACC 460 Government and Non-Profit Accounting (ACC/460) |
|---|---|
| Week | 4 |
| Paper type | Government-wide and fund statement reconciliation paper |
| Length | about 1,048 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 4
From $21.4 Million of Fund Balance to $68.4 Million of Net Position: Reconciling a Composite Suburban City's Governmental Fund Statements to Its Government-Wide Statements
[Student Name]
University of Phoenix
ACC/460: Government and Non-Profit Accounting
Week 4 Assignment
[Instructor Name]
[Date]
The city and all figures are composites written for a model paper; standards and research findings come from the sources listed.
A composite suburban city of 85,000 residents has grown steadily for thirty years, building streets, parks, a police headquarters and a library, financed partly with bonds. Its employees belong to a cost-sharing state pension plan. At June 30, its governmental funds report a combined fund balance of $21.4 million, while its government-wide statement of net position reports governmental activities net position of about $68.4 million. A council member has asked why the two figures differ by $47 million. Both figures are correct; they answer different questions, one about money available to spend soon and one about everything the city owns and owes. This paper explains the two sets of statements and reconciles them.
What the Fund Statements Show
The governmental fund balance sheet and its companion operating statement measure current financial resources, recognizing revenue on the modified accrual basis. They show resources available to finance the near-term services the council has approved and whether this year's revenues covered this year's expenditures. They omit capital assets and long-term debt, because neither will be used to pay current bills. Fund balance is classified as nonspendable, restricted, committed, assigned or unassigned, which tells readers how much is truly free to spend (Governmental Accounting Standards Board, 2009).
What the Government-Wide Statements Show
The statement of net position and statement of activities use the economic resources measurement focus and full accrual basis, like a business. They report all capital assets and long-term liabilities, and the statement of activities shows the net cost of each function, such as public safety and streets, after program revenues. Governmental activities are shown separately from business-type activities such as the water utility, and discretely presented component units appear in their own column (Governmental Accounting Standards Board, 1999).
Major Funds and Columns
The fund statements present the general fund, the capital projects fund for a new public works yard and the debt service fund as major funds in separate columns, with nonmajor special revenue funds combined. The government-wide statements have no fund columns at all, only governmental activities, business-type activities and component units. Readers moving between them must remember that interfund balances disappear in the government-wide view, since money owed by one governmental fund to another is not owed to anyone outside the city.
The Reconciliation, Step by Step
The reconciliation starts with total governmental fund balance of $21.4 million.
Capital assets used in governmental activities are not financial resources and are not reported in the funds. Streets, buildings, land, equipment and infrastructure, net of accumulated depreciation, total $96.0 million and are added.
Long-term liabilities not due and payable in the current period are not reported in the funds. General obligation bonds of $32.0 million and the long-term portion of compensated absences of $2.1 million are subtracted.
Pension Items
The city's proportionate share of the state plan's net pension liability is $18.5 million, subtracted because it is not a current obligation of the funds. Pension accounting also produces deferred outflows of resources of $4.2 million, mostly contributions made after the plan's measurement date and changes in assumptions, and deferred inflows of $1.6 million, mostly investment gains being recognized over time (Governmental Accounting Standards Board, 2012). Deferred outflows are added and deferred inflows subtracted. Net of deferrals, pensions reduce the reconciliation by $15.9 million.
Revenue and Interest Timing
Property taxes of $240,000 that were levied for the year but not collected within 60 days are reported in the funds as a deferred inflow for unavailable revenue. In the government-wide statements they are revenue of the year, so they are added.
Interest on the bonds accrued since the last payment date, $300,000, is not recorded in the funds because it is not yet due. It is a liability in the government-wide statements and is subtracted.
The Internal Service Fund
The city's fleet maintenance fund is an internal service fund that charges departments for vehicle repairs and fuel. Its customers are almost entirely governmental departments, so its assets and liabilities are included in governmental activities. Its net position of $1.1 million is added.
The Result
Adding and subtracting these items: $21.4 million plus $96.0 million, less $32.0 million, less $2.1 million, less $18.5 million, plus $4.2 million, less $1.6 million, plus $0.24 million, less $0.3 million, plus $1.1 million, gives about $68.44 million, which ties to governmental activities net position. The statement of net position divides that amount into net investment in capital assets, restricted net position and unrestricted net position. Because capital assets are large and the pension liability is significant, the city's unrestricted net position is actually negative, about minus $4.9 million, even though total net position is positive.
Reconciling the Operating Statements
A second reconciliation connects the year's movement in fund balance with the year's movement in net position. Capital outlay expenditures in the funds are replaced by depreciation; bond proceeds, which are other financing sources in the funds, are removed and added to liabilities; principal payments, expenditures in the funds, reduce liabilities instead; and the change in the net pension liability and deferrals replaces pension contributions. This year, capital outlay of $7.8 million exceeded depreciation of $5.6 million, which helped net position grow faster than fund balance.
What the Two Views Tell Readers
Fund statements show that the city balanced this year's budget and holds a reasonable unassigned fund balance for emergencies. Government-wide statements show that the city has invested heavily in long-lived assets, carries significant long-term obligations and has not yet set aside resources for its full pension commitment. Wang et al. (2007) proposed measures of financial condition that combine cash, budget, long-run and service-level solvency, an approach that depends on having both views available. For the council member, the $47 million difference is mostly streets and buildings, partly offset by bonds and pensions.
Conclusion
The city's $21.4 million of governmental fund balance reconciles to about $68.4 million of governmental activities net position through ten items, led by $96.0 million of capital assets and offset by bonds, compensated absences and a net pension liability. Each item reflects the difference between measuring current financial resources and measuring all economic resources, and together the two sets of statements give a fuller picture than either alone.
References
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).
Governmental Accounting Standards Board. (2012). Accounting and financial reporting for pensions: An amendment of GASB Statement No. 27 (Statement No. 68).
Wang, X., Dennis, L., & Tu, Y. S. (2007). Measuring financial condition: A study of U.S. states. Public Budgeting & Finance, 27(2), 1-21. https://doi.org/10.1111/j.1540-5850.2007.00872.x
What the ACC 460 Week 4 instructions ask
ACC 460 Week 4 typically asks students to prepare or analyze the basic financial statements of a state or local government. Common requirements include describing the government-wide statement of net position and statement of activities, the governmental fund balance sheet and operating statement, the proprietary and fiduciary fund statements and the required reconciliations between governmental fund and government-wide amounts. Some prompts include conversion entries from modified accrual to accrual, the classification of net position and fund balance or an analysis of a real government's annual report. Each reconciling item should be shown with the reason it arises, supported by the relevant GASB statement in APA form, and the final figure should tie to the statement of net position.
How this ACC 460 Week 4 example is built
A suburban city with a large investment in streets and buildings, outstanding bonds and a pension plan produces reconciling items that are large enough to matter. The paper begins by describing what each set of statements measures and who uses it. The reconciliation is then built step by step, with each item explained in terms of the difference between current financial resources and economic resources. Pension items receive extra attention because they are often the largest and least understood. The internal service fund is explained last. A closing section interprets the result, showing what the two views together tell residents and bond analysts about the city's condition.
ACC 460 Week 4 grading rubric: where the points go
Instructors mostly look for a complete, correct reconciliation and a clear explanation of why each item arises. Faculty check that capital assets are added net of depreciation, that long-term liabilities such as bonds, compensated absences and net pension liabilities are subtracted, that pension deferred outflows and inflows are included, that unavailable revenues deferred in the funds are recognized, that accrued interest not due is subtracted and that internal service fund net position is added where the fund serves governmental activities. The final figure must tie to the statement of net position. Interpretation of the city's condition, including unrestricted net position, and cited standards complete the grade.
ACC 460 Week 4 help: mistakes to avoid
A frequent ACC 460 Week 4 mistake is adding capital assets at cost rather than net of accumulated depreciation. Another is forgetting pension deferred outflows and inflows, which can be large. Students also leave out the internal service fund, whose net position belongs with governmental activities when governmental departments are its main customers. Remember that unavailable property taxes, deferred in the funds, are revenue in the government-wide statements. Subtract interest accrued since the last payment date, because the funds record interest only when due. Keep a running total so the reconciliation ties. Finally, explain what the difference between fund balance and net position means for residents, in words a council member would understand.
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ACC 460 Week 4 questions, answered
What does ACC/460 Week 4 usually cover?
It usually covers the basic financial statements of state and local governments, especially the government-wide statements, governmental fund statements and the reconciliations between them.
Where can I find a free ACC 460 Week 4 sample paper?
The suburban city reconciliation from fund balance to net position, with each item explained in margin notes, can be read here in full. For your own government's version, send the details and we will write the first draft free.
Why does net position differ from fund balance?
Fund balance measures current financial resources, while net position measures all economic resources, including capital assets and long-term liabilities such as bonds and pensions.
What is a net pension liability?
It is the total pension liability for employees' past service minus the pension plan's fiduciary net position, reported by the employer in its government-wide statements.
Where does an internal service fund appear in government-wide statements?
When it mainly serves governmental departments, its assets and liabilities are included in governmental activities rather than shown as a business-type activity.
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