Question: 1. Why do some accountants believe that it should offset the year-end inventory balance with a fund balance – non-spendable when no comparable fund balance is required for cash, taxes receivable, or most other assets?
Answer: Because of the belief of the accountant that it is essential for actions to constrain the resources by legal frameworks and also by external parties, accountant mainly offset the fund balance with the year-end inventory balance. It has very close relation to the changes to the revenue funds which can include additional guidance on the reporting f the resources. When there is no needed for comparable fund balance for the almost all of the assets, then the yearly adjustment helps in reflecting the real ending inventory amount which is generally indicated by performing a physical inventory account. They can help to support the need for the creation of more additional adjusting entry required for the purpose of adjusting the non-spendable section of fund balance. And it can help to indicate the total amount of the inventories which is consumable for appropriation (Granof & Khumawala, 2013).The purpose of the non-spendable fund is to include the amount that cannot never be spent because they are either contractually or legally needed to be maintained intact or not in spendable form. So expect to convert for the cash inventory that is e not desired to be converted into cash are mainly gone under the non-spendable form although not all other assets. It also helps to guide the adjustment of the no-spendable section of the main fund balance for determining the extent of the total shipping costs generally incurred on the consumable inventories. Although all of these inventories could not be available for the appropriation, all of these explanations ensure the causes of most accountants offsetting the each year’s closing inventories (Ariail, Durden, Leathart & Vasill, 2012).
Question: 2. How should governments report their capital project and debt service activities in their government-wide statements?
Answer: Mainly there is three group for which it is needed to report the financial statement. Those are fiduciary, viz proprietary and governmental. Whatever, fiduciary and viz proprietory are not included in the report at last. The governmental funds are mainly comprised of special revenue fund, general fund, capital projects fund and also permanent funds. It is the responsibilities of the government to report debt services activities and their existing capital project in their government-wide statements by using the concept of GASB. The debt services fund mainly account for the purpose of payment of debt. So in this case if the government is collected any resource for providing the payment of debt than it needs to report. All these concepts are mainly very useful for outlining the main group and main frameworks for the organization of the financial information of government (Granof & Khumawala, 2013). All these requirements are essential for preparing the annual reports appropriately. It also helps to make them more comprehensive and easy to understand. It is also the responsibilities of government to continue presenting a statement of finance to provide more information about the funds. The government should use exact accounting for presenting the debt services activities and capital projects in the wide statement of government. And the accounting approach must open up the depreciation expense and capital expenditures mainly incurred by the government (Ariail, Durden, Leathart & Vasill, 2012).
Yale University, Economics