Baruch College, CUNY

ACC 4100

1. Government-wide financial statements have a longer term focus than fund-based financial statements because they report “all revenues and all costs of providing services each year, not just those received or paid in the current year or soon after year-end” (GASB 34). Government-wide financial statements include only two statements: the statement of net assets and the statement of activities. These statements separate the reporting into i) governmental activities (all governmental funds) and ii) business-type activities (enterprise funds). They do not report assets of fiduciary funds, which are shown in separate fund-based accounting statements. 2. Government-wide financial statements use an economic resource focus (in contrast with fund accounting that focuses on current sources and uses of funds). In addition, government-wide financial statements use accrual accounting while fund-based accounting takes a “modified accrual” approach. As a result, the assets and liabilities recognized in government-wide financial will differ from those in fund accounting (e.g., government-wide financial statements will include capital assets and long-term liabilities). In addition, government-wide accounting includes the recognition of “expenses” while fund-accounting only recognized “expenditures.” 3. The fundamental accounting equation in government-wide accounting is A – L = NA where A = assets, L = liabilities, and NA = net assets. Net assets are classified into three categories: i) investment in capital assets, net of related debt (ICALRD) ii) restricted net assets (RA) iii) unrestricted net assets (UA). The accounting equation thus becomes: A – L = ICALRD + RA + UA. 4. Unique Aspects of Government-Wide Financial Statements i) When capital assets are purchased, in addition to the “usual” journal entry that would be recorded under accrual basis accounting, the following reclassification entry is also required: Dr. Unrestricted net assets xxx Cr. Investment in capital assets net of related debt xxx The amount “xxx” equals the cost of the capital assets purchased.