ExpertHard1 markMultiple Choice
CPA · Question 46 · Area III: State & Local Governments
A city's General Fund reports a Net Change in Fund Balance of $500,000. <br/>- Capital Outlay (purchase of vehicles): $100,000<br/>- Depreciation Expense (if full accrual): $20,000<br/>- Proceeds from Long-Term Debt: $200,000<br/>- Principal Payments on Debt: $50,000<br/><br/>What is the Change in Net Position for Governmental Activities in the Government-Wide Statement of Activities?
A city's General Fund reports a Net Change in Fund Balance of $500,000. <br/>- Capital Outlay (purchase of vehicles): $100,000<br/>- Depreciation Expense (if full accrual): $20,000<br/>- Proceeds from Long-Term Debt: $200,000<br/>- Principal Payments on Debt: $50,000<br/><br/>What is the Change in Net Position for Governmental Activities in the Government-Wide Statement of Activities?
Answer options:
A.
$530,000
B.
$430,000
C.
$630,000
D.
$330,000
How to approach this question
Reconciliation Formula: Net Change in Fund Balance + Capital Outlay - Depreciation - Debt Proceeds + Principal Payments.
Full Answer
B.$430,000✓ Correct
Reconciliation:<br/>Net Change in Fund Balance: $500,000<br/>Add: Capital Outlay (capitalized in G-Wide): +$100,000<br/>Less: Depreciation Expense: -$20,000<br/>Less: Debt Proceeds (not revenue in G-Wide): -$200,000<br/>Add: Principal Payments (reduces liability, not expense): +$50,000<br/>Change in Net Position = $430,000.
Common mistakes
Getting signs wrong (adding debt proceeds instead of subtracting).
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