1. Th he state enacts a statewide business tax to fund general governmental oper
ID: 2376633 • Letter: 1
Question
1. Thhe state enacts a statewide business tax to fund general governmental operations. Will collection ofthe tax be an exchange or nonexchange transactions? Explain your answer.
2. The state adopts a fee for admission to state parks and a separate fee for camping overnight in these parks. Is collection of the admission fee an exchange or nonexchange transactions? Explain your reasoning.
3. Explain the difference between exchange and nonexchange transactions.
4. Describe how the impact of a timing restriction is different from the impact of a purpose restriction on the recognition of revenue.
5. What is the key difference between a derived tax revenue and an imposed nonexchange revenue?
6. Describe the four categories of nonexchange transactions. Provide a new example for
7. What are the common types of governmental taxes? Do they all recognize revenue using the same criteria? Explain your answer.
8. When is a property tax considered %u201Cavailable%u201D? Explain your answer
9. Food stamps are distributed by governments to qualified recipients. Why do governments have to account for food stamps as an expenditure and revenue? Explain your answer.
10. Describe the difference between a grant and an entitlement.
11. Explain what an endowment is and the related accounting for it.
12. Describe the criteria that are used to determine whether a donation of a work of art or historical treasure should be capitalized.
13. What is a service-type special assessment? Provide a new example of this kind of assessment.
14. What fund records operating revenue? Explain what it is logical for this account to be used in this fund.
15. Describe the two categories of interfund transactions.
Answers should be at least a sentence-MBA level
Explanation / Answer
In a non-exchange transaction, a government (provider), including the federal government,either gives value (benefit) to another party without directly receiving equal value in exchangeor receives value (benefit) from another party without directly giving equal value in exchange
whereas in an exchange transaction , provider gives value (benefit) to another party receiving equal value in exchange or receives value .
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Derived Tax Revenues result from assessments imposed by governments on exchange transactions. Examples include taxes on personal income, goods or services. The principal characteristics of these transactions are:
The principal characteristic of these transactions is the transmittal of resources to the assessing government is imposed by that government due to an act committed or omitted by the provider (such as property ownership or the contravention of a law or regulation) that is not an exchange transaction.
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four categories :
A city (recipient) through its council adopts a property tax levy ordinance that explicitly links the taxes to the appropriation ordinances for the fiscal year May 1, 20PY, through April 30, 20CY. State statutes indicate the city%u2019s enforceable legal claim to taxes arises on the lien date, defined as the Jan. 1 preceding the start of the fiscal year for which the taxes are levied. Taxes are collected March 1, 20PY, or later.
This example illustrates the characteristics of imposed non-exchange revenues. The city recognizes property taxes receivable on Jan.1, 20PY, (the date the enforceable claim arises) and it recognizes revenues over the period of May 1, 20PY, through April 30, 20CY, (the period for which the tax is levied). For the period from Jan. 1, 20PY until May 1, 20PY, the city recognizes deferred revenues for property taxes recognized as receivable or received.
A state (provider) reimburses school districts (recipients) for specific costs related to special education up to a maximum amount for each school district in each school year. To obtain reimbursement for allowable costs, the school districts submit quarterly reports to the state.
This example illustrates the characteristics of voluntary non-exchange transactions(the program is not a mandate of the state or the school districts). However, fulfillment of the following two eligibility requirements is necessary for a transaction to occur %u2014 in addition to the requirement that the recipients be school districts.
An individual (provider) promises in writing to give $1 million to the town library (recipient) for the construction of a new wing, provided the library raises an equal amount of donations from others.
This example illustrates the characteristics of voluntary non-exchange transactions. But, fulfillment of an eligibility requirement is necessary for a transaction to occur: the library is to raise $1 million from other parties for a construction of the new wing. The library recognizes a receivable and a revenue for the individual%u2019s $1 million when the other $1 million is raised. Resulting net assets (or fund balance) is restricted until used because there is a purpose restriction (construction of a new wing).
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VARIOUS TYPES OF GOVERNMENTAL TAXES
Income taxes provide the primary source of revenue for the federal government, although most states and some municipalities also collect taxes based on income. The federal income tax system is a graduated, or progressive, tax: It applies a higher rate of taxation upon those who earn a higher level of income. According to the Treasury Department, the top 1 percent of income-earners have paid more than 30 percent of all income taxes since 1995. The bottom 50 percent of income-earners in the United States pay less than 5 percent of all income taxes collected by the Internal Revenue Service.
Most states rely on a combination of state income taxes and sales taxes to fund their governmental operations, according to the Treasury Department. Sales taxes are considered to be a consumption tax and may be applied to any tangible or intangible good or service that is bought and sold. Some states may elect to exempt certain items that are considered essential, such as unprepared food or prescription drugs, from sales taxation. Additional excise taxes, sometimes referred to as "sin" taxes, may be applied to certain items such as tobacco or alcohol, as a means of discouraging consumption. Excise taxes may also be applied to necessities such as gasoline to fund infrastructure such as roads and bridges.
Local governments rely most heavily on a combination of sales taxes and property taxes for their revenue, according the Treasury Department. Property taxes are considered to be a tax on wealth. Property tax are typically accessed against private dwellings, business property and raw land, although the methods of determining the value of such property may vary by municipality. Some municipalities may also tax personal property, such as livestock and vehicles, in addition to real property. The federal government may also impose a tax on wealth through estate, inheritance and gift taxation.
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Endowment may refer to many things:
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