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Homework answers / question archive / 1

1

Finance

1. Evaluation of government financial performance is important for which of the following reasons?

2. Which of the following terms or concepts focuses primarily on a government’s ability to generate enough cash over a 30- or 60-day period to pay its bills?

3. Why does the GASB prefer to use the term economic condition rather than financial condition?

4. Factors that influence a government’s financial condition include which of the following?

5. Which of the following environmental factors reveals the entity’s underlying philosophies regarding willingness to support higher taxes, issuances of long-term debt, and increased social services?

6. Which of the following would be an effective means of benchmarking?

7. Which of the following conditions could signal decreasing fiscal stress?

8. For each of the following, select plus (+) if a high or increasing value of the item is generally associated with stronger financial condition, a minus (–) if a high or increasing value of the item is generally associated with a weaker financial condition, and NE if the item generally has no effect on the financial condition or the direction of the effect cannot be predicted.
 

 
 

 

 

 

 
 

a.

Unfunded pension liability.

 

b.

Operating deficit.

 

c.

Revenues over expenditures.

 

d.

Intergovernmental revenues.

 

e.

Level of business activity.

 

f.

Education level of citizens.

 

g.

Unemployment rate.

 

h.

Restrictions on revenues.

 

i.

Personal income per capita.

 

j.

Debt service.

 

k.

Percentage of households below the poverty level.

 

l.

Short-term borrowing.

 

m.

Property values.

 

n.

Population growth.

 

o.

Political party of the mayor.

 

 

9. The government-wide financial statements for the City of Arborland for a three-year period are presented.

CITY OF ARBORLAND

Statements of Net Position

As of December 31

(in thousands)

 

2020

 

2019

 

2018

 

 

Governmental
Activities

 

Business
type
Activities

 

Total

 

Governmental
Activities

 

Business
type
Activities

 

Total

 

Governmental
Activities

 

Business
type
Activities

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

$

5,540

 

 

$

1,800

 

 

$

7,340

 

 

$

4,531

 

 

$

1,663

 

 

$

6,194

 

 

$

3,452

 

 

$

1,487

 

 

$

4,939

 

 

Investments

 

733

 

 

 

291

 

 

 

1024

 

 

 

638

 

 

 

181

 

 

 

819

 

 

 

769

 

 

 

179

 

 

 

948

 

 

Receivables (net)

 

2,747

 

 

 

1,809

 

 

 

4,556

 

 

 

2,947

 

 

 

1,608

 

 

 

4,555

 

 

 

1,865

 

 

 

1,472

 

 

 

3,337

 

 

Prepaid expenses

 

253

 

 

 

8

 

 

 

261

 

 

 

251

 

 

 

6

 

 

 

257

 

 

 

171

 

 

 

5

 

 

 

176

 

 

Inventories

 

26

 

 

 

58

 

 

 

84

 

 

 

101

 

 

 

48

 

 

 

149

 

 

 

167

 

 

 

49

 

 

 

216

 

 

Total current assets

 

9,299

 

 

 

3,966

 

 

 

13,265

 

 

 

8,468

 

 

 

3,506

 

 

 

11,974

 

 

 

6,424

 

 

 

3,192

 

 

 

9,616

 

 

Capital assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

2,180

 

 

 

2,101

 

 

 

4,281

 

 

 

2,070

 

 

 

1,804

 

 

 

3,874

 

 

 

1,971

 

 

 

1,604

 

 

 

3,575

 

 

Depreciable assets

 

37,600

 

 

 

14,455

 

 

 

52,055

 

 

 

37,183

 

 

 

17,775

 

 

 

54,958

 

 

 

39,347

 

 

 

14,801

 

 

 

54,148

 

 

Accumulated depreciation

 

(15,039

)

 

 

(5,782

)

 

 

(20,821

)

 

 

(16,732

)

 

 

(9,776

)

 

 

(26,508

)

 

 

(19,680

)

 

 

(7,402

)

 

 

(27,082

)

 

Total capital assets (net)

 

24,741

 

 

 

10,774

 

 

 

35,515

 

 

 

22,521

 

 

 

9,803

 

 

 

32,324

 

 

 

21,638

 

 

 

9,003

 

 

 

30,641

 

 

Total assets

 

34,040

 

 

 

14,740

 

 

 

48,780

 

 

 

30,989

 

 

 

13,309

 

 

 

44,298

 

 

 

28,062

 

 

 

12,195

 

 

 

40,257

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

1,580

 

 

 

467

 

 

 

2,047

 

 

 

412

 

 

 

376

 

 

 

788

 

 

 

1,633

 

 

 

295

 

 

 

1,928

 

 

Deferred revenue

 

32

 

 

 

 

 

 

 

32

 

 

 

30

 

 

 

 

 

 

 

30

 

 

 

42

 

 

 

 

 

 

 

42

 

 

Other, current

 

1,754

 

 

 

200

 

 

 

1,954

 

 

 

1,443

 

 

 

190

 

 

 

1,633

 

 

 

1,489

 

 

 

170

 

 

 

1,659

 

 

Total current liabilities

 

3,366

 

 

 

667

 

 

 

4,033

 

 

 

1,885

 

 

 

566

 

 

 

2,451

 

 

 

3,164

 

 

 

465

 

 

 

3,629

 

 

Bonds payable

 

15,900

 

 

 

6,500

 

 

 

22,400

 

 

 

16,900

 

 

 

7,500

 

 

 

24,400

 

 

 

15,900

 

 

 

6,500

 

 

 

22,400

 

 

Total liabilities

 

19,266

 

 

 

7,167

 

 

 

26,433

 

 

 

18,785

 

 

 

8,066

 

 

 

26,851

 

 

 

19,064

 

 

 

6,965

 

 

 

26,029

 

 

Net Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment in capital assets

 

9,104

 

 

 

4,027

 

 

 

13,131

 

 

 

7,945

 

 

 

3,065

 

 

 

11,010

 

 

 

5,366

 

 

 

2,067

 

 

 

7,433

 

 

Restricted for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital projects

 

140

 

 

 

 

 

 

140

 

 

 

151

 

 

 

 

 

 

151

 

 

 

130

 

 

 

 

 

 

130

 

 

Debt service

 

933

 

 

 

 

 

 

933

 

 

 

1,033

 

 

 

 

 

 

1,033

 

 

 

818

 

 

 

 

 

 

818

 

 

Unrestricted (deficit)

 

4,597

 

 

 

3,546

 

 

 

8,143

 

 

 

3,075

 

 

 

2,178

 

 

 

5,253

 

 

 

2,683

 

 

 

3,163

 

 

 

5,846

 

 

Total net position

$

14,774

 

 

$

7,573

 

 

$

22,347

 

 

$

12,204

 

 

$

5,243

 

 

$

17,447

 

 

$

8,997

 

 

$

5,230

 

 

$

14,227

   

 

CITY OF ARBORLAND
Statement of Activities
For the Year Ended December 31, 2020
(in thousands)

 

 

Program Revenues

 

Net (Expense) Revenue and
Changes in Net Position

 

Functions/Programs

Expenses

 

Charges for Services

 

Operating Grants and Contributions

 

Capital Grants and Contributions

 

Governmental Activities 

 

Business-type Activities

 

Total

 

Governmental Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General government

$

5,716

 

 

$

531

 

 

 

 

 

 

 

 

$

(5,185

)

 

 

 

 

$

(5,185

)

 

Judicial

 

1,926

 

 

 

716

 

 

$

99

 

 

 

 

 

 

(1,111

)

 

 

 

 

 

(1,111

)

 

Public safety

 

7,958

 

 

 

1,530

 

 

 

168

 

 

 

 

 

 

(6,260

)

 

 

 

 

 

(6,260

)

 

Health and sanitation

 

2,804

 

 

 

524

 

 

 

 

 

 

 

 

 

(2,280

)

 

 

 

 

 

(2,280

)

 

Culture and recreation

 

2,166

 

 

 

554

 

 

 

 

 

$

495

 

 

 

(1,117

)

 

 

 

 

 

(1,117

)

 

Road maintenance

 

2,455

 

 

 

5

 

 

 

1,619

 

 

 

 

 

 

(831

)

 

 

 

 

 

(831

)

 

Interest on long-term debt

 

948

 

 

 

 

 

 

 

 

 

 

 

 

(948

)

 

 

 

 

 

(948

)

 

Total governmental activities

 

23,973

 

 

 

3,860

 

 

 

1,886

 

 

 

495

 

 

 

(17,732

)

 

 

 

 

 

(17,732

)

 

Business-type activities

 

2,895

 

 

 

5,218

 

 

 

 

 

 

7

 

 

 

 

 

$

2,330

 

 

 

2,330

 

 

Total government

$

26,868

 

 

$

9,078

 

 

$

1,886

 

 

$

502

 

 

$

(17,732

)

 

$

2,330

 

 

$

(15,402

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Property taxes

 

17,296

 

 

 

 

 

 

 

17,296

 

 

 

Grants and contributions not restricted to specific programs

 

2,190

 

 

 

 

 

 

 

2,190

 

 

 

Investment earnings

 

716

 

 

 

 

 

 

 

716

 

 

 

Special item—gain on sale of land

 

100

 

 

 

 

 

 

100

 

 

 

Total general revenues and special items

 

20,302

 

 

 

 

 

 

 

20,302

 

 

 

Change in net position

 

2,570

 

 

 

2,330

 

 

 

4,900

 

 

 

Net position—January 1

 

12,204

 

 

 

5,243

 

 

 

17,447

 

 

 

Net position—December 31

$

14,774

 

 

$

7,573

 

 

$

22,347

 

 

 

CITY OF ARBORLAND
Statement of Activities
For the Year Ended December 31, 2019
(in thousands)

 

 

 

Program Revenues

 

Net (Expense) Revenue and
Changes in Net Position

 

 

Functions/Programs

Expenses

 

Charges for Services

 

Operating Grants and Contributions

 

Capital Grants and Contributions

 

Governmental Activities 

 

Business-type Activities

 

Total

 

 

Governmental Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General government

$

4,133

 

 

$

148

 

 

 

 

 

 

 

 

$

(3,985

)

 

 

 

 

$

(3,985

)

 

 

Judicial

 

1,737

 

 

 

209

 

 

$

17

 

 

 

 

 

 

(1,511

)

 

 

 

 

 

(1,511

)

 

 

Public safety

 

5,239

 

 

 

1,943

 

 

 

30

 

 

 

 

 

 

(3,266

)

 

 

 

 

 

(3,266

)

 

 

Health and sanitation

 

2,129

 

 

 

147

 

 

 

 

 

 

 

 

 

(1,982

)

 

 

 

 

 

(1,982

)

 

 

Culture and recreation

 

3,762

 

 

 

322

 

 

 

 

 

$

350

 

 

 

(3,090

)

 

 

 

 

 

(3,090

)

 

 

Road maintenance

 

1,055

 

 

 

 

 

 

501

 

 

 

 

 

 

(554

)

 

 

 

 

 

(554

)

 

 

Interest on long-term debt

 

804

 

 

 

 

 

 

 

 

 

 

 

 

(804

)

 

 

 

 

 

(804

)

 

 

Total governmental activities

 

18,859

 

 

 

2,769

 

 

 

548

 

 

 

350

 

 

 

(15,192

)

 

 

 

 

 

15,192

)

 

 

Business-type activities

 

4,287

 

 

 

4,290

 

 

 

 

 

 

10

 

 

 

 

 

$

13

 

 

 

13

 

 

 

Total government

$

23,146

 

 

$

7,059

 

 

$

548

 

 

$

360

 

 

$

(15,192

)

 

$

13

 

 

$

15,179

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Property taxes

 

13,619

 

 

 

 

 

 

 

13,619

 

 

 

Grants and contributions not restricted to specific programs

 

3,664

 

 

 

 

 

 

 

3,664

 

 

 

Investment earnings

 

916

 

 

 

 

 

 

 

916

 

 

 

Special item—gain on sale of land

 

200

 

 

 

 

 

 

200

 

 

 

Total general revenues and special items

 

18,399

 

 

 

 

 

 

 

18,399

 

 

 

Change in net position

 

3,207

 

 

 

13

 

 

 

3,220

 

 

 

Net position—January 1

 

8,997

 

 

 

5,230

 

 

 

14,227

 

 

 

Net position—December 31

$

12,204

 

 

$

5,243

 

 

$

17,447

   

 

CITY OF ARBORLAND
Statement of Activities
For the Year Ended December 31, 2018
(in thousands)

 

 

Program Revenues

 

Net (Expense) Revenue and
Changes in Net Position

 

Functions/Programs

Expenses

 

Charges for Services

 

Operating Grants and Contributions

 

Capital Grants and Contributions

 

Governmental Activities 

 

Business-type Activities

 

Total

 

Governmental Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General government

$

3,922

 

 

$

109

 

 

 

 

 

 

 

 

$

(3,813

)

 

 

 

 

$

(3,813

)

 

Judicial

 

1,601

 

 

 

198

 

 

$

57

 

 

 

 

 

 

(1,346

)

 

 

 

 

 

(1,346

)

 

Public safety

 

4,113

 

 

 

1,723

 

 

 

10

 

 

 

 

 

 

(2,380

)

 

 

 

 

 

(2,380

)

 

Health and sanitation

 

2,096

 

 

 

216

 

 

 

 

 

 

 

 

 

(1,880

)

 

 

 

 

 

(1,880

)

 

Culture and recreation

 

3,484

 

 

 

364

 

 

 

 

 

$

320

 

 

 

(2,800

)

 

 

 

 

 

(2,800

)

 

Road maintenance

 

1,438

 

 

 

 

 

 

460

 

 

 

 

 

 

(978

)

 

 

 

 

 

(978

)

 

Interest on long-term debt

 

948

 

 

 

 

 

 

 

 

 

 

 

 

(948

)

 

 

 

 

 

(948

)

 

Total governmental activities

 

17,602

 

 

 

2,610

 

 

 

527

 

 

 

320

 

 

 

(14,145

)

 

 

 

 

 

(14,145

)

 

Business-type activities

 

2,637

 

 

 

3,708

 

 

 

 

 

 

20

 

 

 

 

 

$

1,091

 

 

 

1,091

 

 

Total government

$

20,239

 

 

$

6,318

 

 

$

527

 

 

$

340

 

 

$

(14,145

)

 

$

1,091

 

 

$

(13,054

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Property taxes

 

13,100

 

 

 

 

 

 

 

13,100

 

 

 

Grants and contributions not restricted to specific programs

 

2,990

 

 

 

 

 

 

 

2,990

 

 

 

Investment earnings

 

 681

 

 

 

 

 

 

 

681

 

 

 

Special item—gain on sale of land

 

150

 

 

 

 

 

 

150

 

 

 

Total general revenues and special items

 

16,921

 

 

 

 

 

 

 

16,921

 

 

 

Change in net position

 

2,776

 

 

 

1,091

 

 

 

3,867

 

 

 

Net position—January 1

 

6,221

 

 

 

4,139

 

 

 

10,360

 

 

 

Net position—December 31

$

8,997

 

 

$

5,230

 

 

$

14,227

   

 

Additional information follows:
Population: Year 2020: 30,420, Year 2019: 28,291, Year 2018: 26,374. Debt limit remained at $20,000,000 for each of the three years. Net cash from operations is generally 80 percent of total revenues each year.

 

 

 


Required

  1. Select X for the financial performance measures in Illustration 10–4 that can be calculated for the City of Arborland based on the information provided.

 

 
 

 

 

b. Calculate those ratios identified in part a for FY 2020. Show your computations.

 

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