1. Reconciliation of Operating Income to Cash Provided by Operating Activities — What follows are the statement revenues expenses and changes net position ows
General StudiesGeneralWorked Solution
What follows are the statement of revenues, expenses, and changes in net position, and the statement of cashflows for Tucson, Arizona's fleet services internal service fund.
1. How do you account for the difference between net operating income of $105 and cash from operating activities of $10,789? Prepare a reconciling schedule in which you account for the difference.
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2. How would the revenues and expenses of the fund be reported on the city's government-wide statement of activity?
3. How would the revenues and expenses of the fund be reported on the city's statement of revenues, expenses, and changes in net position?
4. How would the difference between charges for services and cash received from customers be reflected on the city's government statement of net position?
5. How would the charges for services most likely be reflected on the city's general fund statement of revenues and expenditures and changes in fund balance?
SOLUTION:
1. Reconciliation of Operating Income to Cash Provided by Operating Activities
Reported operating income $ 105
Depreciation expense 8,714
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Difference between charges for services and cash
collected from customers 511
Difference between wage and salary expense and
cash paid to employees (109)
Difference between contractual services and supplies expense
and cash paid to suppliers 1,568
Reported cash flow from operating activities $10,789
2. The revenues and expenses of the fund would be eliminated in the consolidation process. Hence the revenues would typically be eliminated and the expenses charged back to the fund to which the services were provided.
3. The revenues and expenses, combined with those of other internal service funds would be reported in a single column, “Governmental Activities—Internal Service Funds.” This column would appear to the right of the “totals” column of the enterprise funds.
4. The difference would be reflected as a decrease in accounts receivable (or due from other funds).
5. Insofar as the services were provided to units accounted for in the general fund, the charges for those services would be reflected as an expenditure in that fund’s statement of revenues, expenditures and changes in fund balance. Insofar as they were provided to units accounted for in other funds, the charges would be reflected in the comparable statements of those other funds.