Question

In which of the following circumstances should deferred revenues to be recorded in the General Fund?

(1) Property tax bills are mailed and a receivable is recorded in advance of the year for which they are levied.
(2) Business license fees are collected in advance of the year for which they apply.
a. (1) only.
b. (2) only.
c. Both (1) and (2) above.
d. Neither (1) and (2) above.

Answer 1

Deferred revenues should only be recorded in the General Fund when business license fees are collected in advance.

Step-by-step explanation:

The correct answer is (2) only. Deferred revenues should be recorded in the General Fund when business license fees are collected in advance of the year for which they apply. This is because the fees are received before the services are provided, so they are considered to be deferred revenues. On the other hand, property tax bills are receivables and not deferred revenues, as they are recorded in advance of the year for which they are levied.