Question

Cannedy paid $300,000 in salaries during the year. In addition, during the last few days of 2019, Cannedy's employees earned $10,000, but that amount was not paid until the first week of January 2020. How much should be reported as an expenditure in a proprietary type fund?

Answer 1

In a proprietary type fund, expenses should be reported based on when they are incurred, not when they are paid. Therefore, the total expenditure to be reported in the proprietary type fund for the year would be $310,000.

In a proprietary type fund, expenses should be reported based on when they are incurred, not when they are paid. Therefore, the $10,000 earned by Cannedy's employees in 2019 should be included as an expenditure in the 2019 financial statements, even though it was not paid until January 2020.

So, the total expenditure to be reported in the proprietary type fund for the year would be $300,000 + $10,000 = $310,000.