Question

Under the dual-track accounting approach used in the text, which of the following transactions or events would be recorded in the general journal for governmental activities at the government-wide level?

a. Recording the property tax levy, issuance of tax anticipation notes, and year-end accrual of interest on long-term debt.
b. Recording the property tax levy, encumbrances for purchase orders, and payment of interest on long-term debt
c. Recording the property tax levy, payroll, and encumbrances for purchase orders.
d. Recording the annual budget, property tax levy, and payroll

Answer 1

The correct transaction to be recorded in the general journal for governmental activities at the government-wide level is a. Recording the property tax levy, issuance of tax anticipation notes, and year-end accrual of interest on long-term debt, as it includes activities consistent with an accrual basis of accounting.

Step-by-step explanation:

Under the dual-track accounting approach used in governmental accounting, transactions or events that would typically be recorded in the general journal for governmental activities at the government-wide level include those that involve economic resources measurement focus and accrual accounting. Therefore, the correct answer is a. Recording the property tax levy, issuance of tax anticipation notes, and year-end accrual of interest on long-term debt. This answer includes activities related to the accrual of revenues and expenses such as property tax levies (revenues), debt issuance as a financing source, and accrual of interest expenses, which align with the accrual basis of accounting used at the government-wide level.

Encumbrances and budgetary entries like purchase orders and budget recording, which are reflected in options b, c, and d, are typically recorded in the governmental funds under the modified accrual basis and thus would not be recorded in the general journal at the government-wide level. Similarly, payroll is an expense that would be recorded, but not in conjunction with encumbrances or annual budget which are not recognized in government-wide statements. The government-wide financial statements focus on the flow of economic resources.