A is corrent. The use of full accrual accounting in the preparation of the government-wide Statement of Activities results in reporting $690,000 for property tax revenues in year 1. Under full accrual accounting, property tax revenues are reported in the year levied, net of expected refunds and estimated uncollectible taxes. In this question, property tax revenues reported in year 1 would consist of the $700,000 levied minus the $10,000 estimated to be uncollectible. Note that collection of $100,000 of property taxes in year 2 during the first 60 days and the collection of $90,000 during the remainder of year 2 have no effect on the amount of revenue reported in year 1 using full accrual accounting. Under the modified accrual basis of accounting that is used for the governmental fund statements, the date of collection of property tax revenues in the following year had an effect on the amount of revenue reported in the current year.
B is incorrect. The use of full accrual accounting in the preparation of the government-wide Statement of Activities results in reporting $690,000 for property tax revenues in year 1.
C is incorrect. The use of full accrual accounting in the preparation of the government-wide Statement of Activities results in reporting $690,000 for property tax revenues in year 1.
D is incorrect. The use of full accrual accounting in the preparation of the government-wide Statement of Activities results in reporting $690,000 for property tax revenues in year 1.
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