Governmental Accounting: Proprietary & Internal Service Fund Reporting
Rationale for Business-Type Activity Reporting
Question: Which of the following is the best rationale/justification for reporting the business-type activities of government in a separate fund?
Answer: Laws or regulations require that the activity’s costs of providing services be recovered by fees and charges rather than by general purpose taxes or similar charges.
Required Basic Statements of a Proprietary Fund
Question: Which of the following are required basic statements of a proprietary fund?
Answer:
Read MoreFoundations of Economic Growth Theory
Understanding Economic Growth and Living Standards
Our interest in economic growth stems from its direct link to living standards. When analyzing economic well-being over time or across nations, the crucial variable to focus on is output per capita, rather than total output.
GDP Per Capita: A Key Indicator
The primary indicator of living standards is Gross Domestic Product (GDP) per capita, calculated as: GDPpc = GDP / Population.
Why Exchange Rates Fail for Comparison
When comparing living standards
Read MoreUnderstanding Market Models: Perfect and Imperfect Competition
Market Models: An Introduction
To define the different market models, we analyze the concept of market structure, which refers to the number of companies existing within a market and their relative size. This structure reveals the ability of companies to influence the market price, known as the degree of market power. According to this degree, markets can be divided into the following types:
- Perfect Competition Market: Where no single seller can influence the price.
- Imperfectly Competitive Market:
Understanding Money and Central Banking Systems
Understanding Money: Definitions and Aggregates
Types of Money Explained
Fiat money is an asset that has very low intrinsic value as a commodity but maintains its value as a medium of exchange because people have faith that the issuer is liable for any scraps of paper or coins and ensures that the amount issued is limited.
A deposit money bank deposit is IOU money or debt from a bank, as it has to deliver money from the deposit to the depositor and acts as a limit, if requested. It is a medium of exchange
Read MoreUnderstanding Loan Repayment, Financial Markets, and Ratios
Loan Repayment Methods
Equal Principal Payments
The loan is repaid in equal amounts of principal. The installments are unequal because the interest payment is largest in the first year and becomes smaller as the principal is gradually paid.
Equal Amortization
The loan is repaid in equal installments. The amount applied to principal is smallest in the first year and gradually increases through the payment years. The decreasing payments on interest equalize the uneven payments on principal.
Balloon Payment
The
Read MoreFinancial Markets, Securities, and Risk Management Concepts
Financial Market Assets
Other assets exchanged on the financial market include:
Commodities
Tangible or non-tangible goods such as crude oil, gold, coal, aluminum, copper, wheat, electricity, broadcasting rights, and digital commodities.
Securitization
A process by which non-tradable assets or financial products, such as mortgages, car loans, and credit cards, are aggregated to build a tradable security.
Mortgage-Backed Securities (MBS)
Securities whose cash flows depend on a pool of residential or commercial