The governor and his college- age daughter are talking after dinner. The governor has had a rough day at the office discussing the state’s budget problems. The daughter is home on vacation after having completed a course in municipal accounting. She has just told her dad about the substance of this chapter in this text. “That’s great,” says the governor, “you just solved my problem. I’ll tell my budget director to prepare the budget using those wonderful GAAP rules you just described. We’ll save money by firing our actuary because his ideas about financing pension and retiree benefits cost too much. We’ll save more money by budgeting zero dollars for pensions because the pension plan has enough resources to pay benefits to retirees for several years. And we’ll save even more by budgeting just enough for retiree health care benefits to pay the bills of our retirees, rather than putting money into a fund to pay for those currently working.” The governor’s daughter looks at him and says: “Hold on a sec, Dad, you’re getting me a bit worried.” What did his daughter say about “those wonderful GAAP rules” that caused the governor to reach his conclusion? Why is his daughter worried?
Answer to relevant QuestionsAs this text was being written, the GASB web site indicated that one of its agenda projects was called “Conceptual Framework— Recognition and Measurement Attributes.” One question covered by the project was “What ...The General Fund of the City of Snake River operates on a calendar year basis. It sends bills to property owners on January 2. Taxes are due March 1, but taxpayers are allowed until March 31 to make payment without penalty. ...A citizen sued a city because he was accidentally shot by a police officer. The city acknowledges responsibility for the accident, and based on ongoing negotiations, the city’s attorney believes the citizen’s claim will ...A city’s General Fund received cash from the following sources during fiscal year 2012. All the receipts were credited to revenue accounts. Identify the incorrect credits (some may be correct), and make journal entries to ...Are capital assets recorded in Capital Projects Funds? Why or why not?
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