Introduction

$In$ the practice set you will have the opportunity $to$ maintain a set $of$ accounting records for a typical

local town government encompassing the first two months $of$ its fiscal year. $At$ the end $of$ the

second month $we$ will make the adjusting and closing entries $asifit$ were the end $of$ the fiscal

year. $We$ will also prepare the appropriate financial statements.

The town maintains its accounting records $on$ the modified accrual basis $of$ accounting. This means

that all material items $of$ revenues earned $or$ expenditures incurred are'accrued $in$ order $to$ prepare the

financial statements. The accounting system used $by$ the town $is$ prescribed $by$ the State Comptroller

and consists $of$ the following records:

$>$ General Journal$>$ Cash Receipts Journal

$>$ General Ledger$>$ Subsidiary Revenue Ledger.

Also included $in$ the practice set $is$ a chart $of$ accounts and a schedule $of$ exhibits $to$ assist $in$

recording the appropriate transactions. Balances from the previous year have been brought

forward $in$ the General Ledger.