Investments
Chapter 9 discusses the accounting for investments by governments, so not much space will be spent here discussing investments. Suffice it to say that most investments (most stocks, bonds, and other debt instruments) are reported in the statement of net assets at their fair value (fair market value is an older term
for what is now referred to as fair value). Changes in the fair value of investments from year to year are reported in the government’s statement of activities as part of overall investment earnings (or losses).
Taxes Receivable
Taxes are one type of “nonexchange” transaction that will be described in Chapter 6. Earlier in this chapter, some information about recording receivables for real estate taxes, one of the more common taxes received by governments, was provided. For now, it is important simply to be aware that taxes that are owed to a government—be it real estate taxes, personal or corporate income taxes, sales taxes, or personal property taxes—that are due to a government on the date of its statement of net assets but that have not been paid, are reported on the statement of net assets as a receivable.
Accounts Receivable
The other significant category of receivables, accounts receivable, is often referred to as trade accounts receivable. These receivables represent funds that are owed to the government from individuals or other organizations because of services provided or goods sold to these other entities. Some common scenarios where these types of receivables may be present on a government’s financial statements are
- A governmental college may be owed tuition and fees from students that are past their due date, but have not as yet been paid.
- A government water utility may bill its customers for water that has been provided to the customers and the bill is due but has not as yet been paid.
Taken From : Governmental Accounting Made Easy