| Course | ACC-5070 Government and Not-for-Profit Organization Accounting |
|---|---|
| Module | Module 3 |
| Paper type | Written Assignment 3: recording governmental transactions |
| Length | About 746 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | Master of Science in Accounting |
| Updated | October 2026 |
Free sample paper for ACC 5070 Module 3
A Year in Lenape Hills Township's General Fund: Budget, Taxes, Encumbrances and Closing
Student Name
Master of Science in Accounting, Thomas Edison State University
ACC-5070: Government and Not-for-Profit Organization Accounting
Mentor Name
Month Day, Year
A Year in Lenape Hills Township's General Fund: Budget, Taxes, Encumbrances and Closing
Introduction
A General Fund records two kinds of information at once. Proprietary accounts record actual revenues, expenditures, assets and liabilities on the modified accrual basis. Budgetary accounts record the legally adopted budget and amounts committed through purchase orders, so that officials can see at any time how much of each appropriation remains available. Reck et al. (2020) describe this dual system as the means by which governments show compliance with the budget, which is law. The entries below record the township's 2026 General Fund activity.
Entry 1: Adopting the Budget
The council adopted a 2026 budget with estimated revenues of $8,400,000, appropriations of $8,250,000 and a planned transfer of $120,000 to the debt service fund.
The $30,000 credit to Budgetary Fund Balance shows that the budget plans a small surplus.
| Account | Debit | Credit |
|---|---|---|
| Estimated Revenues | 8,400,000 | None |
| Appropriations | None | 8,250,000 |
| Estimated Other Financing Uses | None | 120,000 |
| Budgetary Fund Balance | None | 30,000 |
Entry 2: The Property Tax Levy
The township levied $6,000,000 of property taxes for 2026 and expects 2% to prove uncollectible.
Revenue is recorded net of the estimated uncollectible amount, since governments report taxes they expect to collect. During 2026 the township collected $5,640,000, leaving $360,000 receivable at year end, of which $240,000 is expected to be collectible after the allowance.
| Account | Debit | Credit |
|---|---|---|
| Taxes Receivable, Current | 6,000,000 | None |
| Allowance for Uncollectible Current Taxes | None | 120,000 |
| Revenues Control, Property Taxes | None | 5,880,000 |
Entry 3: Taxes Not Yet Available
Under modified accrual, property tax revenue is recognized only if collected within the year or soon enough afterward to pay the year's bills, generally within 60 days, a rule that applies to imposed taxes under the nonexchange revenue standard (Governmental Accounting Standards Board [GASB], 2000). Tax collectors expect $150,000 of the collectible $240,000 by the end of February 2027. The remaining $90,000 is not available and is moved out of revenue.
The receivable is also reclassified from current to delinquent, with its allowance, at year end. In the government-wide statements, the full $5,880,000 is revenue, because the accrual basis does not require availability.
| Account | Debit | Credit |
|---|---|---|
| Revenues Control, Property Taxes | 90,000 | None |
| Deferred Inflows of Resources, Unavailable Revenue | None | 90,000 |
Entries 4 and 5: Encumbrance and Expenditure
In March the police department ordered two patrol vehicles estimated at $140,000. When they arrived in June, the invoice was $138,500.
The encumbrance reserved $140,000 of the police appropriation while the order was open, preventing officials from spending it twice. Once the vehicles arrived, the actual cost replaced the estimate. In the General Fund the vehicles are an expenditure; they appear as capital assets only in the government-wide statements.
| Entry | Account | Debit | Credit |
|---|---|---|---|
| Order placed | Encumbrances Control | 140,000 | None |
| Order placed | Encumbrances Outstanding | None | 140,000 |
| Vehicles received: reverse the encumbrance | Encumbrances Outstanding | 140,000 | None |
| Vehicles received: reverse the encumbrance | Encumbrances Control | None | 140,000 |
| Vehicles received: record the expenditure | Expenditures Control, Capital Outlay | 138,500 | None |
| Vehicles received: record the expenditure | Vouchers Payable | None | 138,500 |
Entry 6: Payroll
Gross salaries for the year were $3,100,000, with $620,000 withheld for income and payroll taxes and benefits.
| Account | Debit | Credit |
|---|---|---|
| Expenditures Control, Salaries | 3,100,000 | None |
| Cash | None | 2,480,000 |
| Due to Federal and State Governments | None | 620,000 |
Entry 7: Transfer to the Debt Service Fund
The General Fund sent $120,000 to the debt service fund to help pay principal and interest on the library bonds.
The debt service fund records the same amount as Other Financing Sources, Transfers In. Transfers are not expenditures, because the money stays within the township.
| Account | Debit | Credit |
|---|---|---|
| Other Financing Uses, Transfers Out | 120,000 | None |
| Cash | None | 120,000 |
Entry 8: Closing the Budgetary Accounts
At year end the budget entry is reversed so budgetary accounts start fresh in 2027.
| Account | Debit | Credit |
|---|---|---|
| Appropriations | 8,250,000 | None |
| Estimated Other Financing Uses | 120,000 | None |
| Budgetary Fund Balance | 30,000 | None |
| Estimated Revenues | None | 8,400,000 |
Budget-to-Actual Comparison
Revenues fell short mainly because building permit fees dropped with a slowdown in construction, while savings on overtime and fuel kept spending below appropriations. The comparison, required as supplementary information, is the report that shows residents whether the council kept to the budget it adopted. Research on municipal reserves suggests why such comparisons matter to rating agencies, which look at both the budget variance and the resulting fund balance (Marlowe, 2011).
| Item | Final budget | Actual | Variance |
|---|---|---|---|
| Revenues | $8,400,000 | $8,320,000 | ($80,000) unfavorable |
| Expenditures and encumbrances | 8,250,000 | 8,190,000 | 60,000 favorable |
| Transfer to debt service | 120,000 | 120,000 | None |
References
Governmental Accounting Standards Board. (2000). Accounting and financial reporting for nonexchange transactions (Statement No. 33).
Marlowe, J. (2011). Beyond 5 percent: Optimal municipal slack resources and credit ratings. Public Budgeting & Finance, 31(4), 93-108. https://doi.org/10.1111/j.1540-5850.2011.00994.x
Reck, J. L., Lowensohn, S. L., & Wilson, E. R. (2020). Accounting for governmental and nonprofit entities (19th ed.). McGraw-Hill Education.
ACC 5070 Module 3 instructions, in plain terms
Written Assignment 3 belongs to Module 3, where ACC-5070 moves from concepts to bookkeeping in governmental funds. Expect short answers mixed with entries, and answer every part in full, as the syllabus insists for all six graded sets. Expect to record budgets, property tax levies and collections, deferred inflows for unavailable revenue, encumbrances and expenditures, payroll, interfund transfers and the closing of budgetary accounts, and to prepare or interpret a budgetary comparison. This sample works an invented township's General Fund for one year so the entries connect; your own assignment will give its own transactions. Budgetary entries matter as much as actual ones here: the prompt usually wants the appropriations, estimated revenues and encumbrances recorded before any cash moves.
Inside the ACC 5070 Module 3 example
The assignment opens by explaining the dual system of budgetary and proprietary accounts, which every later entry depends on. Each transaction then gets a short description and a journal entry table, followed by a sentence or two on why the entry takes that form. The property tax section separates recognition at levy from the availability test at year end and notes the different treatment in the government-wide statements. The encumbrance entries show the order, its reversal and the actual expenditure. A transfer is distinguished from an expenditure. The closing entry and a budget-to-actual table finish the year, with an explanation of the variances and a research link to credit ratings.
ACC 5070 Module 3 rubric: what earns full marks
General Fund entries are scored out of 100 within that same 42 percent share. On a transaction assignment, mentors check that budgetary entries use the correct accounts and balance, that tax revenue is recorded net of the allowance, that unavailable revenue is deferred under modified accrual, that encumbrances are reversed before expenditures are recorded, that transfers are not treated as expenditures and that closing entries reverse the budget. Explanations of why each entry is made show understanding beyond the mechanics. Entries laid out with the fund named above each one let a mentor give part marks when only one step goes wrong. Journal entries that show both the budgetary and the actual side of each event, with a closing entry that clears the budget accounts, are the clearest evidence of command of the fund.
Common ACC 5070 Module 3 mistakes, and how to avoid them
The costliest slips are booking the whole levy as revenue with no allowance and no 60-day test, leaving an encumbrance standing after the invoice arrives, and calling a transfer to another fund an expenditure. Work through each transaction asking which accounts are budgetary and which are actual. Remember that capital purchases are expenditures in governmental funds. Check that your closing entry mirrors the budget entry exactly. Give every budget-to-actual gap a one-line cause beside its number. A free first sample of your own ACC-5070 Module 3 transaction analysis is available on request.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Thomas Edison State University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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ACC 5070 Module 3 questions, answered
Where can I find a free ACC 5070 Module 3 sample paper?
The township's General Fund year is recorded above: the budget, tax levy and unavailable revenue, an encumbrance, payroll, a transfer, budgetary closing and a budget-to-actual comparison.
What is an encumbrance in governmental accounting?
A purchase order booked against the budget, so that part of an appropriation is set aside until the invoice replaces it with a real expenditure.
When is property tax revenue available under modified accrual?
Once the township collects it, either inside the year or quickly enough after December 31, usually within two months, to pay that year's bills.
Are interfund transfers expenditures?
No. Transfers between funds are reported as other financing uses and sources, since the resources stay within the government.
Why are budgetary accounts closed at year end?
The budget authorizes spending for one year, so the budgetary entry is reversed and the accounts start fresh with the next year's adopted budget.