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13 March, 05:01

Tree City reported a $1,500 net increase in fund balance for governmental funds for the current year. During the year, Tree purchased general capital assets of $9,000 and recorded depreciation expense of $3,000. What amount should Tree report as the change in net position for governmental activities? A. $ (4,500) B. $1,500 C. $7,500 D. $10,500

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  1. 13 March, 07:29
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    Answer

    The correct answer is c. $ 7,500.

    Explanation:

    The reconciliation of the change in fund balance in governmental fund financial statements to the change in net position for governmental activities in the government-wide financials is computed using the GOES BARE mnemonic. The fact pattern only describes measurement focus (GOES) issues computed as follows:

    G Change in Governmental Fund Balance $ 1,500

    O Other Financing Sources 0

    E Expenditure - Capital Outlay 9,000

    (net of depreciation) (3,000)

    S Internal Service Fund Net Income 0

    Change in Net Position in government

    -wide financial statements $ 7,500
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