The City of Casper levied property taxes for 2009 in the amount of $8,000,000. The amount estimated to be uncollectible is 2%. By the end of the year, $7,200,000 had been collected. It was estimated that $400,000 would be collected during the next 60 days of 2008 and that $240,000 would be collected after that. The City has a policy of recognizing the full amount possible for property taxes. Which of the following statements is true?

Question

Quizplus · Accepted Answer

Choice A is correct because the government-wide Statement of Activities recognizes all revenues earned during the period, regardless of when they are collected. Therefore, the estimated uncollectible amount of 2% ($160,000) would be subtracted from the total property tax revenue of $8,000,000, resulting in a recognized revenue of $7,840,000 ($8,000,000 - $160,000).

Choice B is correct because the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances recognizes only revenues that have been collected during the current period. Therefore, the total property tax revenue of $8,000,000 would be reduced by the estimated uncollectible amount of 2% ($160,000) and the uncollected amounts of $400,000 and $240,000, resulting in a recognized revenue of $7,600,000 ($7,200,000 + $400,000 - $160,000 + $240,000).

Therefore, Choice C is the correct answer because both statements are true.

The City of Casper Levied Property Taxes for 2009 in the Amount