acc 410 ch 4 homework
6. Property taxes should be recognized in the period for which the taxes are levied. In the fund statements, the taxes must meet the additional criterion that they be “available.”
7. Sales taxes should be recognized in the period in which the underlying sales transaction takes place. Sales taxes are “derived” from an underlying economic event — that event being the sales transaction. Hence it is appropriate to recognize revenue at the time of the event.
8. Reimbursement grants are payments that are intended to pay for specified expenditures. Most typically the grantor reimburses the grantee for all or a portion of allowable costs. Entitlements, by contrast, are payments, usually from a higher level government, to which a state or local government is automatically entitled in an amount determined by a specified formula.
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