What is the distinction between expenses and expenses as the terms are used in government accounting?

Expenses are related to government funds, while expenses are related to property funds. Expenses are decreases in net financial resources and expenses are decreases in net financial resources. When an asset is acquired, it is generally accepted as an expense. When an asset is consumed, it is generally accepted as an expense.

A government expects to pay its electricity bill related to its current fiscal year sometime in the following year. A government official seeks your advice on whether the advance payment should be charged as an expense for the current or next year. How would you answer?

The government must record your electricity bill as a lien to be paid in the following year. When the lien is recorded, the budgeted amount for expenses is reduced, while a portion of the unreserved fund balance is reserved for the lien.

Although many governments prepare budgets for both capital projects and debt service funds and integrate them into their accounts, budgetary control over these funds is not as essential as it is for other government funds. Do you agree? Explain. If budgets are prepared for capital project funds, in what significant ways can they differ from those prepared for other funds?

I do not agree that budget control over capital projects and debt service funds is not as essential as it is for other government funds. While budget entries for project and service funds are intended to be an internal control mechanism and do not affect year-end financial statements, it is still important to maintain budget control to prevent expenditures from exceeding authorizations. Budgets prepared for these project funds are significantly different from those prepared for other funds in that capital project funds are stationary in nature and can often be held for significantly more years.

How should governments report their capital projects and debt service activities in their government disclosures?

Governments must report their capital projects and debt service activities in their government returns as long-term obligations as pooled funds that include all other government funds in the government activities column.