Property tax
Property tax is known as ad valorem tax used to levy real estate of the actual property value. For example, the house that I own in Harris county would be the governing authority of my property taxes. It can also be governed by multiple jurisdictions, national government, federated state or even the county. “In many states, a county official prepares bills for all taxes levied on property within the county; another county official acts as collector of all property taxes levied for the county and all governments within the county. Although the billing and collecting functions may be centralized, the taxes levied for each fund must be recorded as an asset of that fund.”
https://phoenix.vitalsource.
#5. Re: Encumbrances (Student Post)
Encumbrances are used when recording purchase orders or contracts. The purpose of an encumbrance is to set aside a certain amount of funds for a future expenditure. Encumbrances help “administrators avoid over-expending appropriations and help plan for payment of liabilities on a timely basis” (Lowensohn, Reck, & Wilson, 2015).
I would say that encumbrances do not affect expenditures directly, but help the flow of the transaction. The relationship between encumbrances and expenditures is encumbrances are estimated expenditures, and they come before expenditures. Therefore, once liabilities are paid the encumbrances outstanding account is debited and encumbrances is credited (to reverse the original entry) at the estimated cost; then the expenditures account is debited with vouchers payable credited at the actual cost paid. The reason I say they are not directly related is because the journal entry numbers are not the same; due to the difference of estimated and actual costs. However, I have not found anything that explains to me how encumbrances affect expenses. I am curious to see what other people can find!
Lowensohn, S., Reck, J., & Wilson, E. (2015). Accounting for Governmental & Nonprofit Entities. (17th ed.). Retrieved from University of Phoenix eBook Collection.
#6. LEASE AGREEMENTS (Student)
found that the lease agreements sections to be very interesting. Lease agreements can fall into either two categories. It first needs to be determined if the lease would fall into capital leases or operating leases. In the chapter is states that “Assets acquired under an operating lease belong to the lessor, not to the proprietary fund; accordingly, the annual lease payment is recorded as a rental expense of the Page 255fund, and there is no depreciation expense on the assets acquired under an operating lease agreement. Assets acquired under a capital lease agreement by an internal service fund, or an enterprise fund, should be capitalized by that fund. The amount to be recorded by a proprietary fund as the cost of the asset acquired under a capital lease is the lesser of (1) the present value of the rental and other minimum lease payments or (2) the fair value of the leased property. The amount recorded as the cost of the asset is amortized in a manner consistent with the government’s normal depreciation policy for owned assets of proprietary funds. The amortization period is restricted to the lease term, unless the lease (1) provides for transfer of title or (2) includes a bargain purchase option, in which case the economic life of the asset becomes the amortization period.”
The reason that I found this interesting is that I have be thinking if a brink and mortar would be a good option for my business in the future or not. Reading this was interested so that I have an idea of how it would be assessed in the books.
https://phoenix.vitalsource.
Solution preview for the order on property tax
APA
385 words