For each transaction and event: If there are no differences in the bottom line (see net or excess), assume that, in this case, the cash versus accrual would have no impact. If there are differences in the net or excess, tell or explain why. For example, with the pension cost, only $25,000 is reported under cash, whereas $100,000 is reported under accrual. Also try to explain how a citizen would interpret the differences in net or excess amount for the cash versus accrual approach.
Finally, which model, cash or accrual, do you think would be better for government?
| Transactions and Events | Original Amount | Cash | Accrual |
|---|---|---|---|
| Revenues | 1750000 | 1750000 | 1750000 |
| Costs of government: | |||
| salaries | 1250000 | 1250000 | 1250000 |
| pension cost 1/4 is paid | 100000 | 25000 | 100000 |
| depreciation, no reserve | 150000 | 150000 | |
| supplies (3/4 used) | 50000 | 50000 | 37500 |
| rent | 175000 | 175000 | 175000 |
| insurance (1/2 used) | 100000 | 100000 | 50000 |
| training | 50000 | 50000 | 50000 |
| purchase of fixed assets 1/4 used this period | 10000 | 10000 | 2500 |
| total expenditures/expenses | 1660000 | 1815000 | |
| net or excess | $90,000 | ($65,000) |