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IU / SPEA / SPE 246 / How to calculate tax rate?

How to calculate tax rate?

How to calculate tax rate?

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Final Exam Study Guide for Government Accounting How to Calculate Tax Rate (Also referred to as millage rate)


How to calculate tax rate?



Amount to be Collected 750,000 

Estimate of Uncollectible Funds 4% 

Required Tax Levy (Yellow/(1-Green) 781,250 

Total Assessed Value of Property 40,000,000

Subtract: Property Not Taxable 5,000,000 

Taxable Property 35,000,000

Subtract: Exemptions* 2,000,000 

Net Assessed Value of Property 33,000,000 

Tax Rate (Millage Rate) is Blue/Purple $2.37/ every $100 worth of property**

Question that will be on the test:  


What is the tax burden of a person who owns property worth $275,000?



What is the tax burden of a person who owns property worth $275,000? Answer: $6,517.50  

Reason: $275,000 x .0237 Which is the property value multiplied by the tax rate

*Exemptions: on the test they might have these broken up into different  categories such as first homes, veterans, elderly etc.

** The Blue/Purple calculation would give you .0237 but we multiply by $100 to  get the tax rate. Note: .0237 is where the number came from for the answer to  the question

Sample Multiple Choice Question with Reasoning:

1. What type of fund would fines or forfeitures be classified in? Answer: Governmental General Fund


What type of fund would building a road with designated funds be classified in?



Reason: Fines and forfeitures are in place for general governmental  operations and are not designated to a specified fund. Don't forget about the age old question of Arousal/affect and cognition are the 2components that make up which psychological theory?

2. What type of fund would escheat property be classified in?

Answer: Fiduciary Fund

Reason: Escheat property is property held by the government and given to  the legal heir of the property when they claim it.

3. True/False Property taxes collected within 60 days of the deadline would be  considered current.

Answer: True

Anything collected after that is not shown on the current accounting  records.

4. What type of fund would building a road with designated funds be  classified in?

Answer: Governmental Capital Projects

Reason: Building a road would be from the general fund BUT the problem  says that funds are being used that are designated specifically for it.

5. What type of fund would a special tax for hotels be classified in? Answer: Governmental Special Revenue

Reason: Special revenue is used easy to distinguish because it’s a special tax  for a purpose.

6. What type of fund would be used to pay long-term debt?

Answer: Governmental Debt Service Fund

Reason: Long term debt is always paid out of the debt service fund and  there and no exceptions.Don't forget about the age old question of What are the four regions of the stomach?

How to Close Entries

*Note: The only accounts that need to be closed are revenues and expenditures for both  budgetary and actual entries.

Pre-Closing Entries We also discuss several other topics like What was asch’s line experiment?

Expenditures- salaries 2050

Expenditures-services 6000

Expenditures- supplies 1000

Revenues-sales tax 5000

Revenues-property tax 2000

Revenues- fines and forfeitures 50

Revenues- federal grant 1000

Revenues- state grants 1000

Total 9050 9050 

Closing Entries

Revenues-sales tax 5000

Revenues-property tax 2000

Revenues- fines and forfeitures 50

Revenues- federal grant 1000

Revenues- state grants 1000

Expenditures- salaries 2050

Expenditures-services 6000

Expenditures- supplies 1000

Total 9050 9050 

Some Things to Keep in Mind:

-Do not panic.  

-All you are doing is taking the given preclosing entries and reversing them. -Revenues will always be credits in preclosing entries which means debit in closing entries. -Expenditures will always be debits in precloing entries which means credit in the closing entry. - Why do we do this? Revenue and expenditures will be different every year. Hence, close  accounts to make them have a zero beginning balance in preparation for the next year.Don't forget about the age old question of What did napoleon accomplish?
We also discuss several other topics like Does appetite increase or decrease?

Balance Sheet Tips

1. We will be given a trial balance.  

2. What does a trial balance mean?

a. It means you will be given ASSETS first and LIABILITIES follow and then a Fund  Balance.

3. Assets are any type of cash or receivable and NOT revenues or transfers. a. Note: only capital assets are recorded. (capital means money, i.e. not inventory) 4. Any transfers are placed in other financing resources and NOT revenues. 5. Assets = Liabilities + Fund balance for the balance sheet. Don't forget about the age old question of Where are phylum zygomycota found?

6. Make sure you find the changes in fund balance (similar to “net income”) and put it on  your balance sheet with fund balance changes

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