Items 1 and 2 are based on the following:
The general fund of Elizabeth City received a $100,000 grant from the state to be used for retraining its police force in modern crime-fighting methods. The state recently passed legislation that requires retraining for all police departments in the state. The grant was received in cash on June 15, 2005, and was used for retraining seminars during July 2005. The state mandated that the grant be spent in the fiscal year ending June 30, 2006. Elizabeth’s fiscal year ends on June 30. Answer each of the questions below based upon the guidance provided by GASB 33, Accounting and Financial Reporting for Nonexchange Transactions.
What account should be credited in the general fund on the date the grant was received?
- Restricted revenue.
- Deferred revenue.
- Unreserved fund balance.
The grant from the state is an example of what type of nonexchange transaction?