(Nature of governmental fund types and fund balances) J. J. Peachum is running for election as a…

 
   

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(Nature of governmental fund types and fund balances) J. J. Peachum is running for election as a commissioner of the municipality of Mt. Lebanon. He examines Table 2-6 in the text and calculates the total of the fund balances to be $10,282,000. Then, in a major campaign speech, he announces: “We have a surplus of more than $10 million. If elected, I will use this entire slush fund to reduce your property taxes.” Comment on Peachum’s assertion, based solely on your analysis of Table 2-6 , your understanding of the nature of governmental-type funds, and your general knowledge of governmental finance. (Fund balances will be discussed in Chapter 5 , and financial statement analysis will be covered in Chapter 14 .)

Table 2-6