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

(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

 

 

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