Describe the fund accounting implications of adopting that suggestion.
Scenario 1 A large city has been financing all of its services through property taxes and sales taxes. As the cost of services has been increasing, the city has found it necessary to raise its tax rates. A special commission appointed by the mayor suggests that it would be possible to reduce the property tax rate by charging residents a monthly fee to cover the costs of collecting and disposing of trash and garbage. The mayor likes the suggestion and wants to run the sanitation activity like a commercial business.
Describe the fund accounting implications of adopting that suggestion.
Scenario 2
Each department in a large city maintains its own fleet of vehicles. The cost of purchasing and maintaining the vehicles is financed through the General Fund. One day, the mayor walks past the parking lot of the Parks Department and notices that many vehicles are not being used. The mayor calls her finance commissioner into the office and says: "Couldn't we save money by setting up a central motor pool and requiring each department to use a pool vehicle whenever they need one?" The finance commissioner replies: "Yes, that will save us lots of money, but we will need to change our accounting system a bit to handle it.
Discuss the fund accounting implications of the finance commissioner's reply.
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