
Major Fund Tests
The City of Somerset has the following fund information:
Required
Apply the criteria specified in GASB 34 to determine which of these funds meets the major fund reporting criteria.

Introduction: GASB statement 34 requires governmental agencies to furnish two financial statements, governmental statements of revenues, expenditures, and changes in fund balance, and the governmental fund balance sheet. The fund based governmental entities only report major funds, to determine major funds, 10 percent criteria is used which says total assets, liabilities, revenues, or expenditures of the individual fund must be at least 10 percent, and 5 percent test which says that the total assets, liabilities, revenues or expenditures of the individual fund must be at least 5 percent of the corresponding total for all governmental plus enterprise funds combined.
The major fund for reporting using criteria specified in GASB 34.
Explanation of Solution
10 percent criterion test
Funds | Assets $ | % | Liabilities$ | % | Revenues$ | % | Expenditures$ | % |
Governmental fund | ||||||||
General fund | 1,320,400 | 878,300 | 4,620,000 | 4,550,000 | ||||
Special revenue | 27,000 | 1.3 | 19,000 | 2 | 327,000 | 5.65 | 328,000 | 5.8 |
Library | 450,000 | 21.3 | 38,000 | 3.99 | 460,000 | 7.94 | 418,000 | 7.39 |
Arena | 28,000 | 1.33 | 16,000 | 1.68 | 41,000 | 0.71 | 55,800 | 0.99 |
Debt service | 41,000 | 1.94 | 0 | 0 | 331,000 | 5.72 | 290,000 | 5.12 |
Permanent | 246,000 | 11.65 | 0 | 0 | 11,000 | 0.19 | 18,000 | 0.32 |
Total | 2,112,400 | 100 | 951,300 | 100 | 5,790,000 | 100 | 5,659,800 | 100 |
Funds | Assets $ | % | Liabilities$ | % | Revenues$ | % | Expenditures$ | % |
Enterprise fund | ||||||||
Enterprise − Electric | 2,640,000 | 66.1 | 1,800,700 | 62.1 | 289,000 | 47.8 | 245,000 | 45.1 |
Enterprise − water | 1,355,000 | 33.9 | 1,100,000 | 37.9 | 329,000 | 53.2 | 298,000 | 54.9 |
Total | 3,996,000 | 100 | 2,900,700 | 100 | 618,000 | 100 | 543,000 | 100 |
- General fund is always major fund.
- Funds percentage above 10 percent are major funds:
- Capital project fund − library and permanent fund is above 10 percent hence a major fund
- Both enterprise funds, electric and water are major funds as both the funds qualify 10 percent test
5 percent test:
Funds | Assets $ | % | Liabilities$ | % | Revenues$ | % | Expenditures$ | % |
Governmental fund | ||||||||
General fund | 1,320,400 | 878,300 | 4,620,000 | 4,550,000 | ||||
Special revenue | 27,000 | 0.44 | 19,000 | 0.5 | 327,000 | 5 | 328,000 | 5 |
Library | 450,000 | 7.37 | 38,000 | 0.99 | 460,000 | 7.18 | 418,000 | 6.74 |
Arena | 28,000 | 0.45 | 16,000 | 0.4 | 41,000 | 0.6 | 55,800 | 0.9 |
Debt service | 41,000 | 0.7 | 0 | 0 | 331,000 | 5.16 | 290,000 | 4.7 |
Permanent | 246,000 | 4.03 | 0 | 0 | 11,000 | 0.17 | 18,000 | 0.29 |
Enterprise − Electric | 2,640,000 | 43.22 | 1,800,700 | 46.7 | 289,000 | 4.51 | 245,000 | 3.95 |
Enterprise − water | 1,355,000 | 22.2 | 1,100,000 | 28.6 | 329,000 | 5.13 | 298,000 | 4.8 |
Total | 6,108,400 | 100 | 3852,000 | 100 | 6,408,000 | 100 | 6,202,800 | 100 |
- General fund is always major fund.
- Funds percentage above 5 percent are major funds:
- Capital project fund − library and permanent fund is above 5 percent hence a major fund
- Both enterprise funds, electric and water are major funds as both the funds qualify 5 percent test
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