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Governmental Accounting Gross Up

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If the General Fund of a certain city needs $6,790,000 revenue from property taxes to finance estimated expenditures of the next fiscal year and historical experience indicates 3 percent of the gross levy will not be collected, how much should the gross levy for property taxes be? Show all computations in good form.

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Solution Summary

The solution accounts for the amount a governmental entity should 'gross up' its budget to account for funds it anticipates will not be collected.

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This problem is a 'gross up' type problem where we are to establish a known net against an unknown gross.

This type of problem is common is business (because of the net effect of taxes). In their employment contracts, business executives often ask ...

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