12/3 Class Chapter 17 Flashcards
governmental entities
- accountability for the flow of financial resources is a chief objective
- typically required to establish separate funds to carry out various missions; each fund is an independent accounting and fiscal entity
7.
GASB
created in 1984
no authority to establish GAAP for governmental entities
GFOA
interpretations of GAAP for governmental entities
elements of a statement of financial condition
- assets - resources with present service capacity that the entity presently controls
- liabilities - present obligations to sacrifice resources that the entity has little or no discretion to avoid
- deferred outflow of resources is a consumption of net assets that is applicable to a future reporting period
- deferred inflow of resources is an acquisition of net assets that is applicable to a future reporting period
- net position the residual of all other elements presented in a statement of financial condition(owners equity)
measurement focus
governmental entities
changes in current financial resources available to provide services to the public in accordance with the budget
method of accounting(gov entities)
modified accrual method
balance sheet
reports only current assets, current liabilities, and fund balance
governmental funds
do not resemble commercial activities
proprietary
these activities resemble commercial activities. Can measure profitability or capital maintenance
fiduciary
holding and managing assets owned by others(ex: pension assets)
fund accounting
accounting for certain activities separately from all other operations
fund definition
……
general fund
the main and largest fund records most routine transactions
governmental funds
have a fund balance(difference between assets and liab)
proprietary and fiduciary
net assets(difference between assets and liab)
general fund
largest fund, accounts for all financial resources except for those accounted for in another fund
special revenue fund
accounts for proceeds of specific revenue sources that are restricted fro specified purposes
capital projects fund
accounts for financial resources for the acquisition or construction of major assets
debt service fund
accounts for the accumulation of resources for and the payment of general long term debt
permanent fund
accounts for resources that are restricted such that only earnings not principal may be used in support of governmental programs
proprietary fund types
enterprise funds - accounts for operation of governmental units that charge for services provided to the general public
internal service fund - accounts for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit. Services are offered only to governmental agencies.
these use accrual accounting more for profit
fiduciary fund types and similar component titles
pension - held in trust for others
investment trust fund - accounts for the external portion of investment pools reported by the sponsoring government
private purpose trust fund - accounts for all other trust arrangement under which the funds are to be used to benefit specific individuals, private organizations, or other governments
agency fund - accounts for assets held by governmental unit in an agency capacity for employees or for other governmental units. Generally short term
they use accrual, net assets
governmental funds financial statements
balance sheet
statement of revenues, expenditures and changes in fund balance
use current financial reports
government fund
Fund balance:
spendable
nonspendable
fiduciary fund
Net Assets:
restricted
unrestricted
he will post his version of chapter 17
look at it
example of balance sheet in slides
look at it
example of statement of revenues, expenditures and changes in fund balance
measurable and available revenues, you have to know it
often called the operating statement of the governmental funds
revenues are measurable and available funds
focuses on the net change in the fund balance
similar to a cash flow statement
we don’t have to build one, but we have to understand its components
modified accrual basis
revenues recognize in the period they are available
expenditures: recognize in the accounting period due
recognition of revenue
depends on the category
1. derived tax revenues, resulting from assessments on exchange transactions(sales tax)
the asset is recognized when the underlying transaction occurs or resources are received whichever comes first
revenue recognition depends on the accounting basis used to measure the transaction
2. imposed nonexchange revenues resulting from assessments on nongovernmental entities, including individuals(property tax)
the asset is recognized when the government has an enforceable legal claim to the resources or the resources are received, whichever comes first.
adjustment
revenue
allowance account/reserve
budgets
we will not be tested on budgets but we should know them
encumbrances lapse at year end
know this
if i set up an encumbrance at the end of the year, the way it has to happen is that expense has to go through the next year
we won’t be tested on this
consumption method
the preferred method it parallels business practice
the use of inventory is treated as an outflow of resources
purchase method
……
fixed assets governmental funds
not on the books recognized as an expenditure in the year it was acquired
fixed assets proprietary funds
account for acquisition of capital assets in the same manner as commercial entities
investments
fair value
look at the slide for
entitlement receivables look at the problem on the slides
