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FAR > 15. State And Local Government Concept > Flashcards

15. State And Local Government Concept Flashcards

1
Q

What are the 5 characteristics of governmental organizations?

A 
Not profit motive
Lack of clear ownership
Non exchange service: contribution of resources do not receive proportionate share of benefits
Compliance with laws and regulations
Formal budget process
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2
Q

What are the 3 types of governmental organizations?

A

State and local government: city, towns, county..
Special purpose government: school district, transit authority
Agencies and commissions: economic development, convention bureau

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3
Q

What are the level of authority for Standards?

What used to be?

A

Category A: GASB stmts and interpretations (officially established accounting principles)
Category B: GASB technical bulletins, GASB implementation guides (used to be D), AICPA literature created by GASB

Level A to D.

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4
Q

Is GASB concept stmt authoritative (like GAAP)?

What’s the purpose?

A

No.

Provide a framework for GASB in developing and revising standards

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5
Q

What are the 6 concept stmts?

A

Objectives of financial reporting
Service efforts and accomplishments
Financial reporting
Elements of financial reports
Service efforts and accomplishments (amendment to 2)
Measurement of elements in financial stmts

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6
Q

What are the two primary objectives for financial reporting?

A

Accountability

Interperiod equity: are current yr resources sufficient to pay current yr services?

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7
Q

6 Characteristics of financial reporting?

A

TRUCCR

Timeliness, relevance, understandability, comparability, consistency, reliability

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8
Q

Service efforts and accomplishments: explain

A

Voluntary Efforts (input): cost of fire department
Accomplishments:
Output: # of fire alarms responded to
Outcome: % of fire alarms responded within 5 min

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9
Q

Financial reporting 4 hierarchy?

A

Recognition in basic financial stmts
Note disclosure
Required supplemental information (RSI)
Supplemental information (optional)

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10
Q

What are 5 elements of financial stmts?

A 
Assets
Liab
Deferred outflow of resources
Deferred inflow of resources
Net position
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11
Q

What are two approaches for measurement and 4 attributes? Two types of measurement focus to determine either for modified accrual or full accrual?

A

Initial amounts. Remeasure amounts.

Historical cost, FV, Replacement costs, Settlement costs

Flow of current expendable financial resources (CF type) and change in economic resources (income type). If net income focused, accrual (proprietary and agency funds). If source/use focused, modified accrual (governmental funds).

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12
Q

What are 4 financial reporting implications?

A

Expression of public policy
Expression of financial intent
Formal control
Provide basis for evaluating performance

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13
Q

Who are the primary users of financial stmts?

A

Citizens, legislative and oversight board, investors and creditors

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14
Q

What are the two definitions of a fund?

A

A fiscal entity (account for cash and non cash)

An accounting entity (debts = credits)

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15
Q

What are 3 categories of funds?

A

Governmental funds, proprietary funds, fiduciary funds

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16
Q

What are 5 funds under governmental funds?

A 
General funds
Special revenue funds
Capital project funds
Debt service funds
Permanent funds
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17
Q

What are two funds under proprietary funds?

A

Enterprise funds

Internal service funds

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18
Q

What are 4 funds under fiduciary funds?

A

Pension trust funds
Private purpose trust funds
Investment trust funds
Agency funds

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19
Q

What are two purposes of a fund?

A

To improve management accountability and control

To meet legal requirements

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20
Q

What are included in government wide statements?

What is the measure basis?

A 
Governmental funds
Proprietary funds (except internal service fund)

Full accrual

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21
Q

What are two groups that are not GASB No 34 and not in fund report, but still reported in government wide stmt?

A

General fixed asset account group

General LT debt account group

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22
Q

What are two measurement focus?

Accounting objectives and measuring basis for each?

A

Flow of financial resources: source/use of current financial resources - modified accrual.

Flow of economic resources: NI - accrual

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23
Q

What is the formula for flow of current financial resources measurement focus?

A

CA - CL = fund balance

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24
Q

What are the financial sources and uses?

A

S: taxes, license/fees, grant revenues, transfer from other funds, process from bonds

U: salaries, utilities, capital expenditures, pmt on debts, transfer out to other funds

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25
Q

Modified accrual: when is revenue recognized?

A

Measurable, legally available (legal right and collected in the current period or within 60days), succeptable to accrual (both measurable and available prior to cash receipt)

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26
Q

If it’s not available, but collected, how should it be classified?

A

As deferred inflow of resource in current yr

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27
Q

What is the recognition approach for property taxes?

A

Accrual: both measurable and available

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28
Q

For licenses and fees?

A

Cash: not measurable or available

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29
Q

For intergovernmental grants?

A

Measurable but not available: when grant provisions are met

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30
Q

For charges for services?

A

Accrual: both measurable and available

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31
Q

For fines and forfeits?

A

Cash: not measurable or available

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32
Q

What is spending called for modified accrual basis?

A

Expenditures (use of “expense” not allowed)

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33
Q

When does expenditure recognized?

A

When incurred or due to be paid (due date)

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34
Q

Is expenditure account carried over to a new yr?

A

No. Closed.

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35
Q

What’s the measurement basis for interest in general LT debt?
On general ST debt?

A

L: modified accrual
S: accrual

36
Q

What is the purpose of budgetary accounting?

A

Planning and control

37
Q

What are the 3 elements of budgetary accounting?

A

Appropriation: authorized spending
Estimated revenues
Estimated other financing sources and use (interfund transfers, proceeds from bonds..)

38
Q

JE for balanced badger?
For surplus?
For deficit?

A

Dr: estimated revenues 100
Cr: appropriations. 100

Dr: Estimated revenue 110
Cr: appropriations. 100
Cr: Fund balance. 10

Dr: estimated revenue 90
Dr: fund balance. 10
Cr: appropriations. 100

39
Q

JE when there are other financing sources (transfer in and out)?

A

Dr: estimated revenue 110
Dr: estimated other financing sources 10
Cr: appropriations 100
Cr: estimated other financing sources 20

40
Q

How to treat budgetary account and actual operating accounts (revenue, exp)?

A

B: reverse the original entry

A: close

41
Q

Which items are required to report on budgetary results?

A

General funds

Each major annually budgeted special revenue funds

42
Q

What are 3 purposes of budgetary result reporting?

A

Report budget to actual results
Demonstrate compliance with related laws
Assist in evaluating performance

43
Q

What are two optional placement for budgetary result reporting?

A

As a part of basic fund level financial stmts

As a part of Required supplemental information after the note to the financial stmts (will be called schedule).

44
Q

What are 6 format for budgetary reporting?

A 
Original budget
Final budget
Actual on budgetary basis
If non GAAP basis, include reconciliation
Variance column (optional)
45
Q

Encumbrance JE for recording a PO issued, PO filled, and invoice for goods received: explain.

A

Dr: encumbrance
Cr: budgetary fund balance

Dr: budgetary fund balance
Cr: encumbrance

Dr: expenditures
Cr: Cash/ vouchers payable

46
Q

How to close OS encumbrance at yr end?

A

If will be used:
Reverse: Dr: budgetary fund balance. Cr: encumbrance
Dr: fund balance - unassigned. Cr: fund balance - assigned or committed (governmental authority) or restricted (external)

47
Q

How to open closed encumbrance in the beg of yr?

A

Dr: encumbrance - prior yr
Cr: budgetary fund balance

Dr: fund balance - assigned
Cr: fund balance - unassigned

48
Q

Are regularly scheduled items get encumbered?

Like payrolls, petty cash, interfund transactions

A

No

49
Q

What are the 3 net position categories?

A

Net investment in capital assets (BV - Depr. - Capital asset related debt used)
Restricted
Unrestricted

50
Q

Classify Board designated fund.

A

Unrestricted

51
Q

What are 5 types of governmental fund types?

A

Nonspendable
Restricted: by external parties, enabling legislation
Committed: internal highest level of decision making authority
Assigned (based on intent of use)
Unassigned

52
Q

What kind of resources will be in assigned fund?

A

Residual amounts in other governmental funds beside general fund

53
Q

Who can have a positive unassigned fund balance?

A

Only general fund

54
Q

Can other governmental funds beside general fund have a negative unassigned fund balance?

A

Yes

55
Q

What’s the possible classification of rainy day fund?

A

Restricted, committed, or unassigned

56
Q

What are the 3 required financial stmts for governmental funds?

A

BS
Stmt of revenues, expenditures, and changes in fund balance
Revenues, expenditures, and changes in fund balance - budget to accrual (can be either a part of stmts or schedule in RSI).

57
Q

Is having general fund required? Which accounting does general fund use?

A

Yes.

Budgetary and encumbrance accounting.

58
Q

Can a government have more than one general fund?

A

No

59
Q

Which fund requires budgetary accounting?

A

General fund

60
Q

Does permanent fund serve government or public or both?

A

Government

61
Q

Which fund record earning (interest revenue) of permanent endowment?

A

Permanent fund

62
Q

How does the permanent fund handle the interest earned on the permanent endowment? JE?

A

Dr: Other financing uses - Transfer to GF
Cr: Cash

63
Q

Classify the capital asset sale proceed?

A

Other financing source

64
Q

What are 3 required financial stmts for Proprietary Fund?

A

Stmt of net position
Stmt of revenues, expenses, and change in fund net position
Stmt of CF

65
Q

Who are the primary users for enterprise fund?

A

Public

66
Q

What are 4 categories of Stmt of CF for proprietary fund?

A

Operating
Non capital related financing
Capital related financing
Investing

67
Q

What kind of method is required for stmt of CF for proprietary fund?

A

Direct method

68
Q

Where should non cash transactions (donations, capital leases, unrealized g/l…) be reported on stmt of CF?

A

At the bottom

69
Q

Is Fiduciary fund included in government wide stmts?

A

No

70
Q

What are the 2 required financial stmts for fiduciary funds?

A

Stmt of fiduciary net position

Stmt of changes in fiduciary net position (uses additions and deductions rather than revenues and expenses)

71
Q

What are 4 required RSI for fiduciary fund?

A

Schedule of funding progress
Schedule of employer contributions
Actuarial information
10 yr schedule

72
Q

What are 3 pension ratios required in RSI?

A

Plan net position as a % of total pension liab
Net pension liab as a % of covered payroll
Contribution as a % of covered payroll

73
Q

Investment trust fund: what does a hosting government record?

A

Just the portion other governments are investing. Not their own

74
Q

Tax agency fund: JE for hosting tax agency fund? JE for a general fund for the hosting government? JE when taxes are received? JE when it is distributed?

A

Dr: Tax receivable Cr: due to other governments. Cr: due to general fund

Dr: Taxes receivable. Cr: Estimated uncollectible property taxes. Cr: Revenues - property taxes.

Dr: Cash. Cr: Property taxes receivable.

Dr: Due to …. Cr: Cash.

75
Q

What happens to the remaining of the capital project fund (which gets closed after the project)?

A

Transfer out and transfer into the debt service fund.
Dr: transfer out - other financing source. Cr: Cash.
Dr: Cash. Cr: transfer in - other financing source.

76
Q

What is the classification of grants? Interest pmt on short-term note? Bond proceeds?

A

Revenue. Expenditures. Other financing source.

77
Q

Proprietary fund: When adjusting net investment in capital asset, what would other account that must be contra adjusted?

A

Unrestricted.

78
Q

User charges based on what for enterprise fund and internal service fund? Where are they presented on the fund stmt?

A

E: Capital maintenance. I: Cost reimbursement.
E: Basic financial stmt. I: RSI.

79
Q

What are three categories that requires enterprise fund?

A

Revenue bonds. Laws and regulations establish fees. Pricing policies based on capital maintenance.

80
Q

Enterprise fund: Stmt of CF: Which method required; direct or indirect? How many sections? Where are non cash transactions reported?

A

Direct.
Four: operating (based on operating income rather than net income. Interest revenue and expenses excluded), noncapital financing activities, capital and related financing activities (must be clearly related to capital projects), investing activities (acquisition and sale of investment, interest and dividends, loans made and collect).
Face of stmt at the bottom.

81
Q

Enterprise fund stmt of CF: what are items that included in non cash items?

A

Donated assets, capital leases, unrealized gains/losses on investment, debt issued to acquire capital assets.

82
Q

Fiduciary fund: What is the category for net position (equity)?

A

Restricted.

83
Q

What are three items that are not included in private-purpose trust funds?

A

Pension plans. Investment pools. Permanent funds.

84
Q

Agency fund: Does it have additions, deductions, equity account?

A

No. Current asset = current liability.

85
Q

When tax agency fund collects fee, where is it recorded? JE? JE of other government?

A

In general fund.

Agency fund: Dr: Due to other government. Cr: Cash. Cr: Due to general fund (Collection fee).

Same, general fund: Dr: cash. Cr: property tax receivable. Cr: revenue - tax collection fee.

Other, general fund: Dr: Cash. Dr: Expenditures - tax collection fees. Cr: Property tax receivable.

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