21 Key Terms Flashcards
GASB Qualitative characteristic:
Understandability
Information can be interpreted by the user
GASB Qualitative characteristics
1 understandability 2 reliability 3 relevance 4 timeliness 5 consistency 6 comparability
GASB Qualitative characteristic:
Reliability
Information is reasonably free from error or bias
GASB Qualitative characteristic:
Relevance
Information has capacity to make a difference in a decision
By a user
GASB Qualitative characteristic:
Timeliness
Information is available before it loses its capacity to affect
The decision
GASB Qualitative characteristic:
Consistency
Information is consistently presented over time
GASB Qualitative characteristic:
Comparability
Users can identify similarities and differences between 2 entities
GASB elements of statement of financial position 5
1 assets 2 liabilities 3 deferred outflow of resources 4 deferred inflow of resources 5 net position
2 elements of GASB resource flow statements
1 Outflow of resources
2 inflow of resources
GASB definition of element:
Assets
Resources with present service capacity that the government
Presently controls
GASB definition of element:
Liabilities
Present obligations to sacrifice resources that the government
Has little or no discretion to avoid
GASB definition of element:
Deferred outflow of resources
Consumption of net assets by government that is applicable
To future reporting period
Similar to an asset (prepaid asset)
GASB definition of element:
Deferred inflow of resources
Acquisition of net assets by the government that is applicable
To a future reporting period
Similar to a liability (unearned revenue)
GASB definition of element:
Net position
Residual of all other elements presented in a statement of
Financial position
GASB definition of element:
Outflow of resources
Consumption of net assets by the government that is applicable
To the reporting period
GASB definition of element:
Inflow of resources
Acquisition of net assets by the government that is applicable to
The reporting period
What is the required supplementary GASB information in compliance with GAAP? (Minimum required info other than financial statements) 3
1 management’s discussion and analysis (MD&A)
2 notes to financial statements
3 required supplementary info (RSI)
Which government statements use accrual accounting and which use modified accrual accounting?
Accrual: government wide, proprietary funds, fiduciary funds
Modified accrual: fund financial statements (governmental funds)
What are the required financial statements for government wide financial statements?
1 statement of net position
2 statement of activities
What are the required financial statements for fund financial statements (AKA Governmental funds)?
1 balance sheet
2 statement of revenues, expenditures and changes in fund
balances
What are the required financial statements for proprietary funds?
1 statement of net positon
2 statement of revenues, expenses and changes in fund net position
3 statement of cashflows
What are the required financial statements for fiduciary funds?
1 statement of fiduciary net position
2 statement of changes in fiduciary net position
3 Examples of deferred outflows of resources
1 grant expenditures paid in advance of meeting timing requirements
2 deferred amounts from refunding of debt (debits)
3 cost to acquire rights to future revenue
2 examples of deferred outflows of resources
1 deferred loss from sale and leaseback
2 negative fair value of government hedge of a future transaction
3 examples of items that continue to be reported as assets
1 prepayments
2 net pension plan position in excess of employer’s total liability
3 capitalized incurred costs for regulated activities
3 examples of items reported as current outflows
1 debt issuance costs
2 initial direct cost incurred by lessor for operating leases
3 fees related to purchased loans
3 examples of deferred inflows of resources
1 grant amounts received in advance of meeting timing requirements
2 deferred amounts from refunding debt (credits)
3 proceeds from sale of future revenues
3 examples of deferred inflows of resources
1 deferred gain from sale leaseback transaction
2 positive fair value of government hedge of future transaction
3 advance of revenue from imposed nonexchange transactions
5 examples of items that continue to be reported as liabilities
1 advances of derived tax revenues 2 grant amounts received in advance of meeting requirements Other than timing 3 receipt of prepayment 4 loan commitment fees 5 refunds imposed by a regulator
3 examples of items reported as current inflows
1 loan origination fees related to lending activities
2 commitment fees charged to make a loan
3 loan origination fees for mortgage loans held for investment
Single employer defined benefit plan:
The state or local government should report in the statement of net position…
A net pension liability
Single employer defined benefit plan:
Net pension liability equation
Net pension liability =
(Actuarial present value of projected benefit pmts attributable to
Past employee service) - (pension plan’s fiduciary net position)
Name the 5 types of governmental funds
1 general 2 special revenue 3 debt service 4 capital projects 5 permanent
Name the 2 types of proprietary funds
1 internal service
2 enterprise
Name the 4 types of fiduciary funds
1 agency
2 pension and other employee benefit trust funds
3 investment trust funds
4 private purpose trust funds
Stabilization fund what is it also called?
Rainy day fund
Disclose info about when it can be used, and balance,
Legal authority, minimum amount, when you have to increase them
Stabilization fund 5 disclosures
1 Disclose info about when it can be used 2 balance 3 Legal authority 4 minimum amount 5 when you have to increase the fund
4 categories of GASB nonexchange transactions
1 derived tax revenues
2 imposed nonexchange revenues
3 government mandated non exchange transactions
4 voluntary nonexchange transactions
General Fund Account Structure:
Real Accounts 5
1 current assets (dr.) 2 current liabilities (cr.) 3 fund balance (fund equity) (cr.) 4 deferred outflow of resources 5 deferred inflow of resources
2 types of fund balance AKA Fund equity
Give 2 examples for first
1 reserved (encumbrances, inventory)
2 unreserved
General Fund Account Structure:
4 nominal accounts
1 revenues (control account) (cr.)
2 other financing sources (control account) (cr.)
3 expenditures (control account) (dr.)
4 other financing uses (control account) (dr.)
What are 3 examples of other financing sources?
1 transfers in
2 bond issue proceeds
3 sale of capital assets
What is an example of other financing uses?
Transfers out
General Fund Account Structure:
6 budgetary accounts
1 estimated revenues (control account) (dr.)
2 estimated other financing sources (control account) (dr.)
3 appropriations (control account) (cr.)
4 encumbrances (control account) (dr.)
5 estimated other financing uses (control account) (cr.)
6 budgetary fund balance (dr or cr.)
Adoption of budget where estimated revenues exceed appropriations and estimated other financing uses by $10,000
What is the journal entry for the following transaction? What fund is it recorded in?
General fund
Estimated revenues. Xxx
Appropriations. Xxx
Estimated other financing uses. Xxx
Budgetary fund balance. Xxx
Transfers to debt service fund (for general long term debt payments)
What is the journal entry for this transaction? What fund is it recorded in?
General fund
Other financing uses- transfers out. Xxx
Due to debt service fund. Xxx
Transfers out is not an expenditure account but is an…
Transfers in is an…
Other financing use
Other financing source
Property tax levy is recorded as revenues, under the modified accrual basis, in the year for which the tax levy is enacted by the governmental unit, if collections will be in time to finance expenditures of the current period. The tax bills amount to $250,000 and $20,000 is estimated to be uncollectible.
What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in?
General fund
Property taxes receivable - current. Xxx
Allowance for uncollectible taxes - current. Xxx
Revenues. Xxx
Revenues from fines, licenses and permits
What is the journal entry to record this transaction? What fund is it recorded in?
General fund
Cash. Xxx
Revenues (detail posted). Xxx
The state owes the city $25,000 for the city’s share of the state sales tax. The amount has not been received at year end, but is expected in time to pay liabilities as of the current fiscal year.
What is the journal entry to record this transaction? Record $ amounts.
What fund is it recorded in?
General fund
Sales tax receivable. 25,000
Revenues (detail posted). 25,000
Incurred liabilities for salaries, repairs, utilities, rent, and other regularly occurring items for $200,000.
What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?
General fund
Expenditures (detail posted). 200,000
Vouchers payable. 200,000
Ordered one police car; estimated cost is $17,000. One month later, ordered second police car; estimated cost is $16,500.
What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?
General fund
Encumbrances. 17,000
Reserved for encumbrances. 17,000
Encumbrances. 16,500
Reserved for encumbrances. 16,500
Police car ordered for $17,000 was received; actual cost is $16,800.
What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?
General fund
Reserved for encumbrances. 17,000
Encumbrances. 17,000
Expenditures. 16,800
Vouchers Payable. 16,800
Property tax collections amounted to $233,000, payments to other debt funds amounted to $50,000, payments to vouchers where $190,000. Allowance for uncollectible taxes-current is overstated by $3,000.
What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?
General fund
Cash. 233,000
Property Taxes Receivable- current. 233,000
Due to Debt Service Fund. 50,000
Cash. 50,000
Vouchers Payable. 190,000
Cash. 190,000
Allowance for Uncollectible taxes-current. 3,000
Revenues. 3,000
Recorded $5,000 inventory of materials and supplies.
What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?
General fund
Materials and supplies inventory. 5,000
Reserved for inventory of materials and supplies 5,000
Allowance for uncollectible property taxes is reduced from $17,000 to $10,000, and reclassified uncollected property taxes to delinquent accounts.
What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?
General fund
Allowance for uncollectible taxes- current. 7,000
Revenues. 7,000
Property taxes receivable- delinquent. 17,000
Allowance for uncollectible taxes- current. 10,000
Allowance for uncollectible taxes- delinquent. 10,000
Property Taxes Receivable- current. 17,000
Interest and penalty charges accrue on unpaid taxes for the date they become delinquent.
What is the journal entry to record this transaction? What fund is it recorded in?
General fund
Interest and penalties receivable on delinquent taxes. Xxx
Allowance for uncollectible interest and penalties. Xxx
Revenues. Xxx
What closing entry reverses the entry to record the budget? What fund is it recorded in?
General fund
Budgetary fund balance. Xxx
Appropriations. Xxx
Estimated other financing uses. Xxx
Estimated revenues. Xxx
What closing entry would indicate that the unreserved fund balance increased by $21,700 since actual revenues exceeded expenditures, encumbrances and other financing uses.
Only use dollar amount for account given. What fund is it recorded in?
General Fund
Revenues. Xxx
Expenditures. Xxx
Encumbrances. Xxx
Other financing uses- transfers out. Xxx
Fund balance- unreserved. 21,700
A government receives a grant award for $30,000, no entry is recorded until…
The expenditure takes place
On November 1, 2012, a government received a grant award of $30,000. Assume the expenditure takes place on March 1st, 2013 and the cash is received on April 1st 2013.
What is the journal entry to record this transaction? Record $ amounts for each date. What fund is it recorded in?
Special revenue fund
3/1/13
Expenditures. 30,000
Cash. 30,000
Grants Receivable. 30,000
Revenues-gains. 30,000
4/1/13
Cash. 30,000
Grants receivable. 30,000
City council approved the construction of a new city hall at an estimated cost of $10,000,000. General obligation long term serial bonds were authorized for issuance in the face amount of $10,000,000.
What is the journal entry to record this transaction?
No entry recorded
City council has already approved the construction of a new city hall at an estimated cost of $10,000,000. $10,000,000 in 8% general obligation serial bonds were issued for $10,100,000. Assume the premium is transferred to the debt service fund for eventual payment of debt.
What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in?
Capital projects fund
Cash. 10,100,000
Other financing sources-proceeds of bonds. 10,100,000
Other financing uses-transfers out. 100,000
Cash. 100,000
How do you recorded the transfer of the $100,000 cash premium to the debt service fund?
Debt service fund
Cash. 100,000
Other financing sources-transfers in. 100,000
The $10,000,000 proceeds (to build city hall) are temporarily invested in a certificate of deposit and earn $50,000. The earnings are authorized to be sent to the debt service fund for payment of bonds.
Use $ amounts.
Record the entries for the capital projects fund and debt service fund
Capital projects fund
Investment in CD. 10,000,000
Cash. 10,000,000
Cash. 50,000
Revenues interest. 50,000
Other financing uses- transfers out. 50,000
Cash. 50,000
Debt Service Fund
Cash. 50,000
Other financing sources- transfers in. 50,000
The lowest bid accepted from a general contractor to build city hall is $9,800,000.
What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in?
Capital projects fund
Encumbrances. 9,800,000
Reserved for encumbrances. 9,800,000
$2,000,000 of temporary investments are liquidated.
What is the journal entry to record this transaction? Use $ amounts.
Cash. 2,000,000
Investment in CD. 2,000,000
Progress billings due to the general contractor for work performed amount to $2,000,000. The contract allows 10% of the billings to be retained until final inspection and approval of the building. The contractor was paid $1,800,000.
What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in.
Capital projects fund
Reserved for encumbrances. 2,000,000
Encumbrances. 2,000,000
Expenditures-Construction. 2,000,000
Contracts Payable. 2,000,000
Contracts Payable. 2,000,000
Cash. 1,800,000
Contracts Payable-Retained Percentage. 200,000
Interest accrued on the CD was $40,000. This was authorized to be sent to the debt service fund.
What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in. (Record for capital projects and debt service fund)
Capital projects fund
Interest Receivable. 40,000
Revenues- interest. 40,000
Other financing uses- transfers out. 40,000
Due to other funds. 40,000
Debt service fund
Due from other funds. 40,000
Other financing sources- transfers in. 40,000
Record the closing entries for the capital projects fund for revenues interest of $90,000 and other financing sources-proceeds of bonds $10,100,000. Use dollar amounts.
Revenues- interest. 90,000
Other financing sources- proceeds of bonds. 10,100,000
Fund balance-unreserved. 10,190,000
Record the closing entry in the capital projects fund of encumbrances $7,800,000 and expenditures on construction of $2,000,000.
Fund balance unreserved. 9,800,000
Encumbrances. 7,800,000
Expenditures- construction. 2,000,000
Record the closing entries in the capital projects fund for other financing uses- transfers out for $190,000.
Fund balance- unreserved. 190,000
Other financing uses- transfers out. 190,000
At the beginning of the second year in the capital projects fund, what entry would be made to reestablish the encumbrances balance?
Encumbrances. 7,800,000
Fund balance- unreserved. 7,800,000
A donor gives $500,000 to a city with instructions that the principal be invested permanently and that the income be used to provide scholarships for low-income children to attend a private, not for profit day care program.
What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in.
Private Purpose trust fund
Cash. 500,000
Additions-non expendable donation. 500,000
Investments. 500,000
Cash. 500,000
In a private purpose trust fund what are the journal entries to receive and expend $30,000 in investment income for awarding scholarships?
Cash. 30,000
Additions- investment income. 30,000
Deductions- awarding of scholarships. 30,000
Cash. 30,000
In the debt service fund, how do you record the journal entry for semi annual interest paid of $400,000 on December 31
What is the journal entry to record this transaction? Use $ amounts.
Expenditures- interest. 400,000
Matured interest payable. 400,000
Matured interest payable. 400,000
Cash. 400,000
On June 30, the first $250,000 principal payment became due and $200,000 was made.
What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in.
Debt service fund
Expenditures-principal. 250,000
Matured bonds payable. 250,000
Matured bonds payable. 200,000
Cash. 200,000
What are the closing entries for the debt service fund when revenues- property taxes is $850,000, expenditures- interest is $800,000, other financing sources- transfers in is $240,000 and expenditures principal is $250,000?
Revenues- property taxes. 850,000
Other financing sources-transfers in. 240,000
Expenditures- interest. 800,000
Expenditures- principal. 250,000
Fund balance- reserved for debt service. 40,000
A local citizen contributed $500,000 with the stipulation that the funds be invested and held; income is to be used for the purpose of maintaining the city cemetery. On January 2, the cash is received and invested.
What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in.
Permanent Fund
Cash. 500,000
Revenues- additions to permanent endowments. 500,000
Investments. 500,000
Cash. 500,000
A local citizen contributed $500,000 with the stipulation that the funds be invested and held; income is to be used for the purpose of maintaining the city cemetery. During 2012, $30,000 was earned on the investment and $25,000 was expended.
What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in.
Permanent fund
Cash (or interest receivable). 30,000
Revenues-investment income. 30,000
Expenditures. 25,000
Cash (or vouchers payable). 25,000
When proprietary funds are initially established, a contribution or advance is usually received from the general fund. A contribution is a transfer and would be recorded by the internal service fund or enterprise fund as follows
Cash. Xxx
Transfer from the general fund. Xxx
An advance from the general fund is a long term loan and would be recorded by an internal service fund or enterprise fund as follows
Cash. Xxx
Advance from general fund. Xxx
Conversion from fund financial statements to government wide financial statements:
What is the worksheet adjustment entry that needs to be made to reduce capital outlay expenditures to 0 and capitalize the costs in appropriate capital asset accounts, these capital assets will increase the net position of governmental activities by $10,000,000?
Fixed assets (land, buildings, equipment). 10,000,000 Expenditures. 10,000,000
Conversion from fund financial statements to government wide financial statements:
The worksheet entry to convert the sale of bonds from governmental fund accounting to government wide statements, assuming a sale of $5,000,000 bods at par?
Other financing sources-proceeds of bonds. 5,000,000
Bonds Payable. 5,000,000
Conversion from fund financial statements to government wide financial statements:
Assuming that a payment of $100,000 was made for the retirement of bond principal, then the worksheet entry to convert the $100,000 principal payment from governmental fund accounting to government wide statements is?
Bonds payable. 100,000
Expenditures- bond principal retirement. 100,000
Conversion from fund financial statements to government wide financial statements:
How do you recognize $200,000 more revenue from property taxes?
Deferred inflow-property taxes. 200,000
Revenues-taxes. 200,000
