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CPA - FAR > 29 - Governmental Accounting > Flashcards

29 - Governmental Accounting Flashcards

1
Q

Which two accounting bases are used in governmental accounting?

A

Accrual basis - Economic resources focus (revenues recognized when earned)

Modified accrual basis - Financial resources focus (current resources when measurable and available)

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2
Q

What are the three major types of funds in governmental accounting?

A

Governmental, Proprietary, Fiduciary

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3
Q

What is an appropriation?

A

Expenditures that are expected to occur in the period

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4
Q

What is an encumbrance?

A

An open order. A legal commitment, unlike an appropriation.

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5
Q

What are estimated other financial sources/uses?

A

Expected proceeds from issuance of L/T debt and operating transfers to/from other govt. departments

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6
Q

What are exchange transactions?

A

Goods/services/cash of equal value are exchanged

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7
Q

What are Non-Exchange transactions?

A

Transaction in which govt. receives/gives w/o directly reviewing/giving equal value in exchange.

Derived tax revenues
Imposed non-exchange transactions
Government-mandated
Voluntary non exchange transactions

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8
Q

What is Derived Tax Revenue?

A

Self-assessed on exchange transactions.

Sales tax (buying cars) or income tax (people working)

Revenue when occurs.

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9
Q

What are Government Mandated non-exchange transactions?

A

One level of govt provides funds to another level of govt (ex. Federal grant)

Revenue when eligibility requirements are met.

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10
Q

What is Imposed Tax Revenue?

A

Assessed on assets or rights of non-gov. No transaction occurred.

Example: property tax, real estate tax, fines

Revenue when use of money permitted and an asset when there’s legal claim.

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11
Q

What is a voluntary non-exchange transaction?

A

Transaction entered into willingly (unrestricted grant and voluntary donations)

Revenue when eligibility requirements are met.

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12
Q

What is the opening budgetary entry?

A

Dr Estimated Revenues
Cr Appropriations
Dr/Cr Budgetary Fund Balance (plug)

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13
Q

What is the closing budgetary entry?

A

Dr Appropriations
Dr/Cr Budgetary Fund Balance (plug)
Cr Estimated Revenues

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14
Q

What are the types of governmental funds (Modified Accrual)

A 
General Fund
Special Revenue Fund
Permanent Fund
Capital Projects Fund
Debt Service Fund

PD-C-SG

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15
Q

What is a General Fund?

A

Junk Drawer
The operating fund of the governmental unit

Records Significant Revenues: Taxes; Tickets; Fines; Licenses

Records Significant Expenditures: Police; Education; Fire Dept

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16
Q

What is a Special Revenue Fund?

A

Earmarked sources. Restricted for a specific purpose.

Ex. gas tax for street repair.

16
Q

What is a Permanent Fund?

A

Legally restricted fund; Where principal remains intact. Only earnings can be spent.

17
Q

What is a Capital Projects Fund?

A

Major acquisition or constructions activities.

18
Q

What is a Debt Service Fund?

A

Repayment of long-term debt and related interest.

19
Q

What are the types of Proprietary Funds (Accrual)?

A

Internal Service Funds - to serve the needs of other governmental units (i.e. motor pool/IT/Maintenance)

Enterprise Funds - provide goods or services to external users (i.e. post office/public transport)

20
Q

What are the Fund Balance Types?

A 
Restricted - Restricted by Contributor 
 Committed - Restricted by Government
 Assigned - Intended for a purpose
 Unassigned - Available to be spent
 Non-spendable - Not in a spendable state
21
Q

What are the types of Fiduciary Funds?

A

Agency Fund - government acts as an agent or custodian

Pension Trust Fund - Government is a trustee for a pension plan

Investment Trust Fund - Government is a trustee over a series of investments

Private Purpose Trust - Trust that benefits various individuals and entities (ex. Cigarette tax for cancer research)

22
Q

Which fund statements are issued in Governmental Accounting?

A

Balance Sheet

Statement of Revenues; Expenditures; and Changes in Fund Balance

23
Q

How are Assets and Liabilities presented on the Statement of Net Position?

A

Assets (Current and Non-Current)
Deferred Outflows of Resources
Liabilities (Current and Non-Current)
Deferred Inflows of Resources

24
Q

How are Capital Assets shown on a governmental Statement of Net Assets?

A

They are shown net of debt

Asset Cost - Accumulated Depreciation - Asset Liabilities : Net Assets

25
Q

How is infrastructure reported on a governmental Statement of Net Assets?

A

Modified approach:

Reported at cost; no accumulated depreciation

26
Q

How is a Statement of Net Assets divided?

A

Into Governmental Activities and Business Activities

27
Q

How are activities presented in a Statement of Activities?

A

They are divided by function

If the activities of a component are distinguishable from the rest of the governmental entity; then discreet presentation is required

If the activities of the component cannot be identified and separated from the rest of the governmental activities; then blended presentation is warranted.

Component units are reported in the Entity-Wide Financial Statements and not the Fund Financial Statements.

28
Q

What Financial Statements are required for Defined Benefit Pension plans?

A

Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position

28
Q

What are the components of the Statement of Fiduciary Net Position for Defined Benefit Pension Plans?

A

Assets; Deferred Outfows; Liabilities; Deferred Outflows; Fiduciary Net Position

30
Q

What are the components of the Statement of Changes in Fiduciary Net Position for Defined Benefit Pension plans?

A

Additions (Contributions and Net Investment Income) - Deductions (Benefits Payments and Admin Expense) : Net Change in Fiduciary Net Position

32
Q

What should be included in the Financial Statement notes for Defined Benefit Pension Plans?

A

Types of Benefits; Plan Member Classes; Board Information; Investment Policies and FV Determination

33
Q

What is the basic criterion used to determine the reporting entity for a governmental unit?

A

Financial accountability

Must demonstrate they comply with decisions concerning raising and spending of public money within budgetary period.

34
Q

Which event should be included in statement of cash flows for governmental entity?

  1. Cash inflow from issuing bonds to finance city hall construction
  2. Cash outflow from city utility representing payments in lieu of property taxes
A

2 only;

Governmental funds apply modified accrual method and do not prepare ate meant of cash flows.

Enterprise, including utilities, apply accrual and do prepare statement of cash flows

CPA - FAR (18 decks)

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