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OpenGov > Accounting > Flashcards

Accounting Flashcards

1
Q

What does Credit translate to? Debit?

A

Debits on left

Credits on right

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2
Q

What is the difference between a temporary and permanent fund?

A

Temporary starts at $0 each year (the balance at the end of the year gets transferred into a new account), permanent carries over (asset, liability and equity accounts).

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3
Q

What are expenditures?

A

The gov fund version of expenses.

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4
Q

In gov’t, you use net revenue (not profit). Whatever is left over gets moved to an Equity permanent account.

A
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5
Q

Define an Asset and Liability

A

Asset: Things you won or are owed (Cash, accounts receivable, buildings).

Liability: Things that you owe (accounts payable, loans, payroll taxes)

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6
Q

What is Fund Balance?

A

If you sold all of your assets for what they were worth and paid off all of your liabilities, this is what you have left.

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7
Q

What is accounts payable (two definitions)

A

A Process to manage the tracking and payment of vendors.

It is ALSO a specific account:

e. g. -the balance will raise as you incur invoices
- the balance will decrease as you pay invoices

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8
Q

What is the Accounting Equation?

A

Assets=Liabilities+Fund Balance (Rev-Exp)
or
Assets-Liabilities= Fund Balance (aka retained earnings or net assets)

Fund Balance is unique to Gov accounting.

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9
Q

Natural balance:

  • Assets increase with Debits
  • Liabilities increase with credits
  • Expenses increase by debits
A

Different accounts: $1000 change

Assets table:
-Assets increase by $1000 debit

Liabilities table:
Liabilities decrease by $1000 debit

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10
Q

Journal Entry:
Every entry in accounting must have at least two numbers typically in two different accounts.

One will be a debit (DR), one will be a credit (CR)

A
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11
Q

Name the 3 types of Gov funds?

A
  • Governmental (police, fire, city hall)
  • Proprietary (parking, fresh water, sewer ‘run like they are their own business’)
  • Fiduciary (managing funds: pension programs, housing, etc..)
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12
Q

What are Special Revenue Funds?

A

That supplied gas taxes, fed storm water grants (rev must be legally used for a very specific purpose that requires additional reporting).

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13
Q

What are Capital projects funds:

A

Funds for “big” projects. Buildings, roads, a new fire truck, etc…

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14
Q

What are debt service funds

A

Government often issues debt by selling bonds. These funds are used to manage monies reserved for the repayment of those loans.

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15
Q

What are permanent funds (endowment fund)

A

A portion of this fund never goes away because the donor chose to make the gift a permanent source of interest revenue. The interest earned may go toward some designated purpose.

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16
Q

What is a general fund

A

Used to account for all resources not accounted for in another fund.

17
Q

Governmental Fund Balance

A

Nonspendable: Typically large assets, e.g. buildings or money in encumberances
Restricted: Externally enforceable-legal limitations
Committed: self imposed legal limitations imposed (by city counsel)
Assigned: Most money that’s not committed ends up. Has an associated use.
Unassigned: Remaining equity in the general fund

18
Q

What are Proprietary Funds

A

Supported by fees and charges. These are non-gov funds that pay their own way without reliance on the general tax base.

19
Q

What are Enterprise Funds:

A

Electric, Water, Sewer, Parking, Airport. They act like for profit business (fee based).

20
Q

Internal Service Funds?

A

Central services like: Payroll, legal, fleet maintenance provided to OTHER parts of the gov, which are billed for these services.

21
Q

Fiduciary (Trust) Funds (4):

A

Funds that hold money on behalf of parties outside the gov

1) Pension funds (retirement)
2) Investment trust fund-Money used to invest and earn income
3) private-purpose trust fund: If an investment does not meet the requirement to be called a pension or investment fund, it may land here.
4) Custodial funds: A broad category of monies managemened for other parties.

22
Q

What is Interfund Activity

A

When money is moved from one fund to another for services, there are two categories:

1) Reciprocal transfers involve one fund paying another for services. Loans between funds also fall into this category.
2) a “gift” or “subsidy”: Non-reciprocal transfers involve moving monies between funds with no expectation of repayments.

23
Q

Name 3 types of accounting Govs use:

A

Cash: Revs and Expenses are reported when cash enters or leaves your books
Accrual: Rev and Exp are reported when you earn rev or incur expense (requires accounts receibable)
Modified Accrual: (combo of the cash and accrual system) When Revenues are measurable and available and when expenses are normally paid. Can be recorded in AR on two instances:
MEASUREABLE: when you are reasonably certain you will receive it
AVAILABLE: when you are certain you will receive it within 60 days.

24
Q

Why do Govs prefer to use Modified Accrual?

A
  • Gov funds rely on taxes and grants from outside parties
  • The other fund categories (proprietary, fiduciary) act like for-profit businesses with their own revenue stream
  • Govs have a legal duty to ensure receive and expend monies per their operating budget.
25
Q

What is GASB?

GFOA?

A

Governmental Accounting Standards Board
-The rules they write are referred to as GAAP or Generally Accepted Accpounting Principles

Government Finance Officers Association
-They write the blue book (GAAFR), which attempts to explain GAAP as GASB defines them.

26
Q

What is the Annual financial report and audit:

A

What happened in the last year and what your financial situation is.

27
Q

The Report has 3 sections, what are they?

A

Introduction-What’s important, major things going on
Financial-Bulk of report (many reports organized showing how each fund is doing)
Statistical-10 years of financial history, demographics, statistics

28
Q

What do Gov Financial Statements do differently than business’?

A
  • provide multi year data to demonstrate trends
  • Provide multi fund info
  • demonstrate complliance
  • Provide extensive economic and demographic info
  • Have their financial statements audited by a CPA
29
Q

What are the two types of financial reports?

A
  • Fund Statements: Financial accountability focus, detailed, short term, Use modified accrual
  • Government-wide statements: focus on operational accountability, big picture, long term, funds converted to full accrual.
30
Q

What’s the nature and purpose of the annual audit?

A
  • Role of Management-Responsible for prepping the financial statements
  • Role of Internal Control-reasonable basis can be provided only by a comprehensive framework of internal control.
  • Role of Governing Body-responsible for ensuring that management meets its responsibilities. Typically an audit committee, comprising members of the governing body, provides the necessary oversight.
  • Objective of Fair Presentation
  • Concept of Reasonable Assurance
31
Q

What is the Chart of Accounts?

A

A financial organizational tool that provides a complete listing of every account the the general ledger of gov, broken into subcategories. Necessary so stakeholders can use that data to make decisions.

32
Q

OpenGov Account String numbers

A

Fund, Object, Department, Program, Project, Proj Category, User Code, User Code, User Code

33
Q

What are the following?

A Fund
Object
Department
Program
Project
Category
A

A fund: an accounting entity with a self-0balanceing set of accounts that is used to record financial resources and liabilities, as well as operatizing activities.

Object Codes: Objects that come in: taxes, fees, other govs

34
Q

Budgeting vs Accounting (what’s the difference?)

A

Budgeting: What are the goals, where’s funding coming from? Has the same force as law once approved. Typically just one year. End product is the budget book.

Accounting: Did we meet our goals. What came up that we didn’t expect? Cumulative from the beginning of time. End product is the comprehensive annual financial report.

35
Q

What is a capital asset and what are some major asset classes?

A
  • A minimum threshold of $5000 (individual item)
  • Some include a longer minimum useful life of assets, i.e. 3 years.
  • Items that don’t need this criteria might be classified as Non-Capital
Classes:
--Land
--Buildings
Improvements (other than buildings)
-Furnishings and equipment
-Infrastructure
-Construction/Development
-Other Capital Assets
36
Q

What is depreciation?

Encumbrances?

A

Depreciation: The allocation of the cost of an asset over the duration of its useful life.

Encumbrances: A way to anticipate an expense in advance. Typically created through a purchase order or contract.

OpenGov (11 decks)

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