Basic Gov Fin Statement Terminology Flashcards
General Purpose Governments
governments that provide many categories of services to their residents.
Special Purpose Governments
Governments that provide only a single function or a limited number of functions.
Interperiod Equity
Financial reporting should help users assess whether current-year revenues are sufficient to pay for services provided that year and whether future taxpayers will be required to assume burdens for services previously provided.
What are the two categories of basic financial statements?
Government-wide financial statements
Fund Financial Statements
Government-Wide Financial Statements are intended to…
Provide an aggregated overview of a government’s net assets and changes in net assets. They report on the government as a whole and assist in assessing operational accountability.
Operational Accountability:
Has the government used its resources efficiently and effectively in eeting operating objectives.
Fund Financial Statements assist in assessing…
whether the government has raised and spent financial resources in accordance with budget plans
Governmental Funds focus on
the short term flow of current financial resources or fiscal accountability.
Government-wide Financial Statements (Are what two?)
- ) Statement of Net Assets
2. ) Statement of Activities
What do governmental activities encompass?
The executive, legislative, and judicial functions of the government as well as major service functions such as public safety, public works, parks and recreations, helath and human services and cultural activities.
What do business type activities encompass?
They are largely self-supporting activities of a government
What are the two government-wide financial statements intended to report on?
the government’s operation accountability.
Governmental fund financial statements report on…
Fiscal accountability. These statements report only information that is useful in assessing whether financial resources were raised an expended in compliance with budgetary and other legal provisions.
Modified Accrual Basis of Accounting
- ) Applies to governmental funds.
- ) Revenues are recorded only if they are measurable and available for paying current period obligations. Expenditure are generally recognized when incurred.
Expenses are more relevant at the…
government-wide level, as they measure the cost of services provided. Expenses, classified by program or function, are reported for both governmental and business-type activities.
What basis of accounting is used for governmental activities?
Accrual basis accounting with an economic resources focus.
What basis of accounting is used for the fund statements?
Modified accrual basis accounting with a current financial resources focus.
Governmental funds provide separate columns for each….
major fund
Component Units are…
legally separate organizations for which the elected officials of the primary government are financially accountable.
Governmental Activities
The core services of general purpose governments
Business-Type Activities
are intended to be self supporting by charging users for the services they receive.
The government-wide statements present all financial information …
using the economic resources measurement focus and the accrual basis of accounting.
Government should provide two kinds of basic financial statements…
government-wide and fund
-each kind intended to achieve different reporting objectives
How are government-wide and fund statements integrated?
In the sense that the total fund balances of governmental funds and changes in fund balances must be reconciled to total net assets and changes in net assets of governmental activities reported in the government-wide financial statements.
Fund accounting focuses on
fiscal accountability
A fund is formally defined as…
A fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives .
A fund assists in…
carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.
A capital project is typically created to…
account for tax or grant revenues, or grant revenues, or bond proceeds earmarked for a capital project, as well as payments to pertinent parties.
The governmental funds category includes five types of funds…
- ) The General Fund
- ) Special Revenue Funds
- ) Debt Service Funds
- ) Capital Projects Funds
- ) Permanent Funds
A special revenue fund is created when…
tax or grant revenues or private gifts are legally restricted for particular operating purposes
Every state and local governments has one and only one…
General Fund: Unless a financial resource is required to be accounted for in a different fund type, it is usually accounted for in the General Fund.
The balance sheet for governmental funds reports only …
Current Assets and Current Liabilities on the balance sheet because governmental funds account for the inflows and outflows of current financial resources.
What are the differences in governmental fund financial statements and government-wide statements?
- Governmental fund financial statements report on short-term fiscal accountability.
- Government-wide statements report on long-term operational accountability
What are the essential differences between an expenditure and an expense?
An expenditure is the amount of financial resources used to acquire an asset, and an expense is how much of that cost expired or was used up in producing services
General Fund
to account for all current financial resources except those required to be accounted for in another fund.
The basic financial statements should include?
- ) Government-wide financial statements
- ) Fund Financial Statements
- ) Notes to the financial statements
Component Unit
is defined as a legally separate organization for which the elected officials of the primary government are financially accountable.
The statement of Net Assets presents..
information on all of the government’s assets and liabilities, with the difference between the two reported as net assets
Governmental Fund Financial statements
focus on near term inflows and outlfows of spendable resources, as well as on the balances left at year-end that are available for spending.
The governmental fund financial statements provide a detailed short-term view that…
helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the government’s programs.
The Statement of Activities reports…
how the City’s net assets changed during the `most recent year.
The Basic Financial Statements comprise three components
- ) Government-Wide Financial Statements
- ) Fund Financial Statements
- ) Notes to the basic financial statements
The government wide financial statements include…
not only the government itself (Primary Government), but also other legally separate entities for which the City is financially accountable.
Financial Position tends to be…
a shorter-run concept compared with financial condition.
- Financial position for governmental funds focuses on assets and liabilities that require cash or are normally converted to cash in the near future and can generally be determined for the financial statements alone.
Financial Position is closely related to…
the concept of liquidity
Financial condition
The probability that a government will meet both it financial obligations to creditors, consumers, employees, taxpayers, suppliers, constituents, and others as they become due and its service obligations to constituents, both current and in the future.
Economic Condition
a composite of a government’s financial health and its ability willingness to meet is financial obligations and its commitments to provide services
Fiscal Capacity
a government’s ongoing ability and willingness to raise revenues, incur debt, and meet its financial obligations as they come due
Service Capacity
A government’s ongoing ability and willingness to supply the capital and human resources needed to meet its commitments to provide services.
Service-Level Solvency
a government’s ability to provide services at the level and quality that are required for the health, safety, and welfare of the community and that is citizens desire.
What are the five key environmental factors?
- ) Community Needs and Resources
- ) Intergovernmental Constraints
- ) Disaster Risk
- ) Political Culture
- ) External Economic Conditions
What are some recognizable signals of fiscal distress in government-wide financial condition?
- ) A decline or inadequate growth in revenues relative to expenses
- ) A decline in property values
- ) A decline in economic activity
- ) Erosion of capital plan, particularly infrastructure,
- ) Increased levels of unfunded pension and other postemployment obligations,
- ) Inadequate capital expenditures.
In addition to analyzing ratios one should..
evaluate the stability, flexibility, and diversity of revenue sources; budgetary control over revenues and expenditures; adequacy of insurance protection; level of overlapping debt; and growth of unfunded employee-related benefits. Also, socioeconomic and demographic trends.
