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Becker Gov Flash Cards

1
Q

What are three accounting themes addressed by governmental accounting?

A

a. Fund structure b. Fund accounting c. External reporting

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2
Q

What are the fund accounting principles applicable to government funds?

A

a. Current financial resources measurement focus b. Modified accrual basis of accounting

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3
Q

What are the fund accounting principles applicable to proprietary funds?

A

a. Measurement focus: economic resources b. Basis of accounting: full accrual

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4
Q

What are the fund accounting principles applicable to fiduciary funds?

A

a. Measurement focus: economic resources b. Basis of accounting: Full accrual

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5
Q

Distinguish between alternative measurements focuses.

A
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6
Q

Define modified accrual and list the funds that use it as a basis of accounting

A

a. Modified accrual: Revenues should be recognized when measurable and available; expenditures are generally (with the exception of interest expenditures) recognized when fund liabilities is incurred b. GRSPP

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7
Q
  1. What do terms measurable and vailable mean in the context of the modified accrual basis of revenue accounting?
A

a. Measurable means quantifiable in monetary terms b. Available means collectible within (generally) 60 days of year-end

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8
Q
  1. What is the basic structure of the statement of revneues, expenditures and changes in fund balance for governmental funds?
A

a. Revenues – expenditures = other financing sources and uses = net change in fund balance

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9
Q
  1. What specialized accounting practices are followed by the governmental funds?
A

a. Budgetary accounting b. Activity (actual) accounting c. Encumbrance accounting

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10
Q
  1. Define the different classifications of expenditures
A

a. Function (e.g., public safety) b. Organizational unit (e.g., police department, fire department, etc.) c. Activity (e.g., drug enforcement, highway safety patrol) d. Character (e.g., current, capital outlay, debt service, intergovernmental) e. Object (e.g., personal services, building occupancy, insurance)

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11
Q
  1. What is the journal entry to record the annual budget
A

a. D: estimated revenues i. Cr: Appropriations ii. Cr: Budgetary control b. Actual expenditures have a natural debit balance. Appropriations to which those expenditures are compared have a natural credit balance. Computaiton of unexpended appropraitions is a pure arithmetic sum of these two accounts

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12
Q
  1. What are revenues recorded in government funds?
A

a. Government funds record revenues when measurable and available.
b. This concept applies to accrual of different types of revenues depending on their character c. Accrue when: i. Billed/recorded (imposed non-exhcnage transactions) 1. Real estate taxes due 2. Fines and penalties ii. Received (derived non-exchange transactions) 1. Income taxes 2. Sales taxes iii. Earned (government mandated and voluntary non-exchange transactions) 1. Revenue collected in advance (unearned when collected) 2. Real estate taxes paid in advance (unearned) 3. Restricted grants (earned when spent) iv. Deferred inflows of resources are reconized in some instances in which assets are recorded but related revenues are not eligible for recognition (not available)

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13
Q
  1. Give the journal entry to recognize supplied remaining at year-end
A
  1. Purchase method:
    1. D: Supplies on hand inventory
      1. Cr: Nonspendable fund balance- inventory
  2. This journal entry indicates that these supplies are not available spendable resources
  3. Consumption method: No entry may be needed as supplies were debited to inventory and then recognized as expenditures as they were used. A corresponding entry changing the related non-spendable classification of fund balance should have been done as each use of inventory was recorded.
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14
Q
  1. Give the journal entry to recognize a purchase order on supplies
A
  1. D: Encumbrance
    1. Cr: Budgetary control
  2. Encumbrances have a natural debit balance. Appropriations, to which those encumbrances are compared, have a natural credit balance. Computation of unencumbered appropriations is a pure arithmetic sum of these two accounts. Computation of unexpended and unencumbered appropriations is the sum of the three accounts: appropriations (credit), expenditures (debit), and encumbrances (debit)
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15
Q
  1. What journal entries are recorded when goods are received and the commitment to purchase those goods had been previously recorded as an encumbrance
A
  1. Dr: Expenditure
    1. Cr: Vouchers payable
  2. Dr: Budgetary control
    1. Cr; encumbrances
  3. The entries serve to reverse the full effect of the encumbrance entry and record the full amount of the expenditure (BAE-BAE_
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16
Q
  1. What are the closing budget, activity, and encumbrance journal entries?
A
  1. Activity:
    1. D: Revenues
    2. D: Unassigned fund balance
      1. Cr: Expenditures
  2. Budget (deficit)
    1. D: Appropriations
      1. Cr: estimated Revneus
      2. Cr: Budgetary control
  3. Encumbrance:
    1. D: Budgetary control
      1. Cr: Encumbrances
  4. At the beginning of the next year, the above encumbrance entry is reversed. The entry will keep the budgetary control intact in order to account for resources spent in the next year that would have been budgeted in the current year.
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17
Q
  1. When are budgetary, actual, or encumbrance entries combined?
A
  1. NEVER
  2. Budgetary, actual, and encumbrance transactions are always segregated on the books:
  3. DO NOT NET
  4. At the beginning of the year: Book budget
  5. Throughout the year: book actuals, book encumbrances
  6. At year-end: Close the budget, close the actuals, close the encumbrances
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18
Q
  1. List the types of inter-fund transactions
A
  1. Reciprocal inter-fund activity:
    1. Inter-fund loans
    2. Inter-fund services provided and used
  2. Nonreciprocal inter-fund activity
    1. Inter-fund transfers
    2. Inter-fund reimbursements
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19
Q
  1. Name and define the five classification of fund balances used by government fund types:
A
  1. Non-spendable: resources that are not available to be spent (e.g., investments)
  2. Restricted: resources that are constitutionally, legislatively or otherwise externally limited as to use
  3. Committed: resources that are internally limited as to use by the government’s highest level of decision making authority
  4. Assigned- resources intended to be used by the gov for specific purposes whose constraints do not rise to the level of restricted or committed
  5. Unassigned- residual classification of equity that represents resources that are the least limited as to use
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20
Q
  1. Identify the three components of net position displayed on government-wide financial statements.
A
  1. Invested in capital assets, net
  2. Restricted (from external sources by category)
  3. Unrestricted
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21
Q
  1. What is the purpose of the general fund?
A
  1. The general fund is created at the beginning of the governmental unit and it exists throughout the life of the unit. The general fund accounts for the general activities of a governmental unit that are not accounted for by any other fund.
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22
Q
  1. What are the typical revenue sources of the general fund?
A
  1. Taxes (property taxes)
  2. Public safety and regulations (fines, inspection fees, etc.)
  3. Intergovernmental (shared revenues)
  4. Charges for services
  5. Other revenues (interest income)
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23
Q
  1. What are the required fund financial statements for the individual governmental fund types?
A
  1. GRSPP funds require
    1. Balance sheet
    2. Statement of revenues, expenditures, and changes in fund balance
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24
Q
  1. What is the basic structure of the balance sheet for the gov funds?
A
  1. Current assets + deferred outflows of resources = current liabilities + deferred inflows of resources + fund balance
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25
Q
  1. What is the purpose of the special revenue fund?
A
  1. Special revenue funds account for revenues and expenditures that are legally restricted or committed for specific purposes other than debt service or capital projects
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26
Q
  1. What are the typical revenue sources of a special revenue fund?
A
  1. Designated sales taxes
  2. Designated gasoline taxes
  3. Designated special fees
  4. Designated admission fees
  5. Designated parking fees
  6. Designated state grants
  7. Designate federal grants
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27
Q
  1. What is the purpose of the debt service fund?
A
  1. The debt service fund is created to account for the accumulation of restricted, committed, or assigned resources (cash and investments) for the payment of currently due interest and principal on long-term general obligation debt
  2. Debt service funds pay GRSPP debt
  3. Debt service funds do not pay SE PAPI debt
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28
Q
  1. What are the typical components of revenue and other financing source classifications for debt service funds
A
  1. Revenues:
    1. Allocated portions of property taxes
    2. b. Other financing sources:
      1. Transfers from other funds
      2. Debt proceeds associated with refunding debt
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29
Q
  1. What is the purpose of the capital projects fund?
A
  1. Established for accounts for resources restricted, committed, or assigned for the construction, purchase, or leasing of significant fixed assets used by the gov (GRSPP funds). Capital projects funds are not used for proprietary (SE) or fiduciary (PAPI) funds
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30
Q
  1. What are typical components of revenue and other financing source classifications for capital project funds?
A
  1. Revenues:
    1. Investment earnings
    2. Tax revenues specifically levied to fund capital improvement
    3. Capital grants
  2. Other financing sources:
    1. Bond issue proceeds
    2. General fund (or special revenue fund) inter-fund transfers
    3. Special assessments
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31
Q
  1. What is the purpose of the permanent fund?
A
  1. Used to report resources that are legally restricted to the extent that only earnings and not principal may be used for the purposes that support the reporting government’s programs
32
Q
  1. What is the purpose of the internal service fund?
A
  1. Established to finance and account for services and supplies provided exclusively to other departments within a governmental unit or to other governmental units, typically on a cost-reimbursement basis
33
Q
  1. What are typical revenue sources for internal service funds?
A
  1. Restricted grant revenue
  2. Operating revenues (billings for services provided)
  3. Non-operating revenues (e.g., interest earnings)
34
Q
  1. What is the purpose of the enterprise fund?
A
  1. Enterprise funds account for the acquisition and operation of governmental facilities and services that are intended to primarily (more than 50%) self-supported by user charges
35
Q
  1. What are typical revenue sources of the enterprise fund?
A
  1. Operating revenues
    1. Charges for services (utility fess, patient fees, tuition, other exchange-type fees)
  2. Non-operating:
    1. Shared/grant revenues
    2. Investment income
36
Q
  1. What are the required financial statements for the individual proprietary fund types?
A
  1. SE funds require
    1. Statement of net position
    2. Statement of revenues, expenses, and change sin fund net position
    3. Statement of cash flows
37
Q
  1. What is the basic structure of the statement of net position for the proprietary funds?
A
  1. (assets + deferred outflows of resources) – (liabilities + deferred inflows of resources) = net position
38
Q
  1. What is the basic structure of the statement of revenues, expenses, and changes in net position for the proprietary funds?
A
  1. Operating revenues (revenues by major source)
  2. Operating expenses
  3. Operating income (loss)
  4. Non-operating revenues (expenses)
  5. Income or loss before contributions and transfers
  6. Capital contributions
  7. Transfers
  8. Change in net position
  9. Total net position-beginning
  10. Total net position-ending
39
Q
  1. What is the basic structure of the statement of cash flows for the proprietary funds
A
  1. Cash flows from operating activities
  2. Cash flows from noncapital financing activities
  3. Cash flows from capital and related financing activities
  4. Cash flows from investing activities
40
Q
  1. What is the purpose of the pension trust fund?
A
  1. Account for government sponsored defined benefit and defined contribution plans and other employee benefits such as postretirement health care benefits
41
Q
  1. What is the required supplemental information reporting associated with pension funds?
A
  1. Required information: (presented for each of the most recent 10 years)
    1. Sources of changes in net pension liability (NPL) total pension liability (TPL) and plan fiduciary net position (FNP) (TPL- FNP = NPL)
    2. Information about components of the net pension liability the actuarially determined contributions (ADC) and various ratios
    3. Significant methods and assumptions used in calculating actuarially determine contributions
    4. The annual money-weighted rate of return on pension plan investments for each year presented
42
Q
  1. What is the purpose of the agency trust fund?
A
  1. Collects cash to be held temporarily for an authorized recipient to whom it later will be disbursed. This recipient may be another fund of some individual or fund or even government outside of the reporting government
43
Q
  1. What is unique about agency fund revenues and expenses?
A
  1. Do not report revenues and expenses, only assets and liabilities
44
Q
  1. What is the purpose of the private purpose trust fund/
A
  1. It is the designated fund for reporting all other trust arrangements under which principal and income are for the benefit of one of the following specific individuals, private organizations, and other governments
45
Q
  1. What is the purpose of the investment trust fund/
A
  1. Investment trust funds account for external investment pools sponsored by a governmental entity
  2. Example: a state may act as the investment agent for counties and cities. The investments “external” to state government, those administered on behalf of the counties and cities, are reported in an investment trust fund.
46
Q
  1. What are the required fund financial statements for the individual fiduciary fund types?
A
  1. Most PAPI funds require:
    1. Statement of fiduciary net position
    2. Statement of changes in fiduciary net position (not required by agency fund)
47
Q
  1. What is the basic structure of the statements of changes in fiduciary net position for the fiduciary funds?
A
  1. Additions – deductions + change in net position + net position- beginning of the year = net position-end of the year
48
Q
  1. What are two important types of governmental accountability?
A
  1. Operational accountability
  2. Fiscal accountability
49
Q
  1. What are the basic sections of external financial reports for governmental entities using the integrated reporting model established by GASB 34?
A
  1. MD&A
  2. Gov-wide financial statements
  3. Fund financial statements (reconciled to gov wide financials)
  4. Notes to financial statements
  5. Required supplementary information
50
Q
  1. What is CAFR? What does it include?
A
  1. CAFR: comprehensive annual financial report
  2. Intro section- letter of transmittal, organization chart, list of principal officers
  3. Basic financial statements and required supplementary information (above)
  4. Statistical section
51
Q
  1. What sections of the external financial reporting model represent the basic financial statements?
A
  1. Government-wide financial statements
  2. Fund financial statements
  3. Notes to financial statements
52
Q
  1. What types of external reports meet the accountability objectives of the government?
A
  1. Operational accountability-government-wide financial statements
  2. Fiscal accountability- fund financial statements
53
Q
  1. A primary government includes any government that meets the SELF mnemonic. Using the “SELF” mnemonic, list the criteria that must be met for a government entity to be considered a primary government.
A
  1. Primary governments are usually represented by a general purpose government, such as a state, county, city, or other jurisdiction that can stand by itself
    1. S- separately
    2. E-elected boards
    3. L- legally separate entity
    4. F- Financially self-sufficient
54
Q
  1. Define a component unit
A
  1. A component unit is an organization for which the elected officials of the primary government are financially accountable or an organization that by its nature and the significance of its relationship with the primary government cannot be excluded from the primary government’s financial statements without making the primary government’s financial statements misleading or incomplete
55
Q
  1. What two methods are available for reporting component units of a primary governmental in the primary government’s financial statements?
A
  1. Blended: consolidated with the primary government
  2. Discrete- show in a separate column as a component unit
56
Q
  1. Define the criteria for discrete and blended presentation of component units
A
  1. Blended:
    1. When the component unit is, in substance, the same as the primary government
      1. A board of the component unit is “substantively the same as that of the primary government”
      2. The component unit serves the primary government exclusively or almost exclusively
      3. The component unit is not a legal entity
  2. Discrete:
    1. When the criteria for blended presentation are not met
57
Q
  1. What are the minimum disclosure requirements on the government-wide statement of net position?
A
  1. Primary government
    1. Government activities
    2. Business-type activities
    3. Total primary government activities
  2. Discretely presented component units
58
Q
  1. Define infrastructure assets, and describe where they are reported
A
  1. Infrastructure assets refer to streets, bridges, etc.
  2. They are reported as assets in the government-wide statements at historical cost and depreciated unless certain conditions are met for reporting using the modified approach
59
Q
  1. What is the appropriate reporting treatment of donated works of art and historical treasures held by a governmental organization?
A
  1. As a general rule, a governments should capitalize donated works of art and historical treasures. However, governments may elect not to capitalize donated works of art if works are protected and displayed and proceeds from any future sales are going to be reinvested in other works
60
Q
  1. List the three components of program revenues in the statement of activities
A
  1. SOC
  2. S- Service charges
  3. O- Operating grants and contributions
  4. C- Capital grants and contribution
61
Q
  1. State the reporting treatment of internal service funds
A
  1. Activities resulting from internal service funds are reported in proprietary funds and should be reported in the governmental activities column of the government-wide financial statements
62
Q
  1. What is the threshold for identification of a fund as a major fund?
A
  1. Any one of four financial statement line items (total assets and deferred outflows, or total liabilities and deferred inflows, or total revenues, or total expenditures/expenses) must meet the following two tests for mandatory reporting as a major fund
    1. The financial statement line item (e.g., total revenue) must be at least 10% of the line item for the total fund category to which the fund belongs (e.g., GRSPP or E) and
    2. The financial statement line item (e.g., total revenues) must be at least 5% of that line item for all governmental (GRSPP) and enterprise (E ) funds combined
63
Q
  1. The statement of cash flows is prepared for which funds? What are the sections of the statement of cash flows?
A
  1. A statement of cash flows is prepared for proprietary funds
    1. Cash flows from operating activities
    2. Cash flows from noncapital financing activities
    3. Cash flows form capital and related financing activities
    4. Cash flow from investing activities
64
Q
  1. Name some significant potential reconciling items between fund balance accounts displayed on the balance sheet of the governmental funds financial statements and net position displayed in the government-wide balance sheet
A
  1. CANS
  2. Reconciling items may result from differences in measurement focus or basis of accounting

Total governmental fund balance

+ Capital assets (existing and current)

(Accumulated depreciation)

(Non-current liabilities (existing))

(Reduce deferred inflows)

(Accrued interest payable)

+ Internal service fund net position

= net position from governmental activities

65
Q
  1. Name some significant potential reconciling items between changes in fund balance displayed on the statement revenues, expenditures, and changes in fund balance in the governmental funds’ financial statements and the change in net position displayed in the government-wide statements of activities
A
  1. CPAS RIDE
  2. Reconciling items may result from differences in measurement focus or basis of accounting

Net change in fund balance-total governmental funds

+ Capital outlay

+ Principal payments or non-current debt

(Asset disposals (NBV)

(Sources (other financing sources-debt proceeds)

+ Revenues (measurable but unavailable)

(Interest expense (accrued)

(Depreciation expenses)

+ Internal services fund net revenue

= change in net position of governmental activities

66
Q
  1. What are some of the major topics included in MD&A?
A
  1. Description of the basic financial statements
  2. Identity of the primary government and discrete component units
  3. Economic conditions and outlook
  4. Major initiatives
67
Q

What are the four criteria for a government to qualify as a primary gov

A

SELF

S- Separately

E- elected

L- Legal entity

F- Fiscally independent

68
Q

What is the defaul or most common type of component unit?

A

Discrete

69
Q

What are three reasons that a component unit will be blended instead of discrete

A
  • Gov/ CU are the same gov/ same governance
  • The CU serves the gov exclusively
  • The component unit is a legal entity
70
Q

where does the following item belong on the gov financials:

Road and bridge assets reported using the modified approach

A

required supp info

71
Q

Where does the following item belong on the gov financials?

Special assessment activity for which the local gov has no responsibility

A

Agency fund

72
Q

Where does the following item belong on the gov financials

comparison of general fund budgets to actual general fund activity

A

Required supplementary information

73
Q

Where does the following item belong on the gov financials?

Budget variances

A

optional supp info

74
Q

Where does the following item belong on the gov financials

Analysis of significant budget variances

A

MD&A

75
Q

Where does the following item belong on the gov financials

Details of non-major fund financial statements

A

optional

76
Q

Where does the following item belong on the gov financials

Definition of measurable and available

A

Required footnote disclosures

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