Budgetary and activity accounting

Question 1

What are the 3 accounting areas of governmental funds?

Answer 1

• Budgetary: used to control spending
• Activity: emphasize the flows of current financial resources and has annual budgetary focus
• Encumbrance: used to record purchase orders and designed to monitor spending for increase budgetary control. Future expenditures

Question 2

What is JE to record estimated revenues in budgetary account?

Answer 2

Dr. Estimated revenue control 2M
Dr. Budgetary control (negative/deficit) 0
Cr. Appropriations control (approved expenditures) 1,950K
Cr. Budgetary control 50K

Question 3

What is the difference b/w JE records under budgetary (modified accrual) vs. JE under full accrual?

Answer 3

• The difference is the JE records the budgeted amounts for estimated revenue and approved expenditures (appropriations) is posted on the opposite side of the T account compare to actual amounts.
• At year end, the budget is reversed and closed

Question 4

what is unassigned fund balance?

Answer 4

It represents the amount of current resources carried forward into the following year that will be available for appropriations

Question 5

What are 4 types of Non-exchange revenues?

Answer 5

• Derived tax revenues: tax imposed on/derived from exchange transactions such as commercial sales taxes, income taxes…
• Imposed non-exchange revenues: tax imposed on non-exchange transactions like fines, property taxes.
• Government-mandated non-exchange transactions: transactions represent a higher level of government (ex: state) provide funds and mandates certain activities by another level of government (ex: county) such as environmental clean up
• Voluntary non-exchange transactions: transactions represent government receives resources and does not provide equal value such as grant agreements

Question 6

What is the difference b/w exchange and non-exchange transactions?

Answer 6

• The difference is the relationship between the amount value given and received.
• Exchange transactions: are reciprocal transfer in which each party receives or sacrifices something about equal in returns
• Non-exchange transactions: values received/given not equal in returns.

Question 7

what is time requirement to collect property tax levied revenue?

Answer 7

• 60 days after year end. Ex: collection during Y1 and 60 days in Y2. After 60 days of next year, the remaining amounts will be recorded as deferred inflows of resources not revenues.
• JE:
  Dr. Property tax receivables
  Cr. Property tax revenues
  Cr. Allowance for uncollectible accounts
  Cr. Deferred inflows

Question 8

What are types of revenue recognition requirements?

Answer 8

• Time requirements (apply to all non-exchange revenue)
• Eligibility requirements (apply to government-mandated and voluntary non-exchange transactions)
  
  1. time requirements

Question 8

What are types of revenue recognition requirements?

Answer 8

• Time requirements (apply to all non-exchange revenue)
• Eligibility requirements (apply to government-mandated and voluntary non-exchange transactions)
  
  1. time requirements
  2. characteristics of recipients: federal to local governments
  3. reimbursements: allowable expenditures must be incurred before revenue may be recognized
  4. contingencies (only apply to voluntary non-exchange transactions): actions must be taken before revenue is earned

Question 9

What is considered as expenditures?

Answer 9

Capital purchases, debt services, and operating expenditures are considered spending of funds and are treated as current year expenditures. It is recognized consistently with accrual accounting

Question 10

what are classifications of governmental expenditures?

Answer 10

• Function or program: major services. ex public safety, highways,..
• Organizational unit: may be responsible for carrying out several programs. Ex. police and fire departments combined to form public safety function
• Activity: can be an event, task, or a unit of work with a specific purpose
• Character: for determining the basis of the fiscal period the expenditures are presumed to benefits
• Object classes: classifies expenditures according to type of items purchased or services obtained. Ex. personal services, supplies, and principal and interest payments for debt services expenditures

Question 11

what are classifications of LEASE?

Answer 11

• Short term lease
• Contracts that transfer ownership
• Leases other than short term leases and contracts that transfer ownership