Ch. 4 Hw Flashcards
The general fund is defined as the fund used to account for all financial resources not accounted for in another fund, but it is actually more than that. Explain why.
It is used to account for and report on the basic day-to-day operating services provided by governments.
***Public safety, education, and transportation services.
Vast majority of a government’s activity occurs in the general fund.
What is the minimum number of Special Revenue Funds you would expect a local government to have?
A particular government may have no Special Revenue Funds, or as many as deemed appropriate by its governing body or as required by a higher-level government.
Do the differences between accrual accounting and modified accounting apply to revenues, expenditures, or both? Explain.
Applies to both revenues and expenditures/expenses
Accrual accounting:
Revenue is recognized when it is measurable and earned.
Expenses are recognized when the liability is incurred or when resources are used.
Modified accrual accounting:
Revenue is recognized when it is earned and available.
Expenditures are recognized when the liability occurs because they are payable shortly after they are incurred. (60 Day Rule)
Which financial statements or schedules must be prepared for General Funds?
Balance Sheet
Statement of Revenues, Expenditures, and Changes in Fund Balances.
Require preparation of budgetary comparison, presented as a financial statement, or included with supplementary information.
For a General Fund or a Special Revenue Fund, what does a credit balance in the fund balance account(s) signify? What does a debit signify?
Credited when estimated revenues exceed appropriations
Debited when estimated revenues are less than appropriations
Does a credit balance in the Fund Balance account(s) at the end of the year necessarily mean the Fund has sufficient cash to pay its liabilities in a timely manner? Explain.
No, having a credit balance in the fund balance does not necessarily mean that the fund has sufficient cash to pay its liabilities
***Cash and Receivables (only reporting current assets) a few prepaids and inventory but that is not significant. Hypothetically, if cash is low and receivables are high – there may be a cash flow problem.
Under the modified accrual basis of accounting, when are revenues considered to be available?
a. When earned
b. When cash is received
c. When measurable with reasonable accuracy
d. When collectible in the period or soon enough thereafter to pay current period bills
d. When collectible in the period or soon enough thereafter to pay current period bills
In budgetary accounting, what is the net effect of receiving all the items ordered together with an invoice for amount less the amount encumbered?
a. The amount available for spending is increased
b. The amount available for spending is decreased
c. The amount available for spending is unchanged
d. A request should be made for a budgetary interchange
a. The amount available for spending is increased
Which of the following accounts of a governmental entity is credited when a purchase order is approved?
a. Encumbrances
b. Budgetary fund balance reserved for encumbrances
c. Vouchers payable
d. Fund balance
c. Vouchers payable (best answer)
b. Budgetary fund balance reserved for encumbrances (acceptable)
When supplies are ordered by a state or local government, the entry on the books of the General Fund should include a debit to which of the following?
a. Appropriations - supplies
b. Expenditures - supplies
c. Encumbrances - supplies
d. Fund balance
b. Expenditures - supplies
c. Encumbrances - supplies
**not sure what is meant by “supplies” therefore either answer works
Under the modified accrual basis of accounting, GASB standards specifically require accrual of salaries due but unpaid at year-end because
a. The amount is measurable and resources to pay the salaries are available
b. Salaries must be paid to maintain the entity’s credit rating
c. Salaries are liabilities that, having been incurred, are normally paid in a timely manner and in full from current financial resources
d. Accruing salaries is an exception to the modified accrual basis of accounting
c. salaries are liabilities that, having been incurred, are normally paid in a timely manner and in full from current financial resources
In approving the budget, the city council appropriated an amount greater than expected revenues. What will be the result of this action?
a. A cash overdraft will definitely occur during the fiscal year
b. Current year expenditures will be greater than previous year expenditures
c. A debit will be made to Budgetary fund balance
d. The debits and credits will not be equal
c. A debit will be made to Budgetary fund balance
Which of the following is a budgetary account?
a. Expenditures - supplies
b. Appropriations
c. Revenues - property taxes
d. Vouchers payable
b. Appropriations
If estimated revenues exceed appropriations, closing the budgetary accounts must include which of the following entries?
a. A debit to Estimated Revenues
b. A debit to Revenues - control
c. A credit to Budgetary fund balance
d. A debit to Budgetary fund balance
d. A debit to Budgetary fund balance
Entries similar to those for the General Fund may also appear in the records of which of the following funds?
a. Enterprise Fund
b. Pension Trust Fund
c. Custodial Fund
d. Special Revenue Fund
d. Special Revenue Fund
