Chapter 1- Funds

Question 1

There are 2 used by state and local governments. The funds are used to account for a governments ongoing organizations and activities that are similar to those found in the commercial sector.

1) enterprise funds
2) internal service funds

Answer 1

Proprietary Funds

Question 2

Also known as trust and agency funds. They account for resources for which the government is acting as a collecting/disbursing agent or a trustee.

1) Agency Funds
2) Pension trust funds
3) investment trust funds
4) Private-purpose trust funds

Answer 2

Fiduciary Funds

Question 3

Accounts for most of the basic services provided by the government. It accounts for and reports all financial resources not accounted for and reported in another fund.

Answer 3

General Fund

Question 4

Account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays. As such, it accounts for the purchase or construction of major capital improvements, except those purchased or constructed by a proprietary (and less commonly, fiduciary) fund.

Answer 4

Capital Projects Funds

Question 5

Account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest, other than interest or principal on proprietary or fiduciary activities.

Answer 5

Debt Service Funds

Question 6

Account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for a specified purpose other than a debt service or capital projects. These include activities funded by federal or state grants or by taxes specifically restricted to certain activities.

Answer 6

Special Revenue Funds

Question 7

Account for and report resources (typically provided under trust arrangements) that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government’s program

Answer 7

Permanent fund

Question 8

Are used when resources are provided primarily through the use of sales and service charges to parties external to the government. Examples of enterprise funds include water and other utilities, airports, swimming pools, and transit systems.

Answer 8

Enterprise Fund

Question 9

Account for services provided by one department of a government to another, generally on a cost-reimbursement basis. In some cases, these services are also provided to other governments. Examples of internal service funds include print shops, motor pools, and self-insurance funds.

Answer 9

Internal Service Funds

Question 10

Are used to account for situations in which the government is acting as a collecting/disbursing agent. An example would be county tax agency fund, where the county collects and disburses property taxes for other taxing units within the county, such as independent school districts.

Answer 10

Agency Funds

Question 11

Are used to account for pension and employee benefit funds for which the government unit is the trustee.

Answer 11

Pension trust funds

Question 12

Account for the external portion of investment pools reported by the sponsoring government.

Answer 12

Investment Trust Funds

Question 13

Report all other trust arrangements under which principal and income benefit individuals, private organizations, or other governments.

Answer 13

Private-purpose trust funds

Question 14

Basis of Accounting

Answer 14

Determines WHEN transactions and events are recognized in the accounting records.

Question 15

Flow of current financial resources measurement focus

Answer 15

Measures primarily financial resources and does NOT measure long-term assets and liabilities.

Question 16

Governmental Funds

Answer 16

There are 5

1) General Fund
2) Capital Projects Fund
3) Debt Service Funds
4) Special Revenue Funds
5) Permanent Funds

Question 17

Modified Accrual Basis

Answer 17

Somewhere between the cash and accrual basis of accounting and recognizes revenues when measurable and available to finance expenditures of the current period.

It recognizes expenditures generally when goods and services are received, except for payments of interest on long-term debt which are recognized when due.