Chapter 1 - General Introduction Flashcards
Accounting system must be on a ___ ___ basis, with a ____ ____.
Double Entry
General Ledger
Each fund should have a complete ___ ____ group of accounts
Self-balancing
Accounts must show a ____ financial position at all times and be able to demonstrate _____ to the public.
Current
Accountability
An annual audit of accounts is required to be conducted by a ____ ____ ____.
Registered Municipal Accountant (RMA)
Adherence to budgets is required by ____
Statute
Accounts should be centralized under the direction of __ ___
One officer
An independent fiscal and accounting entity with a self balancing set of accounts, segregated for the purpose of carrying out specific activities or attaining certain objectives
Fund
List 5 most common funds:
- Current Fund (Operating)
- Utility Fund
- Public Assistance
- Capital Fund
- Trust Funds (Dedicated, Revolving)
A ___ is an accounting term that means the left side of an account
Debit
A ___ is an accounting term that means the right side of an account
Credit
For every debit entry made there must be a ________.
Corresponding credit entry
List the 5 basic accounts that make up a general ledger:
- Assets
- Liabilities
- Fund Balance (Surplus)
- Expenditures (Appropriations)
- Revenues
What three things make up the Balance Sheet accounts?
Assets, Liabilities, Fund Balance
___+___= ____
Assets + Liabilities = Fund Balance
Assets, Liabilities, and Fund Balance are considered what type of accounts?
Permanent accounts
Revenues and Expenses make up the ___ and ___ accounts
Profit and Loss
Revenues and Expenses are considered what type of accounts?
Temporary Accounts
In a cash basis account, when are revenues realized?
When received
In a cash basis account, when are expenses realized?
When paid
In an accrual basis account, when are revenues realized?
When earned or levied, regardless of when collected
In an accrual basis account, when are expenditures realized?
When incurred or liability becomes known
What do you do when receiving $200 in cash for Fees?
Debit cash, credit fees
NJ municipalities utilizes what type of hybrid method of accounting?
Other Comprehensive Basis of Accounting (OCBOA), which is Modified Accrual
Revenues are realized when ____ in a modified accrual basis of accounting
Collected
Expenditures are recorded when ____ in a modified accrual basis of accounting
Incurred
Since we do not realize revenue until it is received, all receivable balances are offset with a _________.
Reserve for receivables
The extra entries created by CFOs when preparing the journal entries necessary to realize the current month’s revenue are called ____ _____.
Collateral Entries
Revenues = ____
Appropriations
Give examples of Revenues -
Fund Balance Misc. Revenue Not Anticipated (MRNA) Misc. Revenue Anticipated Receipt from Delinquent Taxes Amount to be Raised by Taxation
Give examples of Appropriations -
Operations Capital Improvements Debt Service Deferred Charges & Statutory Expenditures Reserve for Uncollected Taxes
NJ Statutes Commonly Referenced: NSJA 40A:2 - NJSA 40A:4 - NJSA 40A:5 - NJSA 40A:11 -
NSJA 40A:2 - Bond Law
NJSA 40A:4 - Budget Law
NJSA 40A:5 - Fiscal Affairs Law
NJSA 40A:11 - Local Public Contract Law
Financial Document Date -
Filing of Annual Debt Statement
Jan 31
Financial Document Date -
Filing of Annual Financial Statement
Jan 26
Feb 10
Financial Document Date -
Introduction of Budget
Feb 10
Financial Document Date -
Adoption of Budget
March 20
Who is responsible for preparing and filing the annual financial statement?
CMFO
Who is responsible for preparing the Financial Statements presented in the Audit?
CMFO (not the auditor)
What is the fine for failure to file the AFS on time?
$5 for each day of non filing
Governmental units have the following common characteristics that are different than those of private business enterprises, such as:
- Greater permanency
- Ability to levy taxes
- Greater borrowing power
- Greater legal restrictions
- Fund accounting
- Lack of profit motive
- Purpose of establishment
Name these Technical Accounting Directives
T.A.D. 85-1
T.A.D. 85-2
T.A.D. 85-3
1 - Encumbrance System
2 - Fixed Assets
3 - General Ledger
The official permanent financial record of the local unit which summarizes all account balances
General Ledger
A record used to accumulate the detailed information that supports and supplements the information contained in the general ledger
Subsidiary Ledger
An account maintained in the general ledger that agrees with the detailed subsidiary accounts contained in the subsidiary ledger
Control Account
An obligation of funds by a local unit arising from the issuance of a numerically controlled purchase order or contract. Such commitment of funds reduces the amount which remains available for spending
Encumbrance
An account used to offset the recording of an encumbrance in a double entry accounting system. It is classified as a cash liability under NJ municipal accounting practices in order to reflect encumbrances which are still outstanding
Reserve for Encumbrances
The amount paid for goods received or services rendered which is supported by a vendor’s invoice and approved payment authorizations
Expenditure
