Chapter 11-12

Question 1

Sets of Statements by state and local Governments

Answer 1

1- Fund Financial Statements

2- Government-Wide financial statements.

Question 2

Fund Financial Statements ( Modified accrual accounting)

Answer 2

Provide a picture of the current activities of the government.
Current period revenues and expenditures in connection with individual government functions.
- Citizens interested in the operation of the government

Question 3

Government-Wide Financial Statements (accrual accounting)

Answer 3

Reports all revenues and costs as well as all assets and liabilities.
Creditors, especially bondholders, most interested as they assess the likelihood of being paid when obligation come due.

Question 4

Fund accounting Classification

Answer 4

Government Funds

Proprietary Funds

Fiduciary Funds

Question 5

Governmental Funds

Answer 5

Includes all funds that account for activities a government carries out primarily to provide citizens with services that are financed primarily through taxes and other general revenue sources. For that reason, police and fire departments are reported within the governmental funds.

Question 6

Proprietary Funds

Answer 6

Account for a government’s ongoing activities that are similar to those conducted by for-profit organizations. This fund type encompasses operations that assess a user charge so that determining profitability or cost recovery is important.

Question 7

Fiduciary funds

Answer 7

Account for monies held by the government in a trustee or agency capacity. Such assets must be maintained for others and cannot be used by the government for its own programs. One common example is the monitoring of assets held in a pension plan for government employees.

Question 8

Governmental funds Divisions

Answer 8

• General Fund
• Special revenue funds
• Capital projects funds
• Debt service funds
• Permanent funds.

Question 9

General Funds

Answer 9

To account for and report all financial resources not accounted for and reported in another fund.
it also accounts for many of a government’s most important, ongoing functions.

Question 10

Special Revenue Funds

Answer 10

Account for resources that are restricted or committed for a specific purpose other than debt payments or capital projects.

Question 11

Capital Project Funds

Answer 11

Accounts for financial resources restricted, committed, or assigned for capital outlays such as acquiring or constructing bridges, high schools, roads, or municipal office complexes.
Fundings normally comes from a number of sources such as grants, sale of bonds, or transfers from Gral revenue.
The actual capital asset being obtained is not reported here, only the money to finance the purchase or construction is recorded.

Question 12

Debt Service Funds

Answer 12

Record financial resources accumulated to pay long-term liabilities and interest as they come due.
This fund type does not account for a governments’s long-term debt.
Debt service funds monitor the balances currently available to make the eventual payment to satisfy long-term liabilities.

Question 13

Permanent Funds

Answer 13

Accounts for financial resources restricted y external donor, contract, or legislation with the stipulation that the principal can never be spent but any income can be used by the government often for a designated purpose.

Question 14

Proprietary Funds Divisions

Answer 14

Enterprise Funds

Internal Service Funds.

Question 15

Enterprise Funds

Answer 15

Any government operation that is open to the public and financed, at least in part, by user charges.

Question 16

Classified as an Enterprise fund if:

Answer 16

• The activity generates revenues that provide the sole security for the debts of the activity.
• Laws or regulations require recovering the activity’s costs (including depreciation and debt service) through fees or charges.
• Fees and charges are set at prices intended to recover costs including depreciation and debt service.

Question 17

Internal Service Funds

Answer 17

Accounts for any operation that provides services to another department or agency within the government for a fee.
Internal service funds charge for their services and the work is for the primary benefit of parties within the government.

Question 18

Types of Fiduciary Funds

Answer 18

Investment Trust Funds
Private-purpose Trust Funds
Pension Trust Funds
Agency Funds

Question 19

Investment Trust Funds

Answer 19

Accounts for the outside portion of investment pools when the repotting government has accumulated financial resources from other governments in order to have more money to invest so that a higher rate of return can be earned.

Question 20

Private-Purpose Trust Funds

Answer 20

Accounts for monies held in a trustee capacity for the benefit of specifically designated external parties such as individuals, private organizations, or other governments.
Unclaimed property is usually recorded in here.

Question 21

Pension Trust Fund

Answer 21

Account for the assets being held to pay employee benefits after retirement.

Question 22

Agency Funds

Answer 22

Records any resources a government holds as an agent for individuals, private organizations, or other government units.