Chapter 17: Governmental Accounting - Methods

Question 1

What is a special revenue fund?

Answer 1

Used to account for proceeds of specific revenue sources that are restricted/committed for specified purposes OTHER than debt service or capital projects.

Question 2

What are the three basic financial statements that a governmental unit must include?

Answer 2

1) Government-wide financial statements
2) Fund financial statements
3) Notes to the financial statements

Question 3

What is the initial encumbrance entry?

Answer 3

(DB) Encumbrances
(CR) Encumbrances outstanding

Question 4

What are the 3 categories of fund types that can be used by a state or local government?

Answer 4

1) governmental (general, special revenue, debt service, capital projects, and permanent funds),
2) proprietary (internal service and enterprise funds), and
(3) fiduciary (pension and other employee benefit trust, investment trust, private-purpose trust, and custodial funds)

Question 5

What does required supplementary information (RSI) of a state or local government include?

Answer 5

(1) Schedules
(2) Statistical data
(3) Budgetary comparison schedules
(4) other info essential to FR

Question 6

What does the budgetary comparison schedules include in the RSI for state or local goverments?

Answer 6

(1) OG appropriated budget
(2) Final appropriated budget
(3) Actual inflows/outflows/balances

Question 7

When is disclosure of significant accounting policies required for state or local government?

Answer 7

(1) a selection has been made from existing acceptable alternatives; (2) a policy is unique to the industry in which the government operates, even if the policy is predominantly followed in that industry; and (3) GAAP have been applied in an unusual or innovative way.

Question 8

When is the blended method appropriate for component’s units?

Answer 8

Component’s units governing body is substantively the same as the primary government or the component unit exclusively or almost exclusively benefits the primary government

Question 9

What is used to report governmental fund financial statements?

Answer 9

Modified accrual basis - EXPENSES are not recognized under modified accrual basis, instead EXPENDITURES.

Question 10

What are the two types of proprietary funds?

Answer 10

Internal funds
Enterprise funds
(Remember PIE)

Question 11

What is used to report proprietary and fiduciary funds?

Answer 11

Accrual basis

Question 12

What are the two methods to present component units?

Answer 12

Discrete or Blended

Question 13

What are the three sections for the annual comprehensive financial report for governmental units?

Answer 13

1) Introductory
2) Financial Section
3) Statistical section

Question 14

What is the journal entry when budgets are recorded for a governmental unit?

Answer 14

(DB) Budgetary Account
(CR) Appropriations

Question 15

When are encumbrances used?

Answer 15

In the governmental fund

Question 16

What are the qualitative characteristics of state and local governmental reporting?

Answer 16

• Understandability
• Reliability
• Relevance
• Timeliness
• Comparability
• Cost-benefit limitations

Question 17

What are elements of state and local governmental reporting?

Answer 17

• Statement of net position
• Resource flow statements

Question 18

If a special-purchase government is only engaged in business-type activities, what needs to be presented?

Answer 18

The financial statements required for enterprise funds, including MD&A and RSI

Question 19

What are enterprise funds in governments generally used for?

Answer 19

To account for activities that benefit outside parties who are willing to pay for them such as parking garages and utilities.

Question 20

What does the statistical section in a state or local government’s annual comprehensive financial report include?

Answer 20

FRDDO
1) Financial trends
2) Revenue capacity
3) Debt capacity
4) Demographic and economic information
5) Operating information

Question 21

What do capital projects account for in governmental accounting?

Answer 21

For financial resources restricted, committed, or assigned to be expended for capital purposes.

These resources include federal grant proceeds to be used for construction of major capital facilities, such as homeless shelters.