Chapter 18 Flashcards
What is the primary objective of governmental financial reporting?
Accountability is the primary objective of all governmental financial reporting. It is a broad concept that is based on the public’s right to know.
Define interperiod equity
Financial resources received during a period should suffice to pay for the services provided during that period
The equity interest in a discretely presented component unit must be reported as
an asset.
Define special revenue funds
A special revenue fund is used to account for the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects
Define the general fund
used to account for all financial resources of a governmental unit that are not accounted for in another fund
Define internal service funds
Generally are used for activities that provide goods and services to other subunits of the primary government and its component units or to other governments on a cost-reimbursement basis.
Define permanent fund
account for resources that are restricted to the use of earnings for the benefit of the government or its citizens. An example is a perpetual-care fund for a public cemetery.
Define enterprise funds
These funds (1) account for a government’s business-type activities, (2) serve defined customer groups, and (3) are generally financed through fees.
What types of government funds use accrual accounting?
Proprietary and Fiduciary funds
Define blended presentation
Component units that are, in substance, the same as the primary government are reported using the blending method.
Define special purpose governments
is a legally separate entity that is a component unit or other stand-alone government. If it engages in one governmental program, it is reported as a special-purpose government.
List Proprietary funds
- Enterprise funds
2. Internal Service Funds
List fiduciary funds
- Trust funds
2. Agency funds
revenue recognition on the modified accrual basis requires
- the criteria for nonexchange transactions be met
2. the resources be available.
When are property tax revenues recognized?
in the period for which they were levied
What basis of accounting is required for government wide financial accounting?
Accrual
Imposed nonexchange revenues other than from property taxes (e.g., fines, penalties, and forfeitures) are recognized
- the resources are required to be used, 2. their use is first allowed by the time requirements.
Governmental fund revenues are increases in fund financial resources other than from
(1) interfund transfers
(2) debt issue proceeds
(3) redemptions of demand bonds
A comprehensive annual financial report (CAFR) includes?
The CAFR includes introductory, financial, and statistical sections.
introductory section of the CARF contains the following:
- Letter of transmittal from the appropriate government officials
- Organization chart
- Names of principal officers
The financial section of the CARF contains the following:
- MD&A and Auditor’s Report
- Government-Wide
- Fund Financial Statements
- Notes
- Budgetary Schedule
The statistical section of the CARF contains the following
- Financial Trends
- Revenue Capacity
- Debt Capacity
- Demographics
- Operating Information
CARF notes to the financial statements include the following?
- Governmental activities,
- Business-type activities,
- Major funds, and
- Nonmajor funds in the aggregate.
CARF RSI includes the following?
(1) schedules
(2) statistical data
(3) budgetary comparison schedules
(4) other information that is an essential part of financial reporting
For most governments, the budget is legally enforceable?
True
Define appropriated budget
the operating budget for a governmental entity
how many years does a governmental Capital budget cover?
As many as 5 years
When is a fixed budget appropriate for a governmental entity?
in which expenditures and level of activity are set by legislative authorization.
Budget integration should be done for the following governmental funds:
- The general fund
- Special revenue funds
- Other funds with numerous transactions
The revenues are debited and appropriations credited in a governmental budget?
True
What do you do with significant encumbrances?
Disclose in the notes
The journal entry for approval of a PO
DR. Encumbrances Control
CR. Encumbrances outstanding
Balance sheet equation Governmental accounting
Assets + Deferred Outflows = Liabilities + Deferred inflows + Fund Balances
Any fund must be reported as major if total revenues, expenditures or expenses, assets, or liabilities (excluding extraordinary items) of the fund
(1) are at least 10% of the corresponding element total (assets, etc.) for all funds of the same category or type, that is, for all governmental or all enterprise funds, and (2) the same element that met the 10% standard is at least 5% of the corresponding element total for all governmental and enterprise funds in the aggregate.
