Chapter 8

Question 1

What does fund accounting enable service and mission-driven organizations to easily monitor?

Answer 1

Fund accounting enables the gov’t organization to easily monitor compliance with spending purpose (legal restrictions), spending limits (budget and financial control), and other fiscal accountability objectives.

Question 2

What is the purpose of presenting separate fund financial statements?

Answer 2

To report additional and detailed information about the primary government.

Question 3

What is a fund?

Answer 3

A fund is a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances , and changes herein.

Question 4

Name 5 governmental funds and what focus:

Answer 4

1. modified accrual and current measurement focus

a. General
b. special Revenue
c. debt Service
d. capital Projects
e. Permanent

(GRaSPP)

Question 5

Name 2 proprietary funds and what focus:

Answer 5

1. accrual and economic resources measurement focus

a. internal Service
b Enterprise

(SE)

Question 6

Name 4 fiduciary funds and what focus:

Answer 6

1. accrual and economic resources measurement focus

a. Pension
b. Agency
c. Private purpose
d. Investment trust

(PAPI)

Question 7

What fund balances represent resources whose use has been limited by external sources such as creditors, contributors, other governments, laws, constitutional provisions or enabling legislation?

Answer 7

restricted fund balances

Question 8

What fund balance represents resources in a form that cannot be spent (inventories or prepaid expenditures) or are legally or contractually required to remain whole?

Answer 8

non-spendable fund balances

Question 9

What fund balance represents resources that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority?

Answer 9

committed fund balances. this is the most restrictive classification of governmental funds.

Question 10

What fund balances are constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed?

Answer 10

Assigned fund balances

Question 11

What is the paramount objective of financial reporting by state and local government?

Answer 11

governmental (and not-for-profit_ organization reporting is designed to demonstrate the accountability of each organization for the stewardship of the resources in their care.

Question 12

What is the prescribed format for the presentation of the statement of financial position of a governmental fund (the equation)

Answer 12

Assets and deferred outflows of resources = liabilities and deferred inflows of resources + fund balance

Question 13

Which type of tax revenues represent taxes imposed on or derived from exchange transactions such as commerical sales

Answer 13

derived (non-exchange) tax revenues

Question 14

what does the appropriation account represent?

Answer 14

Appropriations is a budgetary account. This account represents the governmental units approved spending.

Question 15

What does the expenditure account represent?

Answer 15

Expenditures represent the total amount incurred, whether paid in cash or accrued as vouchers payable, and serve to reduce available appropriations.
Vouchers payable are included in expenditures.

Question 16

what does the encumbrance account represent?

Answer 16

Encumbrances are either commitments or assignments of the fund balance for purchase orders and represent a reduction of available appropriations.

Question 17

What is the JE recorded for when a PO is issued?

Answer 17

Dr. Encumbrances

Cr. Budgetary Control

Question 18

On what basis does GASB recommend that governmental fund budgets be prepared?

Answer 18

Modified accrual.