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CPA > Chapter 8: Governmental Accounting > Flashcards

Chapter 8: Governmental Accounting Flashcards

1
Q

What are the accountability factors for government and not-for-profit organizations (NFP)?

A

Operation and fiscal

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2
Q

What is the purpose of fund accounting?

How do Governments & NFP organizations use fund accounting?

A

Comply with legal restrictions & maintain financial control

Government: internal accounting & external reporting

NFP: internal accounting

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3
Q

What is GASB and what do they do?

A

Government accounting standards board and establishes accounting and reporting standards for governments

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4
Q

Who establishes accounting principles and standards for NFP?

A

FASB

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5
Q

What are the generic fund structure categories?

A

Governmental funds
Proprietary funds
Fiduciary funds

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6
Q

What are the governmental funds?

What is their basis of accounting & measurement focus?

What is not carried within governmental funds?

A 
"GRaSPP"
General
Special Revenue
Debt Service
Capital Projects
Permanent

Modified Accrual & current resources

Fixed assets or long term debt (current only)

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7
Q

What are the proprietary funds?

What is their basis of accounting & measurement focus?

A

“SE”
Internal Service
Enterprise

Full accrual & economic resources

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8
Q

What are the fiduciary funds?

What is their basis of accounting & measurement focus?

A 
"PAPI"
Pension Trust
Agency Trust
Private Purpose Trust
Investment Trust

Full Accrual & Economic resources

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9
Q

When is revenue recognized under the modified accrual method?

A

Measurable and available (collectible within the current period or up to 60 days after YE)

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10
Q

What are the categories of fund balances in GRaSPP funds?

What makes up each?

A

“NU CAR”

Non-spendable: inventory or pre-paid expenses

Unassigned: no constraint

Committed: Government mandated

Assigned: Government intends to commit

Restricted: Creditors, bond covenants, grantors

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11
Q

Which governmental fund should be the only one to have a positive unassigned value?

A

General Fund

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12
Q

What is the purpose of fund accounting?

How do Governments and NFP organizations use fund accounting?

A

Comply with legal restrictions & maintain financial control

Government: internal accounting and external reporting

NFP: internal accounting

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13
Q

What is GASB and what do they do?

A

Government accounting standards board and establishes accounting and reporting standards for governments

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14
Q

What is the orientation of accounting and reporting for all proprietary funds of governmental units?

A

Income determination

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15
Q

What is the primary emphasis in accounting and reporting for governmental funds?

A

Source, use, and balance of current financial resources

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16
Q

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

A

Accountability

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17
Q

How many funds should the accountant establish for a city?

A

The minimum number of funds consistent with legal requirements and sound financial administration.

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18
Q

What are derived tax revenue?

What are imposed non-exchange revenues?

What are governmental non-exchange transactions?

What are voluntary non-exchange transactions?

A

commercial sales and sales taxes

property taxes and fines

environmental cleanup

grants

19
Q

What are derived tax revenue?

What are imposed non-exchange revenues?

A

commercial sales and sales taxes.

property taxes and fines.

20
Q

Which event interperiod equity as a financial reporting objective of a governmental unit?

A

A balanced budget demonstrates interperiod equity.

21
Q

Expenditures of a governmental unit extending over more than one accounting period is accounted for by?

A

Allocating between accounting periods or may be accounted for as expenditures of the period of acquisition.

22
Q

What do these aspects of governmental accounting emphasize:

Budgetary
Activity
Encumbrance

A

Budgetary: control spending
Activity: current financial resources
Encumbrance: record purchase orders

23
Q

What makes up revenue in governmental funds?

What makes up other financing sources?

A

Income, sales, property, real estate taxes, fines/penalties

debt proceeds and inter-fund transfers

24
Q

What is the book opening entry for governmental funds?

What is the closing book entry?

A

DB: Estimated Revenue
DB: Budgetary control (negative)
CR: Appropriations
CR: Budgetary control (positive)

Every amount is the same as opening entry but the entry sides are switched.

25
Q

JE to record initial accrual of property taxes?

A

DB: Property taxes receivable - current
CR: Revenues

26
Q

JE to record collection of property taxes?

A

DB: Cash
CR: Property taxes receivable - current

27
Q

JR to reclassify taxes receivable to delinquent?

A

DB: Property taxes receivable - delinquent
CR: Property taxes receivable - current

28
Q

JE to record the purchase of a capital item?

A

DB: Expenditure - capital outlay
CR: V/P or Cash

29
Q

JE to record principal payment on non-current debt?

A

DB: Expenditure - debt service
CR: Cash

30
Q

JE to record transfer between funds?

A

DB: Other financing sources - transfer out
CR: Cash

31
Q

Do the GRaSPP funds capitalize fixed assets?

JE for purchase of fixed asset in?

A

NO

DB: Expenditure - capital outlay
CR: V/P or Cash

32
Q

JE to set up encumbrance?

JE to close encumbrance?

A

DB: Encumbrance
CR: Budgetary control

DB: Budgetary control
CR: Encumbrance

33
Q

What is the formula for the presentation for financial position with Government wide and Fiduciary funds?

What is the formula for the presentation for financial position with governmental funds?

A

+ Assets and Deferred outflows
- Liabilities and Deferred inflows
= Net position

+ Liabilities and Deferred inflows
+ Fund balance
= Assets and Deferred outflows

34
Q

In order to qualify for hedge accounting treatment, a derivative must be:

A

Effective

35
Q

How are changes in value of derivatives used as investments reported?

How are changes in value of derivatives used for hedging activities reported?

A

Revenues

deferred income or outflow

36
Q

Which of the following is not a characteristic of a fund?

A

Separate legal entity

37
Q

What are the 3 sections of the CAFR reports?

A

introduction
financial
statistical

38
Q

What are the 3 sections of the CAFR reports?

A

introduction
financial
statistical

39
Q

What is the minimal reporting requirement for a government wide FS?

A

MDA
basic FS
RSI

40
Q

What is the minimal reporting requirement for a government wide FS?

A

MDA
basic FS
RSI

41
Q

The government wide FS include which groups of funds?

The CAFR include which groups of funds?

A

Governmental
Proprietary

All Funds
Governmental
Proprietary
Fiduciary

42
Q

What type of accountability do the following have:

government-wide FS
fund FS

A

Operational accountability

Fiscal accountability

43
Q

How does a government report non-major funds within its fund types FS?`

A

May disclose in supplementary information but not required

44
Q

Readers of the Comprehensive Annual Financial Report (CAFR) would expect to find Management’s Discussion Analysis in the CAFR section titled:

A

Basic FS and Required Supplementary Information (RSI)

CPA (35 decks)

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