Chapter 8: Governmental Accounting Flashcards
What are the accountability factors for government and not-for-profit organizations (NFP)?
Operation and fiscal
What is the purpose of fund accounting?
How do Governments & NFP organizations use fund accounting?
Comply with legal restrictions & maintain financial control
Government: internal accounting & external reporting
NFP: internal accounting
What is GASB and what do they do?
Government accounting standards board and establishes accounting and reporting standards for governments
Who establishes accounting principles and standards for NFP?
FASB
What are the generic fund structure categories?
Governmental funds
Proprietary funds
Fiduciary funds
What are the governmental funds?
What is their basis of accounting & measurement focus?
What is not carried within governmental funds?
"GRaSPP" General Special Revenue Debt Service Capital Projects Permanent
Modified Accrual & current resources
Fixed assets or long term debt (current only)
What are the proprietary funds?
What is their basis of accounting & measurement focus?
“SE”
Internal Service
Enterprise
Full accrual & economic resources
What are the fiduciary funds?
What is their basis of accounting & measurement focus?
"PAPI" Pension Trust Agency Trust Private Purpose Trust Investment Trust
Full Accrual & Economic resources
When is revenue recognized under the modified accrual method?
Measurable and available (collectible within the current period or up to 60 days after YE)
What are the categories of fund balances in GRaSPP funds?
What makes up each?
“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
Which governmental fund should be the only one to have a positive unassigned value?
General Fund
What is the purpose of fund accounting?
How do Governments and NFP organizations use fund accounting?
Comply with legal restrictions & maintain financial control
Government: internal accounting and external reporting
NFP: internal accounting
What is GASB and what do they do?
Government accounting standards board and establishes accounting and reporting standards for governments
What is the orientation of accounting and reporting for all proprietary funds of governmental units?
Income determination
What is the primary emphasis in accounting and reporting for governmental funds?
Source, use, and balance of current financial resources
What is the paramount objective of financial reporting by state and local governments?
Accountability
How many funds should the accountant establish for a city?
The minimum number of funds consistent with legal requirements and sound financial administration.
What are derived tax revenue?
What are imposed non-exchange revenues?
What are governmental non-exchange transactions?
What are voluntary non-exchange transactions?
commercial sales and sales taxes
property taxes and fines
environmental cleanup
grants
What are derived tax revenue?
What are imposed non-exchange revenues?
commercial sales and sales taxes.
property taxes and fines.
Which event interperiod equity as a financial reporting objective of a governmental unit?
A balanced budget demonstrates interperiod equity.
Expenditures of a governmental unit extending over more than one accounting period is accounted for by?
Allocating between accounting periods or may be accounted for as expenditures of the period of acquisition.
What do these aspects of governmental accounting emphasize:
Budgetary
Activity
Encumbrance
Budgetary: control spending
Activity: current financial resources
Encumbrance: record purchase orders
What makes up revenue in governmental funds?
What makes up other financing sources?
Income, sales, property, real estate taxes, fines/penalties
debt proceeds and inter-fund transfers
What is the book opening entry for governmental funds?
What is the closing book entry?
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.
JE to record initial accrual of property taxes?
DB: Property taxes receivable - current
CR: Revenues
JE to record collection of property taxes?
DB: Cash
CR: Property taxes receivable - current
JR to reclassify taxes receivable to delinquent?
DB: Property taxes receivable - delinquent
CR: Property taxes receivable - current
JE to record the purchase of a capital item?
DB: Expenditure - capital outlay
CR: V/P or Cash
JE to record principal payment on non-current debt?
DB: Expenditure - debt service
CR: Cash
JE to record transfer between funds?
DB: Other financing sources - transfer out
CR: Cash
Do the GRaSPP funds capitalize fixed assets?
JE for purchase of fixed asset in?
NO
DB: Expenditure - capital outlay
CR: V/P or Cash
JE to set up encumbrance?
JE to close encumbrance?
DB: Encumbrance
CR: Budgetary control
DB: Budgetary control
CR: Encumbrance
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?
+ Assets and Deferred outflows
- Liabilities and Deferred inflows
= Net position
+ Liabilities and Deferred inflows
+ Fund balance
= Assets and Deferred outflows
In order to qualify for hedge accounting treatment, a derivative must be:
Effective
How are changes in value of derivatives used as investments reported?
How are changes in value of derivatives used for hedging activities reported?
Revenues
deferred income or outflow
Which of the following is not a characteristic of a fund?
Separate legal entity
What are the 3 sections of the CAFR reports?
introduction
financial
statistical
What are the 3 sections of the CAFR reports?
introduction
financial
statistical
What is the minimal reporting requirement for a government wide FS?
MDA
basic FS
RSI
What is the minimal reporting requirement for a government wide FS?
MDA
basic FS
RSI
The government wide FS include which groups of funds?
The CAFR include which groups of funds?
Governmental
Proprietary
All Funds
Governmental
Proprietary
Fiduciary
What type of accountability do the following have:
government-wide FS
fund FS
Operational accountability
Fiscal accountability
How does a government report non-major funds within its fund types FS?`
May disclose in supplementary information but not required
Readers of the Comprehensive Annual Financial Report (CAFR) would expect to find Management’s Discussion Analysis in the CAFR section titled:
Basic FS and Required Supplementary Information (RSI)
