Chapter 8: Governmental Accounting Flashcards by Robert Hines

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

Operation and fiscal

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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

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What is GASB and what do they do?

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

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Who establishes accounting principles and standards for NFP?

FASB

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What are the generic fund structure categories?

Governmental funds
Proprietary funds
Fiduciary funds

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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)

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What are the proprietary funds?

What is their basis of accounting & measurement focus?

“SE”
Internal Service
Enterprise

Full accrual & economic resources

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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

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When is revenue recognized under the modified accrual method?

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

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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

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

General Fund

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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

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What is GASB and what do they do?

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

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

Income determination

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

Source, use, and balance of current financial resources

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

Accountability

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How many funds should the accountant establish for a city?

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

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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)