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Concepts CH 18 Flashcards

1
Q

Budgetary Comparison Must Be

A

Reported in General Fund

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2
Q

GASB recommends governmental fund budgets be prepared on

A

Modified Accrual Basis

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3
Q

When a purchase order is released, this commitment should be recorded in general fund as

A

Encumbrance

used as budgetary control to record commitments to purchase goods and service

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4
Q

Budgetary Comparison Schedule Include

A

Original Budgets, First complete appropriated budget
Final appropriated budget
Actual Inflows, Outflows and balances stated on budgetary basis of accounting
A separate column for variances is encouraged but not required

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5
Q

Appropriation

A

Is the total authorized to be expended for the period

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6
Q

An expenditure is recognized in the general fund when

A

the liability has been incurred

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7
Q

Comparison of appropriation, encumbrances, and expenditures determines

A

the unencumbered amounts of appropriation that may still be expended

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8
Q

When expenditure is recorded

A

the encumbrance entry is reveresed

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9
Q

At year end, any remaining encumbrances may be eliminated if

A

The legal authority of appropriations expires. If 1) encumbrances will be honored by entity, 2) encumbered amounts have not been restricted, committed or assigned, they are reclassified from unassigned fund balance to restricted or committed fund balance. Encumbrances are not reported in F/S

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10
Q

Budgets - Estimated Revenues are

A

An anticipatory asset and is debited for the amount expected to be collected from governmental’s body main source

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11
Q

Reciprocal Interfund Activities

A

comparable to exchange and non-exchange transactions. They include interfund loans and interfund services

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12
Q

CAFR Should include

A 
1An intro section
2MD&A
3Basic Financial Statements
4RSI (in addition to MD&A)
5Combining and individual fund statements
6Schedules
7Narrative Explanations
8Statistical Section
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13
Q

Basic Financial Statements

A

1 Government-wide F/S
2 Fund Financial Statements
3 Notes to Financial statements

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14
Q

Basic criterion used to determine reporting entity of governmental unit

A

Financial Accountability

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15
Q

Financial Reporting Entity is

A

Primary government
Organization in which primary government is financially accountable
Other Organization which exclusion would be misleading

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16
Q

Separate Entity must be included if

A

Fiscally dependent on primary government

Two entities have a financial benefit burden relationship

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17
Q

Statement of Revenues, Expenditures and changes in fund balances is required for governmental funds it reports

A

Inflows, outflows, and balances of current fin resources for each major, non major in aggregate, and total column.
Other financing sources and uses appear after excess (deficiency) of revenues and expenditures

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18
Q

Other financing uses and sources include

A

face amount of LT Debt
Issuance of premium/discount
Transfers
Sales of Capital Assets

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19
Q

Restricted Fund Balance includes amounts that may be spent for only specific purposes established by

A

Constitutional mandate
Enabling Legislation
External Provider

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20
Q

Governmental Fund F/S - PP Insurance may be reported either

A

1) Consumption Method - Expediture reported when asset consumed
2) Purchase method when policy purchased

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21
Q

Non-spendable fund balance includes

A

1) are in form that are not spendable (inventory pp ins)

2) must be kept intact

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22
Q

Measurement focus of Governmental Funds

A

Changes in Fin Position
Financial Position
Measure financial flow data

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23
Q

In governmental funds revenue is recognized under mod accrual when

A

Susceptible to accrual, it measurable and available

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24
Q

Available means

A

collectible within current period or soon there after to be used to pay current liabilities

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25
Property taxes are recognized in
The period in which they are levied, the extension of time is not normally beyond 60 days after the end of the year
26
Resources received or reported as received before property taxes are levied
reported as deferred inflows of resources
27
Imposed nonexhcange revenues (other than property tax) should be recognized in the accounting period
Their use is first allowed if time requirements have been established.
28
Governmental Funds (5)
``` General Fund Special Revenue Fund Capital Projects Fund Debt Service Fund Permanent Fund ```
29
Proprietary Funds (2)
Enterprise Funds | Internal Service Funds
30
Fiduciary Funds (4)
Pension Trust Funds Investment Trust Funds Private Purpose Trust Fund Agency Funds
31
MD&A is presented as
A description of currently known, facts, conditions, decisions expected to have significant effects on financial activities
32
A fund must be reported as major if
total revenues, expenditures or expenses, assets, liabilities (excluding ordinary items) are at least 1) 10% of corresponding element total 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 corresponding element for all governmental and enterprise funds in aggregate
33
Estimated revenues
is an anticipatory asset that is debited n the budgetary entry. It records an amount that is expected to be collected from governments main sources of revenues taxes, fines, fees
34
Discrete or blended
Some components are in substance the primary government and should be reported using the blended method.
35
A permanent fund
is a governmental fund that accounts for resources that are restricted to the use of earnings for the benefit of the government and its citizens.
36
RSI other than MD&A is presented in a separate section of the CAFR. It includes
1) schedules, (2) statistical data, (3) budgetary comparison schedules, and (4) other information that is an essential part of financial reporting. It should be presented with, but not as a part of, the basic financial statements of a governmental entity. Budgetary comparison schedules should include the original appropriated budget; final appropriated budget; and actual inflows, outflows, and balances.
37
Combining statements are required to be included in the financial section of the CAFR when the primary government has more than one
1) nonmajor governmental or enterprise fund or (2) internal service or fiduciary fund. Combining statements also are included when the reporting entity has more than one nonmajor discretely presented component unit
38
A special-purpose governments is
legally separate entity that is a component unit or other stand-alone government. If it has governmental and business-type activities or engages in two or more governmental programs, it should be reported as a general-purpose government.
39
The diversity of governmental activities and the need for legal compliance preclude the use of a single accounting entity. Thus,
Thus, independent, distinct fiscal and accounting entities called funds are established to provide not only financial control but also to ensure compliance with finance-related legal provisions.
40
Disclosure of significant accounting policies is required when
(1) a policy is unique to the industry in which the government operates, even if the policy is predominantly followed in that industry; (2) a selection has been made from existing acceptable alternatives; and (3) GAAP have been applied in an unusual or innovative way.
41
Fiscal Accountability
Responsibility of government to justify its action comply with public decisions about financial resources expended in short term
42
Operational Accountability
Responsibility to report to the extent which objectives have been met effectively and efficiently
43
Intraperiod equity
Financial resources received during period should suffice to pay for services provided during that period. Moreover, debt should be repaid during period of usefulness
44
In government funds revenues are increases in fund financial resources not from
1) Interfund transfers (1 way no repayment) 2) Debt issuance porceeds 3) Redemption of demand bonds
45
Revenue - increases in fund financial resources is recognized when susceptible to accrual
Measurable and available
46
Expenditures - decreases in fund financial resources
Recognized when good and services acquired when related liability incurred - Recognized when acquired
47
Accrual Basis of acct used in
1) Govt wide f/s 2) Proprietary 3) Fiduciary Fund
48
A fund is
an independent distinct fiscal and accounting entity with self-balancing set of accounts
49
A fund records
1) Financial resources (including cash) 2) Deferred outflows of resources 3) Liabilities 4) Deferred inflow resources 5) Residual equities or balances 6) Changes in them
50
General Fund
accounts for all financial resources except for those required to accounted for in another fund
51
Special Revenue fund
account for restricted or committed inflows from specific revenue sources. Expenditure must be for specified purpose
52
Capital Projects
account for financial resources restricted committed, or assigned to be expended for capital purposes
53
Special Revenue funds - additional infor
i) a govt may have a special revenue fund for 1) road maintenance or 2) operation of municipal auditorium ii) Donations for programs to be administered by govt are also special rev iii) Not used for resources of a trust benefiting specific individuals, orgs, or govt
54
Capital project - additional info
i) these resources include general obligation bond proceeds to be used for construction of major capital facilities ii) The capital assets themselves are not accounted for in these funds iii) Other capital facilities may be financed thru other prop funds or trust funds
55
Debt service funds
account for resources restricted, committed, or assigned to paying principal and interest. But these funds do not account for the debt itself.
56
Debt service funds - Additional Info
i) They also account for resources being accumulated for future principal and interest payments. ii) A debt service fund is used if it is required by law.
57
revenue recognition on the modified accrual basis requires that
(a) the criteria for nonexchange transactions be met and (b) the resources be available.
58
Derived tax revenues - Assets are recognized at the earlier of
(1) when the underlying exchange transaction occurs or (2) receipt of resources. Any resources received before the underlying exchange are reported as liabilities.
59
Derived tax revenues - Revenues (net of estimated refunds and uncollectibles)
are recognized at the same time as the assets if the underlying exchange has occurred. In the governmental funds, resources also must be available to qualify for revenue recognition.
60
Imposed nonexchange revenues
result from assessments imposed on nongovernmental entities (such as property taxes, fines, and forfeitures).
61
Imposed nonexchange revenues - Assets
are recognized at the earlier of when (1) a legal claim to the resources exists or (2) resources are received.
62
Imposed nonexchange revenues - Non prop tax revenues
are recognized when the assets are recognized unless time requirements apply. i) Given time requirements, revenues are recognized when (a) the resources are required to be used or (b) their use is first allowed. ii) Resources received or reported as received before the time requirements are met are deferred inflows of resources.
63
Imposed nonexchange revenues - Property Tax
are recognized in the period for which they were levied. Availability means collectible within the current period or soon enough thereafter to be used to pay current liabilities. The extension of time ordinarily is not more than 60 days after the end of the year. Resources received or reported as received before the period for which property taxes were levied are reported as deferred inflows of resources.
64
Voluntary nonexchange transactions
result from agreements entered into willingly by the parties. One party may be a nongovernmental entity.
65
Government-mandated nonexchange transactions
occur when one government provides resources to a government at another level and requires that they be used for a specific purpose (such as federal grant money that state governments are required to spend on primary education).
66
Government-mandated nonexchange transactions - Eligibility
Eligibility requirements must be met before these transactions (other than advance payments) can occur and be accounted for. They are conditions set by the provider or by law and include the following: i) Time requirements ii) Incurrence of costs if resources are offered as reimbursements iii) Nature of recipient (e.g., a county or a school district) iiii) Fulfillment of a contingency (e.g., raising a certain amount of other resources)
67
Government-mandated nonexchange transactions - If all eligibility requirement met including time
Providers recognize expenses and liabilities (or decreases in assets) and Recipients recognize revenues (net of uncollectible amounts) and receivables (or decreases in liabilities).
68
Government-mandated nonexchange transactions - Resources transmitted before requirements met except time
Providers continue to report assets and | Recipients report liabilities.
69
Government-mandated nonexchange transactions - Resources received before time requirements met but all other met
Providers report deferred outflows of resources and | Recipients report deferred inflows of resources.
70
Nonrevenue Sources of Funding
1) Bonds 2) Anticipation notes 3) Special Assessments 4) interfund activity
71
Nonrevenue Sources of Funding - Bonds
The proceeds of long-term debt are a major nonrevenue source of funding.
72
Basic financial statements
Government-wide financial statements Fund financial statements Notes to the financial statements
73
Fund financial statements
Governmental funds financial statements Proprietary funds financial statements Fiduciary funds financial statements
74
Governmental funds financial statements
``` Balance sheet (with reconciliation to government-wide statement of net position) Statement of revenues, expenditures, and changes in fund balances (with reconciliation to government-wide statement of activities) ```
75
Proprietary funds financial statements
Statement of net position Statement of revenues, expenses, and changes in fund net position Statement of cash flows
76
Fiduciary funds financial statements (and fiduciary component units)
Statement of fiduciary net position | Statement of changes in fiduciary net position
77
Fund balance is reported only for a
governmental fund
78
governmental fund. It is classified according to the limits on the specific purposes for which resources may be spent. The following is the hierarchy of classifications:
``` Nonspendable Restricted Committed Assigned Unassigned ```
79
Imposed non-exchange transactions
Property taxes Speeding fines Parking Fines
80
Derived Revenue
Income Taxes | State Sales tax
81
Funds that emphasize major fund reporting
Enterprise and governmental funds
82
MD and A basis of analysis
Currently known facts
83
Part of reporting entity MD and A focuses
Primary Government
84
Financial statements discussed
Basic Financial statements
85
When a governmental fund records and asset, but the revenue is not available
a deferred inflow resources is reported
86
Expenditures do not result from
1) Interfund transfer | 2) expiration of a demand bond
87
Governmental funds emphasize
fiscal accountability. the account for the non-business activities of a government and it current expendable resources (most often taxes)
88
To qualify for revenue recognition in governmental funds the resources must also be
available
89
3 Sections of CAFR
Intro Section Financial Section Statistical Section
90
CAFR - Intro Section
Letter of Transmittal Organizational Chart Names of Principal Members
91
CAFR - Financial Section
``` MD&A Government wide F/S Fund F/S Notes Budgetary Schedules Other Statements and Schedules ```
92
CAFR - Statistical Section
``` Financial Trends Revenue Capacity Debt Capacity Demographics Operating Info ```

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