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FAR > Concepts CH 18 > Flashcards

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
Q

Property taxes are recognized in

A

The period in which they are levied, the extension of time is not normally beyond 60 days after the end of the year

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26
Q

Resources received or reported as received before property taxes are levied

A

reported as deferred inflows of resources

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27
Q

Imposed nonexhcange revenues (other than property tax) should be recognized in the accounting period

A

Their use is first allowed if time requirements have been established.

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28
Q

Governmental Funds (5)

A 
General Fund
Special Revenue Fund
Capital Projects Fund
Debt Service Fund
Permanent Fund
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29
Q

Proprietary Funds (2)

A

Enterprise Funds

Internal Service Funds

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30
Q

Fiduciary Funds (4)

A

Pension Trust Funds
Investment Trust Funds
Private Purpose Trust Fund
Agency Funds

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31
Q

MD&A is presented as

A

A description of currently known, facts, conditions, decisions expected to have significant effects on financial activities

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32
Q

A fund must be reported as major if

A

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

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33
Q

Estimated revenues

A

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

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34
Q

Discrete or blended

A

Some components are in substance the primary government and should be reported using the blended method.

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35
Q

A permanent fund

A

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.

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36
Q

RSI other than MD&A is presented in a separate section of the CAFR. It includes

A

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.

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37
Q

Combining statements are required to be included in the financial section of the CAFR when the primary government has more than one

A

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
Q

A special-purpose governments is

A

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
Q

The diversity of governmental activities and the need for legal compliance preclude the use of a single accounting entity. Thus,

A

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
Q

Disclosure of significant accounting policies is required when

A

(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
Q

Fiscal Accountability

A

Responsibility of government to justify its action comply with public decisions about financial resources expended in short term

42
Q

Operational Accountability

A

Responsibility to report to the extent which objectives have been met effectively and efficiently

43
Q

Intraperiod equity

A

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
Q

In government funds revenues are increases in fund financial resources not from

A

1) Interfund transfers (1 way no repayment)
2) Debt issuance porceeds
3) Redemption of demand bonds

45
Q

Revenue - increases in fund financial resources is recognized when susceptible to accrual

A

Measurable and available

46
Q

Expenditures - decreases in fund financial resources

A

Recognized when good and services acquired when related liability incurred - Recognized when acquired

47
Q

Accrual Basis of acct used in

A

1) Govt wide f/s
2) Proprietary
3) Fiduciary Fund

48
Q

A fund is

A

an independent distinct fiscal and accounting entity with self-balancing set of accounts

49
Q

A fund records

A

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
Q

General Fund

A

accounts for all financial resources except for those required to accounted for in another fund

51
Q

Special Revenue fund

A

account for restricted or committed inflows from specific revenue sources. Expenditure must be for specified purpose

52
Q

Capital Projects

A

account for financial resources restricted committed, or assigned to be expended for capital purposes

53
Q

Special Revenue funds - additional infor

A

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
Q

Capital project - additional info

A

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
Q

Debt service funds

A

account for resources restricted, committed, or assigned to paying principal and interest. But these funds do not account for the debt itself.

56
Q

Debt service funds - Additional Info

A

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
Q

revenue recognition on the modified accrual basis requires that

A

(a) the criteria for nonexchange transactions be met and (b) the resources be available.

58
Q

Derived tax revenues - Assets are recognized at the earlier of

A

(1) when the underlying exchange transaction occurs or (2) receipt of resources.
Any resources received before the underlying exchange are reported as liabilities.

59
Q

Derived tax revenues - Revenues (net of estimated refunds and uncollectibles)

A

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
Q

Imposed nonexchange revenues

A

result from assessments imposed on nongovernmental entities (such as property taxes, fines, and forfeitures).

61
Q

Imposed nonexchange revenues - Assets

A

are recognized at the earlier of when (1) a legal claim to the resources exists or (2) resources are received.

62
Q

Imposed nonexchange revenues - Non prop tax revenues

A

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
Q

Imposed nonexchange revenues - Property Tax

A

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
Q

Voluntary nonexchange transactions

A

result from agreements entered into willingly by the parties. One party may be a nongovernmental entity.

65
Q

Government-mandated nonexchange transactions

A

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
Q

Government-mandated nonexchange transactions - Eligibility

A

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
Q

Government-mandated nonexchange transactions - If all eligibility requirement met including time

A

Providers recognize expenses and liabilities (or decreases in assets) and
Recipients recognize revenues (net of uncollectible amounts) and receivables (or decreases in liabilities).

68
Q

Government-mandated nonexchange transactions - Resources transmitted before requirements met except time

A

Providers continue to report assets and

Recipients report liabilities.

69
Q

Government-mandated nonexchange transactions - Resources received before time requirements met but all other met

A

Providers report deferred outflows of resources and

Recipients report deferred inflows of resources.

70
Q

Nonrevenue Sources of Funding

A

1) Bonds
2) Anticipation notes
3) Special Assessments
4) interfund activity

71
Q

Nonrevenue Sources of Funding - Bonds

A

The proceeds of long-term debt are a major nonrevenue source of funding.

72
Q

Basic financial statements

A

Government-wide financial statements
Fund financial statements
Notes to the financial statements

73
Q

Fund financial statements

A

Governmental funds financial statements
Proprietary funds financial statements
Fiduciary funds financial statements

74
Q

Governmental funds financial statements

A 
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
Q

Proprietary funds financial statements

A

Statement of net position
Statement of revenues, expenses, and changes in fund net position
Statement of cash flows

76
Q

Fiduciary funds financial statements (and fiduciary component units)

A

Statement of fiduciary net position

Statement of changes in fiduciary net position

77
Q

Fund balance is reported only for a

A

governmental fund

78
Q

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:

A 
Nonspendable
Restricted
Committed
Assigned
Unassigned
79
Q

Imposed non-exchange transactions

A

Property taxes
Speeding fines
Parking Fines

80
Q

Derived Revenue

A

Income Taxes

State Sales tax

81
Q

Funds that emphasize major fund reporting

A

Enterprise and governmental funds

82
Q

MD and A basis of analysis

A

Currently known facts

83
Q

Part of reporting entity MD and A focuses

A

Primary Government

84
Q

Financial statements discussed

A

Basic Financial statements

85
Q

When a governmental fund records and asset, but the revenue is not available

A

a deferred inflow resources is reported

86
Q

Expenditures do not result from

A

1) Interfund transfer

2) expiration of a demand bond

87
Q

Governmental funds emphasize

A

fiscal accountability. the account for the non-business activities of a government and it current expendable resources (most often taxes)

88
Q

To qualify for revenue recognition in governmental funds the resources must also be

A

available

89
Q

3 Sections of CAFR

A

Intro Section
Financial Section
Statistical Section

90
Q

CAFR - Intro Section

A

Letter of Transmittal
Organizational Chart
Names of Principal Members

91
Q

CAFR - Financial Section

A 
MD&A
Government wide F/S
Fund F/S
Notes
Budgetary Schedules
Other Statements and Schedules
92
Q

CAFR - Statistical Section

A 
Financial Trends
Revenue Capacity
Debt Capacity
Demographics
Operating Info

FAR (22 decks)

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