Deck 7 Flashcards
The purpose for a government to present separate fund financial statements for its governmental and proprietary funds is to:
Report additional and detailed information about the primary government.
This characteristic of service efforts and accomplishments is the most difficult to report for a governmental entity:
Relevance. Relevance means the information must bear logical relationship with the needs for it purpose.
Fund accounting is used by governmental units with the resources that must be:
Segregated for the purpose of carrying out specific activities (e.g water and sewer operations) or attaining certain objectives (e.g providing drinking water and wastewater management services to customers).
Compensated absence liability should be calculated based upon the pay or salary rate in effect:
At the balance sheet date. The valuation of the noncurrent liability on the government-wide statement of net position will be equal to the number of hours employees are entitled to receive upon termination times the rate of pay earned at the balance sheet date.
Unassigned fund balance is a:
Residual classification for the general fund.
The only fund that should have a positive unassigned balance is:
The general fund. Over-expenditures of resources in the other GRaSPP funds would result in a negative unassigned balance.
Resources allocated with inventory would be classified within the fund balance as:
Non-spendable. Inventory is considered non-spendable.
Fund balances that are constrained by the government’s intent to be used for a specific purpose but are not committed or restricted are:
Assigned funds.
Negative fund balances should not be displayed for:
restricted, committed, or assigned classifications. Only unassigned classification would be negative.
GRaSPP SE PAPI:
G = General Fund, R = Special Revenue, and S = Debt Service, P = Capital Projects, P = Private Purpose
S = Internal Service, E = Enterprise
P = Pension, A = Agency, P = Permanent, I = Investment Trust
Permanent funds are used to report resources that are :
Restricted to the extent that income (not principal) will be used for the purposes of supporting the reporting government’s programs for the benefit of the public.
This objective of financial reporting by state and local governments is paramount:
Accountability. Reliability is secondary to accountability.
Derived (non-exchange) tax revenues represent taxes imposed on or derived from:
Non-exchange transactions such as commercial sales (sales taxes), e.g a 2% imposed tax on hotel charges.
Imposed non-exchange revenues represent taxes imposed on:
Non-exchange transactions such as fines or wealth (e.g property taxes).
A balanced budget demonstrates:
interperiod equity.
Budget comparisons must be presented in the:
Same basis of accounting as the adopted budget.
Wages and Salary is an example of:
An object classification. Expenditures of governmental resources should be classified by object classes, according to the type of items purchased service obtained.
Expenditures extending over more than one period may be:
Allocated between or among accounting periods. Non-spendable inventory or prepaid may be recorded using either the consumption or the purchase method.
To record appropriations:
Credit Appropriations Control.
Receiving state appropriations represents:
A non-exchange transaction and will be treated as nonoperating revenue. Operating grants and subsidies represent non-exchange transactions that are not derived from operations. They are treated as nonoperating revenues.
The entry to initially recording the budget is:
Dr: Estimated Revenue
Cr. Appropriations Control
Cr. Budgetary Control
The debt service fund (GRaSPP) accounts for:
The accumulation of resources for, and the payment of, general long term debt principal and interest.
The special revenue fund (GRaSPP) accounts for:
The proceeds of a specific revenue source that are legally restricted to expenditure for specific purposes.
When special assessment debt is to be repaid from general resources of the government:
The debt should be recorded as a general long term liability in the government activities column of the government wide statement of net position as is any debt that is to be repaid from general resources.
Permanent funds are used to account for:
Principal that is restricted and may not be expended. Earning may be used for purposes that benefits the public/supports the government.
