EXAM 1 Flashcards
(85 cards)
Environment of Governmental Entities
1) La__ of a p__it m___e: A major source of revenues is t___s. No di___t r___ip
exists between ta___ p__ and se___s re___ed to individual taxpayers.
2) Businesses attempting to make a p___t will s___d m__ to m___e m___.
3) Governments are just the
op___e - they o___n money in order to sp___ it to provide se__s to the p__c.
1) Lack of a profit motive: A major source of revenues is taxes. No direct relationship
exists between taxes paid and services rendered to individual taxpayers.
2) Businesses attempting to make a profit will spend money to make money.
3) Governments are just the
opposite - they obtain money in order to spend it to provide services to the public.
Environment of Governmental Entities
Define Fund accounting
-is used to fa___e c__l over sp___g
1) Each fund is a s__e
acc___g entity, recording the i___s and o___s of financial resources designated
for various governmental functions.
-is used to facilitate control over spending
1) Each fund is a separate
accounting entity, recording the inflows and outflows of financial resources designated for various governmental functions.
Environment of Governmental Entities
Spending plans are approved by 1) le___e a__n.
The budget communicates amounts that have been appropriated for 2) ex___re and is le___y bi__ng.
Budgetary accounts are 3) inc___ed into the ac___ng system
1) legislative action
2) expenditure and is legally binding
3) incorporated into the accounting system
Environment of Governmental Entities
In the absence of a profit motive, two important objectives of governmental entities are 1) ef___cy and ef___ss.
1) efficiency and effectiveness
Environment of Governmental Entities
Two important responsibilities of governmental entities are
- Ac___y - (i.e., budget
the use of re___es for appropriate p___es and comply with the l__ly established b___et) - In__d eq__y - (i.e., have a b___d b___t; don’t require fu___e generations to pay for cu___t services)
- Accountability - (i.e., budget
the use of resources for appropriate purposes and comply with the legally established budget) - Interperiod equity - (i.e., have a balanced budget; don’t require future generations to pay for current services)
What is the balance sheet called for Government Wide Financial Statements:
Statement of N__ P___
Statement of Net Position
What is the operating statement called for Government Wide Financial Statements:
Statement of A___
Statement of Activities
b. Fund Financial Statements: Three categories of funds and required financial
statements for each category are as follows:
(1) Governmental Funds
-B___e S__t
-Statement of Re___es, Ex___es, and Changes in F__ B___e
(2) Proprietary Funds
-Statement of N__ P__n (i.e., balance sheet)
-Statement of Re___s, Ex___s, and Changes in F___ N__ Po__n
-Statement of C__ Fl___ (direct method required for operating section)
(3) Fiduciary Funds
-Statement of Fi___y N__t P__n
-Statement of Changes in Fi___ N__t P__
(1) Governmental Funds
-Balance Sheet
-Statement of Revenues, Expenditures, and Changes in Fund Balance
(2) Proprietary Funds
-Statement of Net Position (i.e., balance sheet)
-Statement of Revenues, Expenses, and Changes in Fund Net Position
-Statement of Cash Flows (direct method required for operating
section)
(3) Fiduciary Funds
-Statement of Fiduciary Net Position
-Statement of Changes in Fiduciary Net Position
Fund Accounting
A governmental entity (e.g., a city) is a 1) si__e re___g entity having its o__ s__ of financial statements. These statements are based on 2) ac__s which are classified into 3) f__s.
Define a Fund
-4) is a se___e fiscal and accounting en__y having its own se___e accounting equation
The accounting equation for each fund is determined by the accounting basis used
1) single reporting entity having its own set
2) activities
3) funds
4) is a separate fiscal and accounting entity having its own separate accounting equation
Fund Financial Statements: Three categories of funds and required financial statements for each category are as follows:
(1) Governmental Funds
a) B_____e S___t
b) Statement of R__es, E___res, and C__s in Fund Balance
(2) Proprietary Funds
a) Statement of N__ P___n (i.e., balance sheet)
b) Statement of Re___s, Ex___s, and Changes in Fund N__ P___n
c) Statement of C__ F___s (direct method required for operating
section)
(3) Fiduciary Funds
a) Statement of Fiduciary N__ P___n
b) Statement of Changes in Fi__y N__ P___n
(1) Governmental Funds
a) Balance Sheet
b) Statement of Revenues, Expenditures, and Changes in Fund Balance
(2) Proprietary Funds
a) Statement of Net Position (i.e., balance sheet)
b) Statement of Revenues, Expenses, and Changes in Fund Net Position
c) Statement of Cash Flows (direct method required for operating
section)
(3) Fiduciary Funds
a) Statement of Fiduciary Net Position
b) Statement of Changes in Fiduciary Net Position
What’s the equation for the Accrual Basis?
C___t A__s + N___nt Assets = Cu__t Li__es + No___nt Li___s + Net P___n
Current Assets + Noncurrent Assets = Current Liabilities + Noncurrent Liabilities + Net Position
What basis do for-profit businesses use?
this is the basis most familiar to accounting students since it’s used for-profit business
accural basis
Accural Basis focus on the determination of income and measuring e___ic re____s
economic resources
What’s the equation for the Modified Accrual Basis?
CA= (CL) + (FB)
Current Assets (CA) = Current Liabilities (CL) + Fund Balance (FB)
What basis do governmental type funds use?
modified accural basis
Modified Accrual Basis
the focus of the funds using the modified accrual basis is the 1) f__ of cu___t fi__l re___s
1) flow of current financial resources
Modified Accural Basis
Expenditures are 1) d___d even for 2) as__ p___es and d___ re___t, since these transactions represent an 3) o___w of financial resources.
1) debited
2) asset purchases and debt retirement
3) outflow
What are the 5 types of fund for governmental fund category (for modified accrual basis)
- G___l F___ (GF)
- S___l R___e F__s (SRF)
- C___l P___t F__s (CPF)
- D__t S__e F__s (DSF)
- P__t F___s (PF)
- General Fund (GF)
- Special Revenue Funds (SRF)
- Capital Project Funds (CPF)
- Debt Service Funds (DSF)
- Permanent Funds (PF)
Name 2 types of funds that use accrual basis ?
En____e F___s (EF)
In__l S___e F___s (ISF)
Enterprise Funds (EF)
Internal Service Funds (ISF)
Define General Fund
is required to account for 1) g___al act____s of the go___nt.
Other funds will be used to account for other significant activities, if needed.
This fund records the 2) collection of re___s (e.g., tax r___s) and ex___res made for go___al functions that are n___t accounted for in other funds
1) general activities of the government
2) collection of resources (e.g., tax revenues) and expenditures made for governmental functions that are not accounted for in other funds
When the budget is adopted, the following entry is made
dr-E____d R____s
cr-A____ns (for bu___d ex___s)
dr-B___y F___d B___ce
or cr-Bu___y F___d B___e (to balance)
At the end of the year, the above entry is 1) re___d; therefore, the entry to record the budget has 2) n__ i___ct on final balances
dr-Estimated Revenues
cr-Appropriations (for budgeted expenditures)
dr-Budgetary Fund Balance
or cr-Budgetary Fund Balance (to balance)
1) reversed
2) no impact
Under the modified accrual basis, revenues are recognized when m___e and av___le.
measurable and
available.
Revenue
Available is defined as collectible within about 1) __ days after the fiscal year-end.
Amounts that will not be available until past the 60-day limit are credited to 2) De___d Re__e.
Revenues are only recorded for amounts that are deemed collectible
1) 60 days
2) Deferred Revenue.
When cash is received before requirements are met:
1) dr-____
cr-____ ____
When requirements are met:
2) dr-____ ___
cr-____
1) dr-Cash
cr-Deferred Revenue
2) dr-Deferred Revenue
cr-Revenue