F-8 2013 Flashcards
Name the primary authoritative body for GAAP for governmental entities.
Governmental Accounting Standards Board (GASB)
What are the thre accounting themes addressed by governmental accounting?
Fund structure; Fund accounting; External reporting.
Identify the major categories of funds used by state and local governmental units.
Governmental; Proprietary; Fiduciary.
What terms define the manner and timing of transaction recognition in governmental fund accounting?
Fund accounting principles are defined by: Measuresment Focus (how transactions are recognized); Basis of Accounting (when transactions are recognized).
What are the objectives of external reporting?
Operational accountability; Fiscal accountability.
What types of external reports meet the accountability objectives of government?
Operational accountability: Government-wide financial satements. Fiscal accountability: Fund financial statements.
Name each governmental fund type. (GRSPP)
G = General Fund; R = Special Revenue Funds; S = Debt Service Funds; P = Capital Projects Funds; P = Permanent Funds.
What are the fund accounting principles applicable to governmental funds?
Measurement Focus: Current financail resources. Basis of Accounting: Modified accrual.
What specialized accounting practices are followed by the governmental funds? (BAE)
Budgetary Accounting; Activity (Actual) Accounting; Encumbrance Accounting.
Name and define the five classifications of fund balances used by governmental fund types.
Non-spendable: Resources that are not available to be spend (e.g., inventories). Restricted: Resources that are constitutionally, legislatively, or otherwise externally limited as to use. Committed: Resources that are internally limited as to use by the governments highest level of decision-making authority. Assigned: Resources intended to be used by the government for specific purposes whose constraints do not rise to the level of restricted or committed. Unassigned: Residual classification of equity that represents resources that are the least limited as to use.
Name each proprietary fund type. (SE)
S = Internal Service Funds; E = Enterprise Funds.
What are the fund accounting principles applicable to proprietary funds?
Measurement Focus: Economic resources; Basis of Accounting: Full accrual.
Name each fiduciary fund type. (PAPI)
Pension (and other employee benefit) Trust Funds; Agency Funds; Private-Purpose Trust Funds; Investment Trust Funds.
What are the fund accounting principles applicable to fiduciary funds?
Measurement Focus: Economic resources; Basis of Accounting: Full accrual.
Distinguish between alternative measurement focuses.
Current Financial Resources (GRSPP): No fixed assets are recorded; capital outlays displayed as expenditures. No depreciation. No noncurrent liabilities are recorded; debt proceeds displayed as resource inflows. Principal payments displayed as an expenditure. Premiums and discounts on debt are not amortized; they are included as an increase or decrease of debt proceeds. Economic Resources (SE PAPI): Fixed assets are recorded. Noncurrent liabilities are recorded.
Define modified accrual and list the funds that use it as a basis of accounting.
Modified accrual: Revenues should be recognized when measurable and available; expenditures are generally (with the exception of interest expenditures) recognized when fund liability is incurred. Funds using modified accrual basis: G = General Fund; R = Special Revenue Funds; S = Debt Service Funds; P = Capital Project Funds; P = Permanent Funds.
What do the terms “measurable” and “available” mean in the context of the modified accrual basis of revenue accounting?
Measurable means reasonably estimable or of a known determined amount. Available means collectible within (generally) 60 days of year-end.
When are revenues recorded in governmental funds?
Governmental funds record revenues when measurable and available. This concept applies to accrual of different types of revenues depending on their character. Accrue when: Billed/Recorded (Imposed non-exchange transactions) - Real estate taxes (due); Received (Derived non-exchange transactions) - Income taxes and Sales taxes; Earned (Government mandated and voluntary non-exchange transactions) - Real estate taxes paid in advance and Restricted grants.
Define the different classifications of expenditures.
Expenditure classifications include: Function (e.g., public safety); Organizational unit (e.g., police department, fire department, etc.); Activity (e.g., drug enforcement, highway safety patrol); Chracter (e.g., current, capital outlay, debt servcie, intergovernmental); Object (e.g., personal services, building occupancy, insurance).
What is the journal entry to record the annual budget?
DR Estimated revenues; CR Appropriations; CR Budgetary control. Actual expenditures have a nautural debit balance. Appropriations to which those expenditures are compared have a natural credit balance. Computation of unexpended appropriations is a pure arithmetic sum of these two accounts.
Define encumbrance and give the journal entry to recognize a purchase order on supplies.
Encumbrance: A commitment related to an unperformed contract for goods or services (generally an open purchase order). DR Encumbrance, CR Budgetary control. Encumbrances have a natural debit balance. Appropriations, to which those encumbrances are compared, have a natural credit balance. Computation of unencumbered appropriations is a pure arithmetic sum of these two accounts. Computation of unexpended and unencumbered appropriations is the sum of the three accounts: Appropriations (credit), Expenditures (debit), and Excumbrances (debit).
What journal entries are made to record the liabilities incurred associated with previously encumbered funds?
Expenditure of previously encumbered fundsresults in the following entries: DR Expenditure, CR Accounts Payable, DR Budgetary control, CR Encumbrance. The entries serve to reverse the full effect of the encumbrance entry and record the full amount of the expenditure (BAE - BAE).
