F6-Governmental Accounting , Fund Structure & Fund Accounting Flashcards
Governmental Accounting
Governments use fund accounting and it enables…
service and mission-driven organizations to:
* easily monitor compliance with spending purpose (legal restrictions)
* spending limits (budget and financial control)
* other fiscal accountability objectives
List primary users of external financial reports
External financial reports are used by three primary user groups including:
* citizens,
* legislative/oversight groups, and * investors/creditors.
Note: Advocate groups within the state are logically associated with citizens, citizen groups, etc.
Which of the following characteristics of service efforts and accomplishments is the most difficult to report for a governmental entity?
Relevance means the information must bear a logical relationship with the needs for its purpose. It must also be reliable. The achievement of this reporting objective is more difficult to establish.
How a government presents its fund financial statements for its governmental and proprietary funds?
Rule: Separate fund financial statements should be presented for governmental and proprietary funds to report additional and detailed information about the primary government.
What kind of measurement focus and basis accounting governmental funds use?
Governmental funds (general, permanent, and capital funds) use the current financial resources measurement focus and modified accrual basis of accounting in their fund financial statements.
What are the Governmental Funds?
● General Fund: General government operations like administration, public safety, street maintenance, and other general services funded primarily through taxes and general revenues.
● Special Revenue: Grant funds, special taxes, or other earmarked revenues designated for specific purposes like education, public health programs, or transportation projects.
● Debt Service: Property taxes or other
revenues earmarked for debt service, payments of interest and principal on bonds, and other long-term debts
● Capital Projects: Proceeds from capital grants, certain bond issuances, and expenditures related to the construction or acquisition of major capital assets like buildings, roads, or parks.
● Permanent
Under the “modified accrual basis” of accounting for a governmental unit, revenues should be recognized..
for the accounting period in which they “become available and measurable.
A state grant received and expended for road repairs in the current year would be recognized as revenues on both
the government-wide financial statements and the governmental fund financial statements.
Measurement Focus and Basis of Accounting for Government-Wide Reporting:
Full Accrual Basis of Accounting and Economic Resources Measurement Focus (both to provide a long-term perspective, reflecting the government’s overall financial health and sustainability).
What kind of measurement focus and basis accounting proprietary and fiduciary funds use?
Proprietary and fiduciary funds use the economic resources measurement focus and accrual basis of accounting.
What are the Proprietary Fund Types?
● Enterprise Funds: Operations of utilities (water, electric), public transportation systems, toll roads, airports, and other government services provided to the public on a fee-for-service basis
● Internal Service Funds: Centralized services like fleet management, information technology, insurance, and supply services where costs are recovered through charges to user departments.
What are the Fiduciary Funds Types?
● Pension (and Other Employee Benefit) Trust Funds: Contributions from employees and the government, investment earnings, and benefits
payments.
● Investment Trust Funds: Pooling of resources for investment purposes and the related earnings and distributions.
● Private-Purpose Trust Funds: Escheat property, private donations, and other trust arrangements where the government acts in a fiduciary capacity.
● Custodial Funds (formerly known as Agency Funds): Collection of taxes and assessments on behalf of other governmental units or entities, and disbursement of the collected funds to entitled parties.
