F8 Flashcards
Governmental Funds
- No Profit Motive
- Modified accrual accounting
- Current financial resources measurement focus. (Current only - No Fixed Assets or LTd)
Note:* The Balance sheet only carries Current Assets and Liabilities. NO, Fixed Assets, NO Long Term Liabilities.
General Fund Special Revenue Fund Debt Service Fund Capital Projects Fund Permanent Fund
Proprietary Funds
Treat like customer/ Not Citizen
- Full accrual accounting
- Economic resources measurement
Internal Service Fund
Enterprise Funds
Note: A Balance sheet “Statement of Net Position”, which is NOT the fund balance.
Carry everything (FA & LTD)
Fiduciary Trust Fund
Trust Accounts
- Full accrual accounting
- Economic resources measurement focus
Pension (And Other Employee Benefits) Trust Fund
Agency Trust Funds
Private Purpose Trust Funds
Investment Trust Funds
NOTE: ** Net Position, not fund balance, and carry everything
MAC-GRaSPP
Modified
Accrual Accounting
Current Financial Resources measurement focus
GRaSPP General Special Revenue Debt Service Capital Projects Permanent
General Fund
Governmental Fund
Set up to account for the ordinary operations of a governmental unit.
Note**: The only fund that can have a Positive Unassigned Balance
Special Revenue Fund
Governmental Fund
For revenues from specific taxes or other earmarked sources that (by law) are restricted or committed to finance particular activities.
Debt Service Fund
Governmental Fund
Accumulation of resources and the payment of interest on all “general obligation debt”
Capital Projects Fund
Governmental Fund
Resources restricted, committed or assigned for the acquisition or construction of major projects.
Permanent Fund
Governmental Fund
resources that are legally restricted to the extent income, and not principal.
Internal Service Fund
Proprietary Fund
Set up to account for goods and services provided by designated departments on a fee basis to other departments and agencies within a single governmental unit or to other governmental units.
Enterprise Fund
Proprietary Fund
Set up to account for the acquisition and operation of governmental facilities and services that are intended to be primarily self supported by user charges.
Pension (Other employee benefits) Trust Fund
Fiduciary (Trust) Fund
Pension trust funds account for resources of defined benefit plans, post-employment
Agency Trust Funds
Fiduciary (Trust) Fund
Account for resources in the temporary custody of a governmental unit (taxes collected)
Private Purpose Trust Fund
Fiduciary (Trust) Fund
Often the government will need to record escheat property (i.e. property that has been forfeited as a result of the passage of time or proccess of law) in a private purpose trust fund.
Investment Trust Fund
Fiduciary (Trust) Fund
External Investment Pools
Classification of Governmental Fund Balances (NU-CAR) for GRaSPP
Five categories of fund balances to fully report various levels of constraint. Hierarchy that shows up to five (5) degrees of constraint.
1) Non-Spendable Ex: pre-paid expenses, inventories
2) Restricted - Restricted by external parties (Legislation, grantors, creditors)
3) Committed Fund Balance - By a formal action (resolutions, encumbered, appropriations)
4) Assigned - government intends to obligate (Designations)
5) Unassigned - Only the General Fund should have a positive unassigned fund balance.
Derived Tax Revenues
Derived (non-exchange) from exchange transactions, such as commercial sales (Sales taxes), taxpayer income (Income Taxes).
Received (= Revenue)
Examples:
1) Income Taxes
2) Sales Tax
Imposed Non-exchange Revenue
Imposed (non-exchange), tax revenues represent taxes imposed on non-exchange transactions (fines) or wealth (Property Taxes)
Bill/ Recorded (=Revenue):
Examples:
1) Real Estate Taxes (Due)
2) Fines and Penalties
Government Mandated Non-Exchange Transaction
Higher level of government provides funds and mandates certain activities by another level of government (a country) such as environmental clean up.
Voluntary Non-Exchange
The government receives resources and does not provide equal value (Grant Agreements)
Earned (= Revenue)
Examples:
1) Revenue collected in advance, unearned when collected.
2) Real estate taxes paid in advance (unearned)
3) Restricted Grants (Earned when Spent)
4) Deferred inflows of resources are recognized in some instances where assets are recorded but related revenues are not eligible for recognition (not available).
JE Example: (To record accrual of real property taxes levied and provide for the estimated amount of uncollectible accounts)
DR: Real Property Taxes Receivable - Current $1.8M
CR: Revenues - Property Taxes $1.6M
CR: Allowance for uncollectible taxes receivable - current $200K
When a purchase order is released, a commitment is made by a governmental unit to buy a computer to be manufactured to specifications for use in property tax administration. This commitment should be recorded in the general fund as a (an)?
Encumbrance
Note: Under modified accrual accounting, the issuing of a purchase order (commitment to purchase) is recorded for internal bookkeeping as:
DR: Encumbrance $1000
CR: Budgetary Control $1000
Note: ***
- The issue of a purchase order will not impact appropriations. Appropriation accounts are adjusted upon the adoption or amendment of the budget and are closed at the end of the year.
Appropriations
Appropriations is a budgetary account. This account represents the governmental units approved spending.
Expenditures
Expenditures represent the total amount incurred, whether paid in cash or accrued as vouchers payable, and serve to reduce available appropriations
Encumbrances
Encumbrances are either commitments or assignments of the fund balance for purchase orders and represent a reduction of available appropriations.
The revenues control account of a governmental unit is increased when? What JE
DR: Property Taxes Receivable
CR: Allowance for uncollectible property taxes
CR: Revenues
When the encumbrance account is decreased, the following internal entry is made?
DR: Budgetary Control
CR: Encumbrances
When appropriations are recorded, the following entry is made?
DR: Fund balance $ 100
CR: Appropriations $ 100
When the budget is recorded, the following entry is made?
DR: Estimated Revenue Control
DR: Estimated Other Finc Sources
DR: Budgetary Control (Negative)
CR: Appropriations Control
CR: Estimated Other Finc Uses (Transfer out)
CR: Budgetary Control (Positive)
A purchase order is a binding document and thus is recorded when issued. The journal entry made for internal accounting when a purchase order is issued is: JE?
Dr: Encumbrances
CR: Budgetary Control
On what accounting basis does GASB recommend that governmental fund budgets be prepared?
Modified Accrual Basis
The modified accrual basis is used in accounting for governmental funds and should, therefore, be used in preparing governmental fund budgets.
When a snowplow purchased by a governmental unit is received, it should be recorded in the general fund as a(an)?
Expenditure
Expenditures are decreases in net financial resources other than through interfund transfers. General fixed assets, such as land, buildings, and equipment, purchased with general fund resources should be recorded as expenditures in the general fund.
JE:
DR: Expenditures $3000
CR: Voucher Payable - Snow Plow $3000
The journal entry to record the issuance of the purchase orders and contracts should include a:
Such a commitment is recorded as an encumbrance and a credit to budgetary control.
Vouchers payable is credited when???
When expenditures are incurred NOT when purchase orders are issued. Issuance of a purchase order results in an encumbrance.
Which of the following accounts of a governmental unit is credited when taxpayers are billed for property taxes?
Revenues are credited and Property Taxes Receivable are debited when taxpayers are billed for property taxes.
Note:***! Revenues ARE recorded net of estimated uncollectibles.
Encumbrances outstanding at year-end in a state’s general fund would most likely be reported as a?
Fund balance commitment in the general fund.
Encumbrances are commitments or assignments of fund balance representing the amount of unperformed contracts for goods or services. Encumbrances at year-end do not constitute expenditures or liabilities. Therefore, at year-end encumbrances are reclassified as a commitment of assignment of fund balance that is not appropriate for expenditure.
A public school district should recognize revenue from property taxes levied for its debt service fund when?
Funds from the levy are measurable and available to the district.
Note: Revenue from property taxes is recognized when the revenue is available and measurable.
