F8 Flashcards
What are the dual objective of government and not-for-profit reporting?
operational accountability for the entity (government-wide F/S) and fiscal accountability for specific funding(fund F/S).
Who uses governmental accounting and reporting principles other than governments? e.g. not-for-profit hospitals?
Not-for-profit organizations run by governments! Nothing else. Other not-for-profit is still FASB.
What’s Government Accountability Office?
GAO prescribes government auditing standards.(yellow book standards)
What’s the fund structure for governments?
11 fund types grouped into 3 generic categories: governmental funds; proprietary funds; fiduciary funds. They have different accountability objectives and use different accounting principles.
What external reporting is required for governments accounting?
fund based and government-wide and their supplementary info. Major fund F/S and aggregate of nonmajor funds, also a reconciliation of fund F/S to government-wide F/S.
Which fund types are included in governmental funds(modified accrual, current only)?
GRaSPP- General fund, special Revenue fund, and debt Service fund, capital Projects fund, Permanent fund.
Which fund types are included in proprietary funds(full accrual, economic resources measurement)?
Business type activities. SE- internal Service fund (building maintnance), Enterprise fund(utilities system, over 50% self-supported).
Which fund types are included in fiduciary funds(full accrual, economic resources measurement)?
PAPI-Pension trust funds, Agency trust funds, Private purpose trust funds, Investment trust funds.
When is revenue rec’d under modified accrual (GRaSPP)? e.g. property tax due, property tax paid in advance by taxpayers.
When measurable and available. Available under modified accrual means collectible within the current period or soon enough thereafter (60 days after year end).
property tax due is revenue when billed. property tax in advance is not revenue until earned.
What are the 5 degrees of constraints associated with GRaSPP fund equity?
Nonspendable(prepaid expense, inventory), Restricted (by external authority), Commited (formally encumbered), Assigned(not formal), Unassigned. (NU CAR)
How are budgeted amounts recorded under governmental modified accrual basis? beginning and ending of year.
In the beginning of year, difference between estimated revenues(tax etc) and appopriation(approved spending) goes into “budgetary control” (fund balance, equity, Cr positive, Dr negative).
Dr estimated revenue control/ other financing source. Cr appropriation control/ estimated other financing use. (because it’s estimated, record on the opposite side of actual accounts)
At the end of year, all buget accounts reversed and closed(same amount, disregard actual actitivies).
How are capital purchases(non-current assets) and debt principal payments rec’d under governmental fund (GRaSPP) F/S?
Current year expenditures-capital outlay or expenditure-debt service.
When is expenditure rec’d under modified accrual (GRaSPP)? Cash paid or payable rec’d?
When voucher payable is rec’d or debt payment is due, same as accrual accounting.
How are current asset purchases rec’d under governmental fund (GRaSPP) F/S?
2 methods. Purchse (expenditure) or Consumption (set up an asset) method. During the year, Dr expenditure Cr asset (inventory) under C method. At year end, if not all consumed, reverse the unconfumed part by Dr asset(inventory), Cr non-spendable fund balance-inventory, under P method.
J/E for moving fund $ to other funds under GRaSPP? Receiving fund?
Dr other financing uses, Cr cash.
Dr Cash, Cr other financing sources.(same as receiving long-term debt (bond) proceeds)
For governmental funds (GRaSPP), where does other financing sources/ uses show in th F/S? B/S?
Statement of revenues,expenditures, and changes in fund balance (operating statement)
Not balance sheet. B/S shows current asset, current liability and fund balances, that’s all.
J/E to record encumbrances under governmental funds? When to use encumbrances?
For spending control for purchases per government policy, not for routine(recurring) expenditures.
At purchase order: Dr encumbrances, Cr Budgetary control. At actual invoice(voucher): reverse encumbrance and then record expenditure: Dr expenditure, Cr cash/voucher payable. If still open at year end, reverse it to fund balance-committed or assigned (B/S). In the following year at invoice, Dr expenditure-PRIOR year, Cr cash.
Net position vs fund balance?
Full acruals have “net position” on balance sheet. Fund balance is for modified acrual method (governmental funds) only.
How are derivative instruments valued by government accounting?
Investment- at fair value, changes in value is investment revenue.
Hedging activity- at fair value, changes in value is deferred outflows or deferred inflows of resources.
How to record refinance/refunding of debt when there is “gain” or “loss” by government?
The difference is rec’d as deferred outflow or inflow, and then amortized to/offset future interest expense over the shorter of old or new debt life.
How to treat debt issue cost by government? expense or capitalize?
Expensed. Diff from FASB.
How to account for SIR AGE items of government’s pension plans?
Very similar to GAAP rules.
SIR items are expensed. unearned portion of AGE items are in Deferred inflows/outflows, just like OCI under GAAP.
What category is a state grant fund for operating a youth center?
special Revenue fund (legally(government or grantor) restricted or commited and expendable) of GRaSPP. All expendable trust activities should be special revenue fund instead of fiduciary funds.
When grants are received, is it a special revenue fund or agency trust fund?
Special revenue fund if the recipient govenment monitors and/or determines eligibility.
Capital grants go to capital project fund.
Which GRaSPP funds don’t record Encumbrances?
Debt service fund and permanent fund.
What types of debt does debt service fund “serve”?
GRaSPP funds debt only. SEPAPI carry and pay their own debts.
How to rec assets from interfund transfer and investment income by debt service fund?
Interfund transfer- Cr interfund transfer (other financing sources). Investment income- Cr revenue.
What are the items in the liability section of a debt service fund B/S?
currently due debts only since it’s GRaSPP fund.
When to rec revenue when receiving capital grants?
Unrestricted-immediatly.
Restricted-deferred until spent(thus earned), applies to all restricted grant(full accrul and modified).
How to close a GRaSPP fund at year end?
Reverse Budget and Encumrances(if any) for same amount. Reverse Activities for actual amount.
Are all resources in a internal service fund expendable?
NO. Full accruals are like private companies. Capital should be maintained (hence proprietary).
What are the categories under Net position for SEPAPI funds?
Net position is the equity of fund-Restricted(by external), Unrestricted, Net investment in capital assets.
Are full sets of F/S required for SEPAPI funds?
SE(Propreitary)-yes.
PAPI(Fiduciarary)- statement of cash flow not required.
Who can be the recipient of a government “agency trust fund”?
Another fund, individual or firm, other government. so anybody.
Which govenment fund does not record expense (expenditure) or revenue?
agency trust fund. No net position no income statement no cash flow. Just a mailman.
How are capital G/L rec’d for private purpose trust fund?
adjustment to fund principal not to income.
Where is escheat property reported in governmental accounting?
Private purpose trust fund.
For GRaSPP funds, how to record proceeds from sale of capital assets?
Not revenue. Other financing sources. GRaSPP revenue can only be derived tax(from exchanged transactions, sales,income) and some non-exchange revenues.
If a general fund makes payment to a pension trust fund, is it expenditure or other financing uses (interfund transfer)?
Expenditure.
