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CPA - FAR Exam > F8 - F10 > Flashcards

F8 - F10 Flashcards

1
Q

What is the criteria for an enterprise fund?

A
  1. activity is financed with DEBT that is secured solely by a pledge of the NET REVENUE from fees and charges
  2. laws and regulations require that the cost of providing services be recovered through FEES
  3. pricing policies of the activity establish FEES and charges designed to recover its costs
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2
Q

What basis is used for proprietary funds (enterprise and internal service)?

A

-full accrual (similar to a regular business)
-economic resources measurement focus is on net income and capital maintenance (includes depreciation)

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3
Q

What is the JE for proprietary funds (mainly internal service) when recording fees for services to other funds?

A

DR: Due from other funds
CR: Operating revenues

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4
Q

Is the statement of cash flows required to be presented for proprietary funds?

A

YES

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5
Q

What is the difference between fund balance and net position?

A

fund balance = “balance sheet”
net position = “income statement”

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6
Q

What type of fund data is excluded from the government-wide statement of net position?

A

fiduciary funds

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7
Q

How are donated property and other acquired property recorded on the government-wide F/S?

A

donated property – fair value
other acquired property – lower of cost or market

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8
Q

How should interest income be reported on the Statement of Cash Flows for an enterprise fund?

A

Investing activities

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9
Q

What do non-capital financing activities include in the statement of cash flows for proprietary funds?

A

-operating transfers out
-borrowing for non-capital purposes
-cash receipts from grants or subsidies
-property taxes

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10
Q

How are payments in lieu of taxes to the general fund treated in a proprietary fund’s statement of cash flows?

A

operating activities

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11
Q

The notes to the governmental F/S include important disclosures about the ________.

A

basic F/S – NOT the required supplementary information

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12
Q

What is the order of how F/S are presented for government-wide F/S?

A
  1. MD&A
  2. Basic financial statements
  3. Required supplementary information and separate related disclosures (note: the minimum requirement display is 10 years of data)
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13
Q

The sale or purchase of works of art are recorded in which section of the statement of cash flows (NFP)?

A

investing activities

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14
Q

T/F: Contributed collection items should not be recognized as revenues or gains if collections are not capitalized.

A

true

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15
Q

Cash flows from purchases, sales, and insurance recoveries of unrecognized, noncapitalized collection items should be reported as ________ activities in a statement of cash flows.

A

investing

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16
Q

How should property tax revenue that is measurable but NOT available be presented in government F/S?

A

as deferred inflows in the governmental fund F/S, not the government-wide F/S

Property tax revenues that are measurable but not available at year end are recorded as deferred inflows of resources in governmental fund presentations and not recognized as revenues consistent with the modified accrual basis of accounting. Government-wide financial statements are presented on the full accrual basis of accounting and would recognize property tax revenue regardless of availability.

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17
Q

T/F: Federal grant funding, subject to conditions associated with eligible cost principles, would not be recognized as revenue until conditions are satisfied.

A

true

18
Q

All expenses of not-for-profit organizations are classified as _____ donor restrictions.

A

without

19
Q

Donated services should be added to total EXPENSES in the NFP Statement of Activities if:

A

they would have otherwise been used/expensed by the entity if not donated (and the service is measurable) AND they enhance a nonfinancial asset

20
Q

How is the acquisition of property accounted for on the Statement of Cash Flows for NFP?

A

financing activities

21
Q

How should multi-year pledges be treated in NFP accounting (in terms of revenue)?

A
  • multi-year pledges are recorded at their net present value (for all future years) at the date the pledge is made
  • pledges to be collected in the future are classified as “with donor restrictions” and reclassified as “without donor restrictions” as terms and conditions are satisfied (reclassifications are NOT revenues)
22
Q

How should you calculate contribution revenue?

A

as the difference between the contributions made by a donor and the fair value of any premium transferred

23
Q

Where would interest income go on the statement of cash flows for proprietary funds?

A

investing activities

24
Q

What are the different types of categories on the statement of cash flows for NFPs?

A

Operating, Capital and related financing, Non-capital financing, and Investing

25
Q

Which governmental fund would include the income from investments of donated art?

A

permanent fund

26
Q

What is the formula to go from total governmental FUND BALANCE to NET POSITION from governmental activities?

(aka balance sheet reconciliation)

A

governmental fund balance
+ capital assets
- AD
- non-current liabilities (including lease liabilities)
+ deferred inflows (ex. sales tax to be paid in Jan. of the next year; multiply December sales by the sales tax %)
- accrued interest payable
+ internal service fund net position
= government-wide net position

27
Q

What is the formula to go from NET CHANGE in fund balance to CHANGE IN NET POSITION of governmental activities?

(aka income statement reconciliation)

A

net change in fund balance (gov. funds)
+ capital outlay (full amount w/ debt proceeds)
+ principal payments on non-current debt
- asset disposals (net book value)
- sources (other financing sources - debt proceeds)
+ revenue (measurable and unavailable; earned but not accrued; December sales x tax %)
- interest expense (accrued; NOT on debt)
- depreciation expense
+ internal service fund net revenue
= change in net position of governmental activities

28
Q

Do NFP governments issue a Statement of Functional Expenses?

A

no

29
Q

What demonstrates interperiod equity?

A

a balanced budget

30
Q

Where would property tax receipts go on the statement of cash flows for an Enterprise fund?

A

noncapital financing activities (source)

31
Q

Where would operating transfers out go on the statement of cash flows for an Enterprise fund?

A

noncapital financing activities (use)

32
Q

How would donated property received as a gift be reported on the governmental F/S?

A
  • an increase in assets on the Statement of Financial Position at its fair value
  • “support” on the Statement of Activities at its fair value
33
Q

What is the governmental way of accounting for assets and debt using the current financial resources (modified accrual) method?

A

capital outlay expenditures and other financing sources

34
Q

How should you report cash contributions with donor restrictions relative to the acquisition of property?

A

financing activities

note: it would be in investing activities if the acquisition was relative to general operations

35
Q

How are internal designations of assets treated for an enterprise fund?

A

unrestricted net position

36
Q

What is the formula for the statement of financial position for a governmental fund?

A

assets and deferred outflows = liabilities and deferred inflows + fund balance

37
Q

What is the journal entry to record when a purchase order is approved (in budgetary accounting)?

A

DR Encumbrances
CR Encumbrances outstanding (estimated liability)

(you would debit appropriations when closing the budgetary account)

38
Q

If an NFP organization expends something in the year after the service is performed, what are the effects on net assets with/without donor restrictions?

A

(decrease)
Net assets without donor restrictions
Net assets with donor restrictions
AND
(decrease)
Net assets without donor restrictions (to recognize the expenditure)

39
Q

What account do governmental funds (GRASPP) use for the proceeds of long-term debt?

A

other financing sources

40
Q

What has to happen for revenue to be recognized (accrued) in governmental funds?

A

revenue needs to be earned and collected within 60 days after year-end

(this is modified accrual)

CPA - FAR Exam (4 decks)

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