F8 Governmental Accounting Flashcards
What are the objectives of external reporting?
- operational accountability
- fiscal accountability
What are typical revenue sources from enterprise funds?
Operating revenues - charges for services (utility fees, patient fees, tuition, other exchange-type fees)
Nonoperating revenues
- shared/grant revenues
- investment income
What is the purpose of the capital project fund?
Capital projects fund are established to account for resources restricted, committed, or assigned for the construction or purchase or leasing of significant fixed assets used by the governmental (GRSPP) funds. Capital projects funds are not used for proprietary (SE) or fiduciary (PAPI) funds.
What are the required fund financial statements for the individual proprietary fund types?
SE funds require:
- statement of net position
- statement of revenues, expenses & changes in fund net position
- statement of cash flows
What are the typical revenue sources of a special revenue fund?
- intergovernmental revenues (e.g., sales taxes or gasoline taxes restricted for use)
- intergovernmental revenues (e.g., grants and other financial assistance provided for a specific purpose)
- specific fees (e.g., parking fees, museum admission fees, etc.)
- seizure of assets surrendered as a result of illegal acts (e.g., forfeiture act)
What is the purpose of the internal service fund?
Internal service funds are established to finance and account for services and supplies provided exclusively to other departments within a governmental unit or to other governmental units, typically on a cost-reimbursement basis.
Major fund reporting requirements do not apply to internal service funds.
Name each fiduciary fund type.
Pension (and other employee benefit) trust funds
Agency funds
Private purpose trust funds
Investment trust 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 determinable amount
- available means collectible within (generally) 60 days of the year-end
What terms define the manner and timing of transaction recognition in governmental fund accounting?
Fund accounting principles are defined by:
- Measurable focus (how transactions are recognized)
- basis of accounting (when transactions are recognized)
List examples of transactions that qualify for treatment as deferred outflows of resources (reported after assets) or deferred inflows of resources (reported after liabilities)
1- changes in FV of hedging derivative instruments
2- resources to be reported by a transferor government in a qualifying service concession agreement
3- revenues that are measurable but not available (collected more than 60 days after year-end)
4- non-exchange revenues (e.g., property taxes) reported as receivable prior to their formal levy
5- changes in pension liabilities that result from changes in actual assumptions
6- other deferred outflows/inflows of resources.
What are the closing budget, activity, and encumbrance journal entries?
Activity:
Dr. revenues
Dr. unassigned fund balance
Cr. expenditures
Budget (deficit)
Dr. appropriations
Cr. estimated revenues
Cr. budgetary control
Encumbrance
Dr. budgetary control
Cr. encumbrances
At the beginning of the next year, the above encumbrance entry is reversed. the entry will keep the budgetary control intact in order to account for resources spent in the next year that would have been budgeted in the current year.
What is the basic structure of the statement of changes in fiduciary net position for the fiduciary funds?
Additions (deductions) = changes in net position
Name each proprietary fund type
S: Internal Service Funds
E: Enterprise Funds
What is the purpose of the special revenue funds?
Special revenue funds account for revenues and expenditures that are restricted or committed for specific purposes. The life of a special revenue fund may be limited or unlimited.
What is the purpose of the enterprise fund?
Enterprise funds are used for operations that are financed and operated in a manner similar to private business enterprises. Activities should be reported in enterprise funds if:
- the activity is funded by debt secured by a pledge of net revenue from feed and charges;
- laws require that activity fees be recovered through fees; or
- fees are designed to recover costs
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 (w/ the exception of interest expenditures) recognized when fund liability is incurred
Funds using MAC: G:General fund R: Special Revenue funds S: Debt service funds P: capital project funds P: permanent funds
Journal entry to recognize supplies remaining at year end
Purchase method:
Dr. supplies on hand inventory
Cr. fund balance, nonspendable
Above JE indicates that these supplies are not available spendable resources.
Consumption method: no entry may be needed as supplies were debited to inventory and then recognized as expenditures as they were used. A corresponding entry changing the related nonspendable classification of fund balance should have been done as each use of inventory was recorded.
What is the JE to record the annual budget?
Dr. estimated revenues
Cr. appropriations
Cr. budgetary control
Actual expenditures have a natural Dr. balance. Appropriations to which those expenditures are compared have a natural Cr. balance. computation of unexpended appropriations is pure arithmetic sum of these two accounts.
What types of external reports meet the accountability objectives of government?
- operational accountability; government-wide F/S
- fiscal accountability; fund F/S
What is the purpose of the agency trust fund?
Cash is held temporarily for an authorized recipient to whom it later will be disbursed. This recipient may be another fund or some individual or fund or even governmental outside of the reporting government.
What is the basic structure of cash flows for the proprietary funds?
- Cash flow from operating activities
- cash flows from noncapital financing activities
- cash flows from capital financing activities
- cash flows from investing activities
What is the purpose of the private purpose trust fund?
The private purpose trust fund for reporting all other trust arrangements under which principal and income are for the benefit of one of the following: specific individuals, private organizations, and other governments.
