F8: Governmental Accounting Overview

Question 1

What are two items lead to the use of fund accounting by governmental organizations?

Answer 1

1- Spending purpose (legal restrictions)

2- Spending limits (budget and financial control)

Question 2

The purpose of separate fund financial statements for governmental and proprietary funds:

Answer 2

To report additional and detailed info about the primary government

Question 3

2 Objectives for governmental and non-for-profit reporting

Answer 3

1- Demonstrate their operational accountability

2- Show their fiscal accountability

Question 4

Primary purpose of fund accounting

Answer 4

Enables service and mission-driven organizations to easily monitor and report compliance with:

• Spending purposes (legal restrictions)
• Spending limits (budget)
• and other fiscal accountability objectives

Question 5

External fund reporting is allowed for what?

Answer 5

Governmental units

Question 6

What cannot use external fund reporting?

Answer 6

Non-for-profit (they use it for internal accounting only)

Question 7

Types of industries that use governmental or non-for-profit accounting and reporting principles

Answer 7

• Governmental units
• Colleges/universities
• Health care organizations
• Voluntary Health and Welfare organizations
• Foundations
• Other NFP organizations

Question 8

GASB

Answer 8

“Governmental Accounting Principles and Standards Board”

-the governmental counterpart of FASB

Question 9

What accounting principles and standards are used for non-for-profits?

Answer 9

FASB

Question 10

GAO and its role

Answer 10

“Government Accountability Office”

-Prescribes government auditing standards (yellow book standards)

Question 11

Single Audit Act

Answer 11

Allows for frequent audits of federal financial assistance awarded

Question 12

3 Themes of Governmental Accounting:

Answer 12

1- Fund structure
2- Fund accounting
3- External reporting

Question 13

Definition of a Fund:

Answer 13

Think “like a checkbook”

• sum of money segregated for the purpose of carrying on a activity
• each fund is a self-balancing set of accounts

Question 14

What defines fund structure for governments?

Answer 14

GASB 34

Question 15

11 fund types are classified in the GASB 34 in what three categories?

Answer 15

1- Governmental Funds
2- Proprietary Funds
3- Fiduciary Funds

Question 16

Fund financial statements should be presented how for governmental, proprietary, and fiduciary funds?

Answer 16

Separately

Question 17

GASB establishes what?

Answer 17

Minimum reporting requirements

Question 18

What type of reconciliation is required?

Answer 18

A presentation of a reconciliation of fund f/s to government-wide f/s

• Government-wide = consolidated f/s
• Major fund f/s = like segmented reporting

Question 19

Governmental Funds are “MAC-GRaSPP”

Answer 19

Modified
Accrual accounting
Current financial resources measurement focus (no FA or LTD)
GRaSPP

Question 20

GRaSPP

Answer 20

G-General fund
R- special Revenue funds
and
S- debt Service funds
P- capital Project funds
P- Permanent fund

Question 21

Proprietary and Fiduciary Funds have “SPACE”

Answer 21

S- SE
P- PAPI
A- Accrual accounting
C- Carry fixed asset and long-term debt
E- Economic resources measurement focus

Question 22

Proprietary Funds “SE”

Answer 22

S- internal Service funds

E- Enterprise funds

Question 23

Fiduciary Funds “PAPI”

Answer 23

"trust funds"
P- Pension and other employee trust funds
A- Agency trust funds
P- Private purpose trust funds
I- Investment trust funds

Question 24

2 of the most significant reconciling items between governmental funds and government-wide financial statements:

Answer 24

1- adding fixed assets

2- subtracting non-current liabilities

Question 25

Net position is analyzed and reported in 3 components:

Answer 25

1- Net investment in capital assets
2- Restricted
3- Unrestricted

Question 26

How to record revenues & expenses under “Modified Accrual”

Answer 26

Revenue- recognized when measurable and available

Expenses- recorded when the related fund liability is incurred

Question 27

How to record revenues & expenses under “Full Accrual”

Answer 27

Revenue- recognized when earned

Expenses- recognized when incurred

Question 28

Saying revenue is available means:

Answer 28

Collectible within the current period or within 60 days after year-end

Question 29

5 Degrees of Constraint with the classification of governmental fund balances

Answer 29

"NU CAR"
N- non-spendable fund balance
U- unassigned fund balance
C- committed fund balance
A- assigned fund balance
R- restricted fund balance

Question 30

Non-spendable fund balance examples

Answer 30

prepaid expenses, inventories, etc.

Question 31

Unassigned fund balance thing to remember

Answer 31

Only the general fund should have a positive unassigned fund balance

Question 32

Committed fund balance examples

Answer 32

Resolutions, encumbered appropriations, etc.

Question 33

Assigned fund balance

Answer 33

Government tends to obligate but has not formally committed

Question 34

Restricted fund balance

Answer 34

Restricted by external authorities

Question 35

What is the measurement focus and basis of accounting for the government-wide financial statements?

Answer 35

• Economic resources measurement focus

- Accrual basis of accounting