F8pt1-3 Govt' Acct Flashcards
Budgetary Accounting
- A balanced budget supports Inter-period Equity
- As an objective of Public Administration & Fiscal Accountability
Derived Tax Revenues
- Non-Exchange
- Taxpayer income (inc.taxes)
- Measurable & Available
Imposed Non-Exchange Revenues
-Wealth/ Property Taxes
J/E to record accrual of Real Property taxes levied & Est for Uncollectible accounts.
Debit:
-Real Property Taxes Rec.-Current
Credit:
- -Revenues- Property Taxes
- -Allowance for Uncoll.taxes Rec.- Current
J/E to reclassify Current Allowance for Uncoll. taxes to Delinquent & accrue Rev.
Debit:
- Revenues- Property Taxes
- Allow. for Uncoll. Taxes- Current
Credit:
—Allow. for Uncoll. Taxes- Delinquent
Purchase Method
[Expenditure Method]
- Asset as Expenditure & Reserve for items on hand.
- Expenditure Current Assets when purchased:
~Supplies & Inventory - Reverse (set up as current asset) for items not used during period (still on hand)
Consumption Method
[Expenditure Method]
-Set up Current Asset when purchased
(Supplies & Inventory)
-Expenditure items as Consumed.
(by Periodic physical count)
Encumbrances
- Open Purchases orders represent an encumbrance or commitment of the available appropriations of a Gov’t.
- Effectively monitor the degree to which they have used their budgetary appor.
J/E to set up Encumbrance in General Fund
[Step 1]
-Encumbrances
—–Budgetary Control
J/E to Reverse estimated Encumbrances
[Step 2]
-Budgetary Control
—–Encumbrances
J/E to Record the actual Expenditures
[Step 3]
-Expenditures
—– Voucher’s Payable/Cash
Encumbrances Not Used for?
- Recurring Expenditures
- Such as Salaries
Encumbrances that are still Outstanding at Yr-End & Don’t Lapse
- Reverse the J/E & Include Outstanding encumbrances in an appor. fund balance classification.
- Included in ‘Fund Balance, Committed’
OR - ‘Fund Balance, assigned’
Encumbrances in F/S
- Will Not be specially detailed on the face of the F/S
BUT
- May be disclosed if material
J/E to close Outstanding Encumb. at Yr-end & Reserve the Fund Balance
-Budgetary Control
—-Encumbrances
Gov’t- Wide Statement of Net Position
(Assets + Deferred Outflows of Resources)
MINUS
(Liab. + Deferred Inflows of Resources)
= NET POSITION
Gov’t Fund Balance Sheet/Present Financial Position that displays:
(C.Assets + Deferred Outflows of Resources)
[(C.Liab. + Deferred Inflows of Resources)
+ Fund Balance]
Proprietary & Fiduciary St. of Net Position
- P. Funds are Encouraged & F.Funds are Required to report Net position as the difference Betwn:
(Asset + Deferred outflows of resources)
MINUS
(Liab.+ Deferred Inflows of resources)
Criteria for Qualifying for Deferred Outflow/Inflow Treatment
- Transferor (Gov’t) conveys to the operator the right & related obligation to provide public service
- Through the use & operation of a capital asset in exchange for significant consideration
Deferred Outflow/Inflow Treatment Examples:
- An upfront payment
- Installment Payments
- New Facility or Improvements to an existing facility
- Operator collects & is compensated by fees from 3rd parties.
Transferor Accounting
- Continues to show the managed facility as a Capital Asset
- Displays a Liab. for significant contractual obligations
Derivatives Accounting Treatments
- Derivatives are reported at FV
- Changes in value of derivatives used as investments are displayed within the investment revenue classification
Hedge Accounting Treatments
- Changes in value of derivatives used for Hedging Activities are reported as either:
~ Deferred outflow or inflows of resources.
Imposed Non-Exchange Revenue Transactions
- That are Reported as receivable prior to their formal levy
- Such as property taxes recorded in Dec. but all fully levied until Jan.
Which two accounting bases are used in governmental accounting?
- Accrual basis
- Modified accrual basis
What is a budget appropriation?
The highest amount allowed for a particular expenditure under a budget.
What is an encumbrance?
Records purchase and reserves it for the encumbrance.
Not used for Interest payments, considered expenditures
What is the opening budgetary entry?
-Estimated Revenues Control
——Appropriations Control
Dr/Cr: Budgetary Fund Balance (plug)
What is the closing budgetary entry?
-Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
——- Estimated Revenues Control
Which fund statements are issued in Governmental Accounting?
Balance Sheet
Statement of Revenues; Expenditures; and Changes in Fund Balance
When is Revenue recorded in Governmental Accounting?
When it is BOTH available and measurable; regardless of when it is spent.
What is Derived Tax Revenue?
Money collected from people doing things:
Sales tax (buying cars) or income tax (people working)
What is Imposed Tax Revenue?
Tax assessed just because things exist
Recorded as a revenue when BUDGETED.
Estimated uncollectible property tax revenues don’t offset revenues; so don’t net them.
Example: property tax on a car (even if it’s never driven); real estate tax
How are Assets & Liabilities presented on the Statement of Net Position?
-Assets (Current & Non-Current)
- —- Deferred Outflows of Resources
- —- Liabilities (Current & Non-Current)
- —–Deferred Inflows of Resources
How are Capital Assets shown on a governmental Statement of Net Assets?
They are shown net of debt
Asset Cost - Accumulated Depreciation - Asset Liabilities : Net Assets
How is infrastructure reported on a governmental Statement of Net Assets?
Modified approach:
- Reported at cost; no accumulated depreciation
How is a Statement of Net Assets divided?
Into Governmental Activities and Business Activities
How are activities presented in a Statement of Activities?
They are divided by function
Component units are reported in the Entity-Wide F/S & NOT the Fund F/S
What is the primary objective of governmental accounting?
To provide information that is useful and benefits a wide range of users including:
Costs of services provided
Sufficiency of revenues to cover costs
Financial position of entity
Dual Objectives
Both Gov’t & Non-For-Profit Organizations seek to demonstrate their:
- Operational Accountability for entity taken as a whole
& - Fiscal Accountability for specific funding.
Purpose of Fund Accounting & Reporting
- Compliance with legal restrictions
- Budget Control overspending limits
I/S: Modified Accural Revenue is Recognized when?
(GraSPP)
- Available: Means collectible within the current period or soon enough thereafter to be used to pay liab. in current period.
& - Measurable means quantifiable in monetary terms.
Inc. Statement: Modified Accrual Exceptions
Un-matured Interest on Long-term debt is not accrued
- It is only recorded when legally due.
Income Statement: Full Accrual
[Se-PAPI]
- Revenue is Recognized when Earned
- Expenses are Recognized when Incurred
Modified Accrual Basis of Acct. & Current Fin. Resources Measurement Focus
[GRaSPP]
- General
- Special Revenue
AND - Debt Service
- Capital Projects
- Permanent
Economic Resources Measurement Focus & Full Accrual Basis of Accounting
[SE-PAPI]
- Service (Internal)
- Enterprise
- Pension
- Agency
- Private
- Investment
Non-Spendable
[Levels of Constraints]
- Practical
- Monies have spent, assets are either maturing or expiring
- Inventory
Restricted
[Levels of Constraints]
- External
- Legislation, Grantor, or Creditor Requirements must be satisfied
- Bond Holder
Committed
[Levels of Constraints]
- Internal
- Highest Governing authority establishes limits
- Legislator
Assigned
[Levels of Constraints]
- Internal
- Intention without Formal Commitment
Unassigned
[Levels of Constraints]
- No Constraint as to use
Budgetary Accounting: BEG. J/E
DR
- Estimated Revenue Control
- Est.Other Fin. Sources
- Budgetary Control
CR
- –Appropriations Control
- –Est. Other Financing Uses(T.I./T.O.)
- –Budgetary Control (Pos./Surplus)
Budgetary Accounting:
End of Period J/E
- Appropriations Control
- Est. Other Financing Uses(T.I./T.O.)
- Budgetary Control (Pos./Surplus)
- —- Estimated Revenue Control
- —–Est.Other Fin. Sources (T.I)
- —–Budgetary Control (Negative)
Accrual basis
- Current Economic Resources Focus
- Revenues Recognized when Earned
Modified Accrual Basis
- Current financial Resources Focus
- Revenues recognized when Available and Measurable
Activities Presented in a ‘Discreet’ Statement of Activities
Is Required:
- If the activities of a component are distinguishable from the rest of the governmental entity
Activities Presented in a ‘Blended’ Statement of Activities
Warranted:
- If the activities of the component cannot be identified
& - Separated from the rest of the governmental activities
Which characteristics of service efforts & accomplishments is the most difficult to report for a Gov’t entity?
Relevance
Fund Accounting is used by Gov’t units with resources that must be?
- Segregated for the purpose of carrying on specific activities or attaining certain objectives.
Compensated absences liab. in Gov’t wide F/S, should be reported at?
- Balance Sheet date
A Special Revenue Fund, overspent its available resources, the deficit would likely be displayed as?
- Negative Fund Balance- Unassigned
Order to Qualify for Hedge acct. treatment, a derivative must be?
- Effective
When should Property taxes due to a Gov’t unit be recorded as Deferred Inflow of Resources?
Property taxes Receivable:
- Are Recogn. in advance of the year for which they are levied
- Are Collected in advance of the year in which they are levied.
Transferor Accounting: Deferred Inflow of Resources
- Upfront or installment payments are displayed as an asset at their P.V. along with a deferred Inflow of Resources.
- Recogn. in a Systematic & Rational Manner.
Object Classes
[Gov’t Expenditures]-Examples:
~Personnel Service & Supplies
~Principal & Interest Payments for Debt Service expenditures
Gov’t Expenditures: Character
- Period of Benefit & Intergovernmental
- Current Expenditures: Current Fiscal Period
- Capital Outlays & Debt Service:
~Both the present & future fiscal periods
