F9 - State and Local Government: Part 1

Question 1

Fund Financial Statements are presented why?

Answer 1

To report additional and detailed information about the primary government

Question 2

Governmental Funds Include? and use what kind of accounting?

Answer 2

• General Fund (general gov’t activities)
• Permanent Fund (trust fund, principal can’t be used but earnings can for public purpose)
• Capital Projects Fund (construction)
• Special Revenue Funds (money received for special program)
• Debt Service (pay off LT debt)
• Current Financial Resources and modified accrual accounting.
• Expenditures (not expenses)
• No depreciation expense

Question 3

Proprietary (business) Funds Include? and use what kind of accounting?

Answer 3

• Internal Service (central store)
• Enterprise (utilities)
• Accrual accounting and Economic Resource Focus

Question 4

Fiduciary Funds Include? and use what kind of accounting?

Answer 4

• Agency (gov’t is acting as agent)
• Trust (investment pools)
• Private-Purpose (only benefit certain group)
• Pension (employee benefit)
• Accrual accounting, Economic Resource Focus

Question 5

When does gov’t fund recognize revenue?

Answer 5

When it becomes available and measurable

Question 6

How are Government-Wide Financial Statements presented?

Answer 6

• Accrual Basis.
• Deferred inflow/outflows are cancelled out
• Transfers are cancelled out

Question 7

What is derived (non-exchange) tax revenue?

Answer 7

Taxes imposed on or derived from exchange transactions (sales tax)

Question 8

Estimated Revenues and Appropriations:

Answer 8

dr Estimated Revenues
cr Appropriations
cr Budget Control

Question 9

Imposed Non-Exchange Revenues Include?

Answer 9

Property Taxes and Fines

Question 10

Object Classifications are what?

Answer 10

Most specific classification and represents the chart of accounts title.

Question 11

OFS: Other Financing Sources Include?

Answer 11

Transfers, Proceeds from Debt

Question 12

Purchase vs Consumption Method: Inventory

Answer 12

Purchase records inventory first as expenditures

Question 13

Net Property Tax Revenue Includes:

Answer 13

Collections during the current year and collections expected during the first 60 days of the next year.

Question 14

DR Balance in Appropriations account means what?

Answer 14

Appropriations for the year exceed estimated revenues

Question 15

Expenditures: Gov’t Funds

Answer 15

Recognize any outflow of resources as expenditures (even payment of principal on LT debt)

Question 16

Unassigned Fund Balance is increased at YE by what?

Answer 16

Appropriations exceed actual expenditures

Question 17

Inventories are classified as what kind of resources?

Answer 17

Non-spendable

Question 18

Expenditures exceed funds assigned/restricted/commited for use (special revenue fund) deficit is looked as what?

Answer 18

Negative Fund Balance (un-assigned)

Question 19

Restricted Fund Balances represent what?

Answer 19

Resources that have been restricted by external sources like: creditors, debt covenants, laws etc.

Question 20

What is the JE for a purchase order in gov’t funds?

Answer 20

dr Encumbrances

cr Budgetary Control

Question 21

Appropriations Left Over: Calculation

Answer 21

Appropriations

• Expenditures (includes payable amounts)
• Encumbrances

= Appropriations left over

Question 22

YE Encumbrances in General Fund are represented how?

Answer 22

As “fund balance commitments”

Question 23

Funds that are received before they can be used are classified as what?

Answer 23

Deferred Inflows (appear under liabilities)

Question 24

Imposed Non-Exchange Transactions recorded as a receivable before the period the services/items would be needed/used (licenses/property taxes) are recorded as what?

Answer 24

Deferred Inflows (even if the money had been collected at year end)

Question 25

Encumbrances/Budgetary Control and Expenditures/Vouchers Payable: JE’s

Answer 25

Purchase Order:
dr Encumbrances XXX (estimated amount)
cr Budgetary Control XXX

Items/Invoice is Received:

dr Budgetary Control XXX (estimated amount)
cr Encumbrances XXX

dr Expenditures XXX (amount actually paid)
cr V/P XXX

Question 26

Equity Section in a Enterprise Fund is called what?

Answer 26

Net Position

Question 27

Internal Designations of Funds for future use in Enterprise Funds are what and called what?

Answer 27

Unrestricted and Unrestricted Net Position

• Restricted Net Position would come from outside parties restricting funds

Question 28

Services provided to the General Fund by an Enterprise fund (water utility) results in what JE’s?

Answer 28

dr Expenditures XXX

cr Due to Enterprise Fund - Water Utility XXX

Question 29

What is decreased when interest payments are made by the general fund?

Answer 29

Fund Balance (just as interest expense decreases RE on a normal Balance Sheet)

Question 30

In gov’t funds what is the exception to the modified accrual method of accounting?

Answer 30

Recording of principal/interest payments on LT Debt

Question 31

Cash received/paid by Debt Service from/to the general fund are recorded how?

Answer 31

Received: Transfers (OFS)
Paid: Expenditures (operating)

Question 32

When do Debt Service Funds accrue interest?

Answer 32

When it becomes legally due. (once the first interest payment is due)

Question 33

Capital leases that lead to the acquisition of a general capital asset should be recorded as what?

Answer 33

Expenditure and OFS

Question 34

Capital Projects Funds: Gov’t subsidies

Answer 34

• Recorded as Revenue

- Transfers from general fund and proceeds from general bond issuance are both OFS

Question 35

Debt Service Fund: Costs of issuing debt

Answer 35

Expenditures in debt service fund

Examples:

• Underwriter fees
• Debt Issue costs

Question 36

What happens to gov’t funds at the end of the year?

Answer 36

The are closed out to the gov’t wide financials.

Question 37

Bond anticipation notes are recorded as what if the debt can’t be refinanced?

Answer 37

Current Liabilities