Far 12 Flashcards
What is the J/E for a NFP that is financially interrelated with its beneficiary organization when receiving receipts? What is the effect on the financial statements?
Dr Interest in Net Assets XXX
Cr Interest in beneficiary organization Net Assets (Statement of activities) XXX
When having financial interest in recipient organization, recognize change in interest of recipient organization on statement of activities.
When a NFP receives money from a donor for a specific intended use how is it recorded? As a contribution with donor restrictions or a liability?
As a liability since it is for the benefit of a specific beneficiary and no variance power exists related to how the NFP can use the contribution.
Not as a contribution with donor restrictions b/c no variance power exists over the resources, so it would not be classified as a contribution
What is the most important objective of financial reporting by NFP’s and state and local governments?
Accountability, to show the accountability of each organization for stewardship and resources in their care.
Who are the three primary user groups of external financial reports of a state Government?
Citizens, citizen groups, legislative/oversights groups such as advocate groups within the state and investors/creditors.
What demonstrates inter-period equity as a financial objective of a governmental unit?
A balanced budget demonstrates inter-period equity. A Significant part of accountability of the governmental entity.
Helps external users determine if current year revenues are sufficient to pay for current services provided and whether or not future taxpayers will have to inherit burdens for services previously provided.
Residual equity transfers is a distractor
What characteristic of service efforts is most difficult for a governmental entity to report?
Relevance, difficulty showing a logical relationship with the needs for its purpose.
What is the purpose of the GASB 34 requiring governments to present separate fund financial statements for governmental and proprietary funds
Separate fund F/S should be presented for proprietary and governmental funds to REPORT ADDITIONAL AND DETAILED INFO about the primary government
What measurement and basis of accounting does governmental accounting use?
What measurement and basis of accounting does Proprietary and Fiduciary funds use?
Governmental accounting uses current financial resources measurement focus and modified accrual basis of accounting’
Measures flow of current financial resources and resulting financial position
Proprietary and Fiduciary funds use economic resources measurement focus and accrual basis of accounting
What are the 3 governmental funds? GRSPP What type of accounting and measurement is used?
G - General fund
R - special Revenue fund
S - debt Service fund
P - capital Projects fund
P - Permanent fund
Uses current financial resources measurement focus
modified accrual basis of accounting
What are the two funds in Proprietary funds? SE What type of accounting and measurement is used?
S - Internal service funds
E - Enterprise funds
Uses full accrual accounting
Economic Resources Measurement Focus
What are Fiduciary funds? CIP POE What type of accounting and measurement is used?
C - Custodial
I - Investment Trust
P - Private Purpose Trust
POE - Pension and Other Employee benefit trust
Uses full accrual accounting
Economic resources measurement focus
How does modified accrual basis of accounting recognize revenue?
How does accrual basis of accounting measure revenue?
Modified accrual basis of accounting recognizes revenue in the accounting period in which the revenue becomes available and measurable
Accrual basis of accounting recognizes revenue in accounting period in which the revenue is earned.
What is the J/E when appropriations are greater than estimated Revenues at the beginning of the year for governmental accounting?
Dr Estimated Revenues $5,000,000
Dr Budgetary Control. $1,000,000
Cr Appropriations Control. $6,000,000
What is the J/E when Expenditures and Encumbrances are less than appropriations at the end of the year?
Dr Appropriations Control $6,000,000
Cr Estimated Revenues $5,000,000
Cr Budgetary Control. $1,000,000
How does the purchase method accounting for inventory different than the consumption method of accounting when recording inventory?
Purchase method initially records additions to inventory as an expenditures
What kind of fund is supported by user fees?
Enterprise fund
What is the original J/E for a Proprietary fund recording leased asset that it will acquire at the end of the lease?
Dr Lease Receivable XXX
Cr Deferred inflows of resources XXX
What is the J/E for a municipality (proprietary fund) record a lease use ROUA? The Lessee
Other than a short term lease (greater than 12 months)
Dr Right-of-use Asset
Cr Lease Liability
What is the rule for leases other than short-term leases and contracts that transfer ownership?
Recognized as ROU Assets with related debt for net present value of lease payments
Increase Lessees Asset and Liability amount
What is the J/E for leases other than short-term leases and contracts that transfer ownership for fee-supported convention center fund?
Enterprise funds are SUPPORTED BY USER FEES
Dr ROU Asset
Cr Lease Liability
Modified accrual accounting for revenue recognition would recognize revenue within 60 days subsequent to the fiscal year end.
what is the difference between future contracts and forward contracts?
Future contracts are standardized, have notional amounts, established by a clearing house
Forward contracts are primarily negotiated between the parties, do not have notional amounts
A change from the individual item approach to the aggregate approach by applying lower of FIFO cost or market to inventories is what kind of cumulative effect and change on the F/S?
Change in accounting principle - Retrospective adjustment on the R/E with separate disclosure is required
Where are foreign transaction gains and losses recorded?
Income Statement
What date is retained Earnings decreased by when a company declares a cash divined?
Date of Declaration
How do you calculate Most advantageous market?
Price paid - Transaction cost
Do not look at by all suppliers
What is included in the total payments for a note? What reduces the liability of a note?
Principal + Interest
Just the principal, so subtract interest out and take the difference against the remaining amount
Do NFP’s record deprecation expense on fixed assets? Where is it reported?
Yes, on the statement of activities
For debt restructuring what is the equation used to calculate gain or loss on the restructuring of payable’s?
Liability (Carrying amount owed)
- Fair value of asset
=Gain or loss
For Operating $ flows for an Enterprise fund starting with Operating Income, what is the calculation?
Operating income - (increase in CA) + (Increase in CL) + Depreciation expense
Gain on disposal of assets is excluded as well as revolving debt
