FAR 13 Flashcards
Nongovernmental not-for-profit organizations are required to provide which of the following external financial statements?
The three required statements are the Statement of Financial Position, Statement of Activities, and Statement of Cash Flows. Note that a voluntary health and welfare organization also must report a Statement of Functional Expenses.
The City of Palo Alto’s Service Efforts and Accomplishments Report for Fiscal Year 2010 reported that the average response to fire calls within 8 minutes occurred on 90% of the fire calls in 2010. This rate met the benchmark target goal of 90%. According to GASB’s conceptual framework, this information is classified as a measure of
The example in the question is an outcome measure. Outcome measures indicate the accomplishments or results that occur because of the services provided.
Which of the following local government funds uses the accrual basis of accounting?
Recall the acronym “DRIP-CEG-PIPPA” where the vowels in “DRIP-CEG” represent fund types that use accrual accounting and the consonants use modified accrual accounting. The “I” stands for Internal Service Fund and “E” for Enterprise Funds. This answer is correct.
Which of the following is not a characteristic of a fund?
A fund is both a fiscal and an accounting entity. A fund is “fiscal” because it has assets, liabilities, revenue, expenditure or expense, and fund balance or other equity accounts. A fund is “accounting” because it has its own ledgers and contains a self-balancing set of accounts. A fund is not a separate legal entity.
Which of the following funds would be reported as a fiduciary fund in Pine City’s financial statements?
Recall the acronym “PIPPA” for fiduciary funds. Fiduciary funds include the following 4 types of funds: P ension trust funds, I nvestment trust funds, P rivate- P urpose trust funds, and A gency funds.
Oro County’s Expenditures control account at December 31, 2005 had a balance of $9,000,000.
When Oro’s books were closed, this $9,000,000 Expenditures control balance should have
The Expenditures control account is a temporary account that must be closed at the end of the fiscal year. The Expenditures control account is debited as resources are expended during the year. When the books are closed at the end of the year, this account should be CREDITED for $9,000,000 so that the balance in the account is zero.
The orientation of accounting and reporting for all proprietary funds of governmental units is
Proprietary funds account for activities of the governmental unit that are similar to activities conducted by commercial enterprises. The orientation of accounting and reporting for proprietary funds is similar to that used in private businesses. The accrual basis of accounting is used, and the measurement focus is on income determination, financial position, and cash flow (GASB Codification 1300.102).
Assuming no outstanding encumbrances at year’s end, closing entries for which of the following situations would increase the unassigned fund balance at year’s end?
Assuming that both actual and budgetary transactions are closed to the fund balance, closing appropriations, a credit balance account, would increase the fund balance whereas closing expenditures, a debit balance account, would decrease the fund balance.
Since appropriations were greater than expenditures, the net effect would be to increase the fund balance.
When Todd records its annual budget, which of the following control accounts indicates the amount of the authorized spending limitation for the year ending December 31, 2005?
The Appropriations Control account, a budgetary account, would be credited for the amount of the authorized spending limit.
Excel City issued $40,000 of purchase orders. Assume that when all the orders were received, the actual cost was $39,100. How much would be recorded as expenditures when the purchase orders were issued?
No expenditures are recorded at the time purchase orders were issued. Encumbrances represent a commitment made to the vendor in the form of a purchase order prior to incurring actual expenditures. At the time a purchase order is issued, the encumbrance account is increased by the amount of the purchase orders - in this case, $40,000. Expenditures of $39,100 will be recorded when goods are received along with the invoices, and at that time the $40,000 encumbered will be also be reversed out.
Park City uses encumbrance accounting and formally integrates its budget into the general fund’s accounting records. For the year ending July 31, 2005, the following budget was adopted:
Estimated revenues $30,000,000 Appropriations 27,000,000 Estimated transfer to debt service fund 900,000 When Park's budget is adopted and recorded, Park's budgetary fund balance would be a
Park would credit the budgetary fund balance for $2,100,000 when it makes the following entry to record the budget.
Estimated revenues $30,000,000 Appropriations $27,000,000 Estimated transfers to debt service fund $900,000 Budgetary fund balance $2,100,000
In Year 20x1 a local government levied $5,000,000 in special assessments. The assessments are due and payable in five equal installments at the beginning of each of the next five fiscal years, starting in Year 20x2. Assume that all installments are collected four months (120 days) into the year that they are due. The Special Assessment Debt Service Fund would report revenue in Year 20x1 in the amount of:
The Debt Service Fund recognizes revenue when it is measurable and available. Since the first installment will be received 120 days into Year 20x2, no revenue is recognized in Year 20x1.
Which of the following fund balance classifications is used for budgetary accounting but not for GAAP financial statement reporting?
GASB Statement No. 54 eliminated the use of “reserve” and “unreserved” fund balances. The appropriate fund balance classifications are Nonspendable, Restricted, Committed, Assigned, and Unassigned.
In preparing Chase City’s reconciliation of the Statement of Revenues, Expenditures, and Changes in fund balances to the Government-Wide Statement of Activities, which of the following items should be subtracted from the changes in fund balances?
At the Governmental-Fund level, the entire proceeds from the sale of capital assets is a financial resource of the fund - it is spendable. Only the gain or loss on the sale of capital assets is reported in the Government-Wide Financial Statements. Therefore, the book value of capital assets should be subtracted.
A Capital Projects Fund has outstanding encumbrances of $250,000 as of the end of the fiscal year. Assume that all resources in the Capital Projects Fund are considered to be committed due to the constraints established by the enabling legislation of the governing body of the government. How should the encumbrances be reported in the year-end external financial statements?
According to GASB Statement No. 54, outstanding encumbrances are no longer reported as Reserves in the fund balance section, which was the practice prior to Statement No. 54. Significant encumbrances should be disclosed in the notes to the financial statements.
