FAR 14 Blake Cubria CPA Flashcards
What is the function of a special revenue fund?
Gov’t Fund
Amount received from specific revenue sources that is legally restricted to expenditure for a specific purpose.
What is the exception of modified accrual accounting for Gov’t Funds?
Exception: How interest and principal is treated for L/T Debt, recorded when they become due and payable not when they accrue/incur and become measurable
What is displayed after the “excess (deficiency) of revenue and expenditures” computation
Special items and other financing sources and uses are displayed after “excess (deficiency) of revenues over expenditures” on a Gov’t fund stmt of revenues, expenditures, and changes in fund balance.
Does The statement of revenues, expenditures, and changes in fund balance accrue partial bond interest expense payable at its fiscal year end?
No, $0 interest expenditures would be accrued. Only recorded when payment occurs or bond matures.
recorded when LEGALLY PAYABLE PER BOND AGREEMENT
What is the J/E in the Debt Service Fund for payment both principal and interest expenditure of a general Bond?
Dr Expenditure - Interest 5,000
Dr Expenditure - Principal 20,000
Cr Cash 25,000
Does the Debt service fund accrue interest payable?
No, uses modified accrual basis of accounting. Only accrue interest when legally due and not at interim dates.
What is the J/E in the debt service fund when paying off a lease that transfers ownership?
Dr Expenditures Control (principal + interest) 65,000
Cr Cash. 65,000
What is the rule for every operating fund when debiting expenditures?
Almost every operating fund debits Expenditure Control and Credits Cash
What is an extraordinary item in Gov’t Accounting?
an item or event that is BOTH unusual and infrequent in nature
What is a special item in Gov’t accounting?
An event or item that is Unusual OR Infrequent in nature, and the event must be in the CONTROL OF MANAGEMENT
Ex: Sale of property by Gov’t or other SIGNIFICANT MGT DECISION
What does other financing uses capture?
Transactions such as debt proceeds and transfers
What is the function of a special revenue fund?
Uses special revenues from specific taxes to finance particular government activities
When a obligation bond is issued at a premium or a discount and there is underwriter fees and debt issuance costs that incurred, what is the amount that should be reported as Other Financing sources?
Only the Face Amount and the Premium or discount.
The underwriters fee and debt issuance cost would be classified as a debt service expenditure - Debt related transactions are not shown on a net basis
How are investments held in a Permanent Fund?
At Fair Value
What is the function of a Permanent Fund?
Holds on to income based on donor restrictions from investments that is restricted and not expended.
Only earnings can be used for purposes to benefit the public, specific individuals, private organizations, or other Governments
What are examples of other financing sources?
Proceeds from general obligation bond issuance & Transfers from the General Fund
Is the Capital Projects fund closed out at year end? Where would the Construction In Progress be shown: Capital projects fund or the Gov’t Wide F/S?
Yes Capital projects fund is closed out at year end.
Construction in progress will be shown in the Gov’t wide F/S.
What transaction would not decrease stockholders Equity? What is the J/E? Assume there is $200 balance in APIC T/S account.
The sale of Treasury Stock at Less than cost, since the net impact will still be positive as long as $ is received
Dr Cash 600
Dr APIC - T/S 200
Dr R/E 200
Cr Treasury Stock 1,000
How do you calculate that at least 90% PV of minimum payments is made up of the FV of the asset for a finance lease at inception?
PV of Lease PMTS/FV of asset at inception = %
What is the J/E for Employee stock purchase plan that includes Employee withholding and Employer Match?
Dr Liability for employee Withholdings
Dr Employee Stock Purchase Expense (company match)
Cr Treasury Stock
Cr APIC
How do you treat bond issuance costs when recording Bond liability? ex: Sold $100,000 bond @ 95 and incurred $3,000 bond issuance cost.
What is the J/E?
YOU SUBTRACT BOND ISSUANCE COSTS: UNDERWRITER FEES
example: ($100,000 * .95) - $3,000 = $92,000
Dr Cash 92,000
Dr Discount 8,000
Cr Bond Payable 100,000
What is a debenture bond?
Unsecured corporate bond
What is a term bond?
Has a single fixed maturity date
When calculating FICA for employer match, ignore Federal income taxes and FICA withheld amount. What is the calculation and how much should be deposited in the Payroll checking account to cover net payroll and related payroll taxes?
Employer FICA Tax = Gross wages x FICA rate = Employer amount
Employer amount + Gross wages = Deposit in payroll account for that week
Where would a Tax benefit carry forward be reported in the year it decreases current taxes?
In income from continuing operations, since tax benefit reduced current year taxes payable from continuing operations
What occurs when Tax Depreciation is less than Book Depreciation?
Deferred Tax Liability occurs, since amount will be taxable in the future
when discounting a note what percentage is used? Market interest rate or discounted rate? What amount is received?
Use the discounted rate %. Amount received is how every many month is left before the note matures.
Ex: originally 8 months, and two months has passed, take Face Value * discount rate percentage = discount
Discount * (6/12) = Unamortized Discount
What type of recognition occurs when changes in common stock (stock dividend and stock split) outstanding occurs after year end but before F/S are issued when computing Earning Per Share?
Retroactive recognition for all periods presented using new # of shares
How do you treat prepaid rent when it increases when converting cash to accrual basis?
You add it!
What is the 3 criteria that allow activities to be reported as an enterprise Fund? Only one needs to be satisfied.
- The activity is financed with debt that is secured solely by a pledge of the net revenue from fees and charges
- Laws and Regulations require that the cost of providing services be recovered through fees
- The pricing policies of the activity establish fees and charges designed to recover costs
What is the orientation of accounting and reporting for all proprietary funds?
Income determination
