FAR 1C Gov Flashcards

Question

📂 What is a custodial fund?

Answer 1

✅ A fiduciary fund that is NOT a pension, investment, or private-purpose trust fund ✅ Administered through a trust, but the government is NOT the beneficiary

Answer 2

✅ Used when fees are charged to external users ✅ Fees don’t have to cover all costs

Answer 3

✅ Resources restricted or committed for specific general government purposes (not capital outlay or debt service)

Answer 4

✅ Gasoline taxes → Road repairs ✅ Hotel bed taxes → Industrial development/arts

Answer 5

✅ Same as General Fund (uses budgetary accounts)

Answer 6

✅ Property tax ✅ Sales tax ✅ Income tax ✅ Fines and penalties ✅ Licenses & permits ✅ Intergovernmental grants (unrestricted) ✅ Public services charges (if not in enterprise funds)

Answer 7

✅ Payment of interest & principal on tax-supported debt

Answer 8

✅ If the question asks what funds use accrual, do NOT include modified accrual basis funds

Answer 9

✅ As revenue in seller funds ✅ As expenditures/expenses in purchaser funds

Answer 10

✅ External portion of investment pools reported by the sponsoring government

Answer 11

1️⃣ Governmental Funds: General, Special Revenue, Capital Projects, Debt Service, Permanent 2️⃣ Proprietary Funds: Enterprise, Internal Service 3️⃣ Fiduciary Funds: Trust Funds (Investment, Private-Purpose, Pension) & Custodial Funds

Answer 12

✅ Ensures current taxpayers pay for current services, not shifting burdens to future taxpayers

Answer 13

✅ Representative government & separation of powers ✅ Federal system with intergovernmental revenues ✅ Taxpayer relationship to services received

Answer 14

✅ Proprietary funds & fiduciary funds

Answer 15

✅ In the period in which they become legally due & payable

Answer 16

✅ Accounts for activities within a government that serve other departments ✅ Sometimes also used for services provided to other governments ✅ Services are provided at prices approximating external exchange value

Answer 17

✅ Each fund is a separate fiscal & accounting entity ✅ Self-balancing set of accounts recording cash, financial resources, liabilities, and equity ✅ Segregated for specific activities or objectives

Answer 18

✅ Resources held in trust for non-governmental beneficiaries ✅ Not used for general government programs

Answer 19

✅ Treated as an expenditure (not capitalized) ✅ For government-wide financials, journal entries are reversed & assets are capitalized

Answer 20

✅ If debt is secured solely by a pledge of net revenues from fees ✅ If laws require service costs to be recovered through fees & charges instead of taxes

Answer 21

✅ On a cost-reimbursement basis ✅ ❌ Not like an enterprise fund, which generates revenue from external users

Answer 22

✅ Part of the fund resources are restricted from use ✅ Only earnings can be used for government programs

Answer 23

✅ If windmills are constructed & funded by property taxes ✅ If land is donated for windmills, it is recorded in the Enterprise Fund

Answer 24

✅ Account for activities where one government department provides services to other departments 🏛️ ✅ Can also serve other governments (less common) 🌍 Services are priced similarly to external exchange values 💰

Answer 25

✅ Revenue in the seller fund 💵 ✅ Expenditure/expense in the purchaser fund 📊

Answer 26

✅ As "Other Financing Sources" rather than revenue 🔄

Answer 27

✅ Earnings that are tangential to the fund's main purpose (e.g., interest, miscellaneous revenue) 💰

Answer 28

✅ Unrestricted grants → Nonoperating revenue 💰 ✅ Restricted operating grants → Nonoperating revenue 🔄 ✅ Restricted capital grants → Capital contributions 🏗️

Answer 29

❌ They do NOT report contributed capital 🚫 ❌ They do NOT report expenditures 🚫 ✅ Instead, expenses are recognized using the accrual basis 📊

Answer 30

✅ Authorize expenditures for a specific budget period 📆💰 ✅ Ensure spending aligns with legal limits ⚖️

Answer 31

❌ Violates budget law, even for necessary improvements 🚫🏛️

Answer 32

✅ Tracks remaining appropriation authority in real-time 📊 ✅ Ensures expenditures stay within legally approved limits ✅

Answer 33

1️⃣ Show sources & uses of financial resources 💰🔄 2️⃣ Explain how activities were financed & cash needs met 🏦💵 3️⃣ Assess if the financial position improved or deteriorated 📊📉📈

Answer 34

✅ Accounts for payments of principal & interest on general government debt 💰🏛️ ✅ Includes both short- & long-term liabilities ⏳ ✅ Debt liabilities are recorded under General Capital Assets & General Long-Term Liabilities accounts 📊

Answer 35

Transactions between different governments → Recorded as revenues & expenses/expenditures 🔄🏛️

Answer 36

Describes interfund transactions but is NOT an account title ❌📑

Answer 37

Budgetary accounts tracking funds for transportation-related expenses 🚦💰

Answer 38

In the "Statement of Revenues, Expenditures, and Changes in Fund Balance" 📊💰

Answer 39

✅Transfers to/from other funds 🔄🏛️ ✅Proceeds from debt issuances (bonds) 💳📈 ✅Proceeds from capital asset sales 🏗️💵

Answer 40

✅Financial differences should reflect real differences in transactions or structure 🔄🏛️ ✅Not just the result of different accounting methods or practices ❌📊

Answer 41

✅ Ensures users can meaningfully compare financial statements 📑📈 ✅ Prevents misleading differences caused by accounting choices 🚫🔍 ✅ Promotes consistency across governmental entities 🔄✅

Answer 42

1️⃣ Present financial position & results fairly, with full disclosure, in accordance with GAAP 📊✅ 2️⃣ Ensure compliance with finance-related legal & contractual provisions ⚖️📑

Answer 43

✅ Demonstrates accountability for public funds 💰🏛️ ✅ Ensures legal & contractual financial obligations are met 📜✅ ✅ Supports transparency & trust in government financial reporting 🔍👥

Answer 44

1️⃣ Citizenry 👥🗳️ (Taxpayers, voters, service recipients, media, advocacy groups, researchers) 2️⃣ Legislative & Oversight Bodies 🏛️⚖️ (State legislatures, city councils, school boards, executive officials) 3️⃣ Investors & Creditors 💰📊 (Bondholders, rating agencies, financial institutions, municipal security underwriters)

Answer 45

✅ Citizenry → Ensures transparency & accountability of public funds 🔍💰 ✅ Legislative & Oversight Bodies → Monitor financial compliance & decision-making ⚖️🏛️ ✅ Investors & Creditors → Assess financial health for investment & lending decisions 📈💵

Answer 46

✅ Sets standards for state & local governments 🏙️ ✅ Includes states, counties, cities, towns, school districts, public colleges/universities, hospitals, and eligible NFPs 🎓🏥

Answer 47

✅Objectives of financial reporting for nonbusiness organizations (including governments and NFPs) 🏛️📑 ✅Provides conceptual guidance, NOT specific accounting standards 💡📖

Answer 48

✅Establishes the overall purpose and concepts behind financial reporting 🎯 ✅Serves as a basis for detailed accounting and reporting standards 🔍📊 ✅Not directly enforceable standards but guiding principles 🚫⚖️

Answer 49

🏛️ Governmental Funds: ✅ Changes in financial position 📈 ✅ Financial position at year-end 📆 ✅ Sources & uses of financial resources 🔄💰 🏢 Proprietary/Fiduciary Funds: ✅Operating income 💼 ✅Changes in net position 📊 ✅Financial position & cash flows 💵

Answer 50

1️⃣ Representative government & separation of powers 🏛️⚖️ 2️⃣ Federal system & prevalence of intergovernmental revenues 🌐💰 3️⃣ Relationship of taxpayers to services received 🧑‍🤝‍🧑📦

Answer 51

1️⃣ Resource Allocation Decisions: Provide useful info for resource providers (donors, creditors, taxpayers) to make informed decisions. 💰📈 2️⃣ Service Assessment: Enable assessment of services provided & organization's ability to continue them. 🏛️🔍 3️⃣ Stewardship & Performance: Help evaluate management’s stewardship responsibilities & overall performance. 👔📊 4️⃣ Economic Resources & Obligations: Provide info on resources, obligations, and net resources, and how transactions affect them. ⚖️💼 5️⃣ Performance Measurement: Show periodic changes in net resources & service accomplishments for assessing organizational performance. 📅📉📈 6️⃣ Liquidity & Cash Flows: Provide information on cash/liquidity management, borrowing activities, and other liquidity impacts. 💧💵 7️⃣ Explanations & Interpretations: Include explanations to help users clearly understand the financial information presented. 📖🔍

Answer 52

1️⃣ Financial position & condition of the entity 📊🏛️ 2️⃣ Physical & other nonfinancial resources 🌳🏗️ 3️⃣ Legal/contractual resource restrictions & potential resource loss risks ⚖️🚫

Answer 53

✅ As nonoperating revenue 📌 Because the grant is not earned through the fund’s primary exchange activities 🔁 Only charges for services are reported as operating revenue 🏗️ Restricted capital grants are reported as capital contributions

Answer 54

✅ Proprietary funds (e.g., enterprise & internal service funds): ✔️ Transfers out are subtracted when calculating the change in net position ✅ Governmental funds (e.g., general, special revenue): ✔️ Transfers out are reported as "other financing uses" ❌ They do not affect the fund’s "net position" (since these funds use fund balance, not net position) 📘 In both cases, transfers do not affect revenues or expenses, but they do impact the bottom line in their respective statements.