FAR 29 - Governmental Accounting Flashcards
What are the three major types of funds in governmental accounting?
Governmental, Proprietary, Fiduciary
Which two accounting bases are used in governmental accounting?
Accrual basis - current economic resources focus (revenues recognized when earned)
Modified accrual basis - current financial resources focus (revenues recognized when available and measurable)
What is a budget appropriation, encumbrance & expenditure?
Appropriation - The highest amount allowed for a particular expenditure under a budget. “Authorized to spend”
Encumbrance - An open order; can be considered a form of estimated expenditure. “Expected to spend”
Expenditure - Actual Cost
What are the five types of governmental funds?
(Modified Accrual)
General Fund
Special Revenue Fund
Permanent Fund
Capital Projects Fund
Debt Service Fund
What is a General Fund?
The operating fund of the governmental unit.
Records Significant Revenues: Taxes; Tickets; Fines; Licenses Records Significant Expenditures: Police; Education; Fire Dept
What is a Special Revenue Fund?
Restricted for a specific purpose such as street repair. Earmarked
Example: gas tax that finances repairs & maintenance of the roads
What is a Permanent Fund?
Legally restricted fund; where only earnings can be used to fund programs. Principal remains intact.
What is a Capital Projects Fund?
Used to acquire and build facilities. Major acquisition or construction activities.
What is a Debt Service Fund?
Handles repayment of long-term debt and related interest.
Which financial statements are issued in Governmental Funds?
- Balance Sheet
- Statement of Revenues, Expenditures, and Changes in Fund Balance
- (Modified Accrual)
When is Revenue recorded in Governmental Accounting?
When is Revenue accrued in Government Accounting?
When it is BOTH available and measurable; regardless of when it is spent.
Acrrued for:
- Property Tax to be collected within 60 Days
- Grants
What is Derived Tax Revenue?
Money collected from people doing things: Sales tax (buying cars) or income tax (people working) or motor fuel tax
or
Taxes assessed on exchange transactions.
What is Imposed Tax Revenue?
Tax assessed just because things exist.
Example: property tax on a car (even if it’s never driven); real estate tax Recorded as a revenue when BUDGETED.
Estimated uncollectible property tax revenues don’t offset revenues; so don’t net them.
What are the types of Proprietary Funds?
(Accrual)
Internal Service Funds - to serve the needs of other governmental units (i.e. motor pool, IT department)
Enterprise Funds - provide goods or services to external users (i.e. post office/untilities)
- Usually “Fees” based.
What are the five Fund Balance Types found in the Balance Sheet of a Governmental Funds Financial Statement?
Restricted - Restricted by Contributor
Committed - Restricted by Government
Assigned - Intended for a purpose
Unassigned - Available to be spent
Non-spendable - Not in a spendable state
What are the types of Fiduciary Funds?
Agency Fund - government acts as an agent or custodian (Collects money and disburses to others) (Due To/From)
Pension Trust Fund - Government is a trustee for a pension plan
Investment Trust Fund - Government is a trustee over a series of investments
Private Purpose Trust - Trust that benefits various individuals and entities
How are Capital Assets shown on a Government-Wide Statement of Net Position?
Capital Assets are shown net of debt.
+ Asset Cost
- Accumulated Depreciation
- Asset Liabilities
= Net Assets
How is Infrastructure reported on a Government-wide FS Statement of Net Position?
Infastracture is shown Modified approach:
- Reported at Cost; NO accumulated depreciation
Infastracture shown on Preferred Approach:
- Report at Cost & Depreciate
On a Government-wide F/S, how is a Statement of Net Position presented/divided?
Rows to the very Left:
Asset, Deferred Outflows, Liabilities, Deferred Inflows = Net Position
Columns to the Right:
Governmental Activities
- Consists of 5 Govt Fund + Internal Svc
Business Activities
- Consists of Enterprise fund
Total (Govt & Bus Activities)
Component Units
How are activities presented in a Statement of Activities of a Government-wide FS?
They are divided by function If the activities of a component are distinguishable from the rest of the governmental entity; then discreet presentation is required If the activities of the component cannot be identified and separated from the rest of the governmental activities; then blended presentation is warranted. Component units are reported in the Entity-Wide Financial Statements and not the Fund Financial Statements.
What is the primary objective of governmental accounting?
To provide information that is useful and benefits a wide range of users including: Costs of services provided Sufficiency of revenues to cover costs Financial position of entity
What are Government-mandated revenues?
What are voluntary Revenues?
Govt Mandated Revenues - One level of government provides funds to another level.
- Example: Federal Grants
Voluntary Revenues - Transactions entered into willingly by parties (Unrestricted grants & voluntary donations)
Modified accrual funds (PD Consents to Smoking Grass)
Permanent
Debt Service
Capital Projects
Special Revenue
General
Accrual Funds (I-PIPE-Alot
Internal Service
Pension Trust
Investment Trust
Private Purpose Trust
Enterprise
Agency
Interfund Transactions (4 Types)
- Operating
- General to Capital; General to Debt Svc
- Quasi-external - pmts from one fund to another
- General buying from Enterprise Fund
- Reimbursements
- repmt from one fund to another
- Loans
Bugetary Entry Set-up Budget (JOURNAL ENTRY)
DR: Estimated Revenues
DR: Estimated Sources
DR: Budgetary Fund Balance (PLUG)
CR: Appropriations
CR: Estimated Uses
CR: Budgetary Fund Balance (PLUG)
***Reverse Entries to close at YE
Spending Cycle (Encumbrance Accounting)
Purchase Order Journal
DR: Encumbrances
CR: Reserved for Encumbrances
Order Filled (received goods) 2-Step
DR: Reserved for Encumbrances (same amt as PO)
CR: Encumbrances (same amt as PO)
DR: Expenditures
CR: Voucher’s Payable
What are the five major sections to the general purpose financial statements of a government entity?
- MD & A
- Government-wide FS (Accrual)
- Statement of Net Position
- Statement of Activities
- Fund Financial Statements
- Government Fund (Modified Accrual)
- Statement of Net Position (B/S)
- Stmt of Rev, Expenditures & Change in Fund Bal
- Proprietary Funds (Accrual)
- Statement of Net Position (B/S)
- Stmt of Expenses & Change in Fund Bal
- Statement of Cash Flows
- Fiduciary Funds (Accrual)
- Statement of Fiduciary Net Position
- Statement of Changes in Fiduciary Net Position
- Government Fund (Modified Accrual)
- Footnotes
- Required Supplementary Information (RSI)
Which financial statements are issued in Proprietary Funds?
- Statement of Net Position
- Statement of Revenues, Expenses, and Changes in Fund Net Position
-
Statement of Cash Flows
- Operating (direct method required)
- Investing
- Includes interest/dividend income
- Loans made
- Noncapital Financing
- Capital Related Financing
Which financial statements are issued in Fiduciary Funds?
- Statement of Fiduciary Net Position
- Statement of Changes in Fiduciary Net Position
Which statements are issued in the Governmnet-wide Financial Statements?
(Accrual)
- Statement of Net Positions
-
Statement of Activities
- Provides info to asses operational accountability
