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Becker FAR > FAR 8 > Flashcards

FAR 8 Flashcards

1
Q

3 Generic Fund Categories in Governmental Accounting

A
  1. Governmental Funds
  2. Proprietary Funds
  3. Fiduciary Funds
    * F/S should be separately presented for these
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2
Q

Government-wide Presentations

A

Consider to be consolidated financial statements with fund financial statements as their respective segments.

Funds are reconciled to government wide

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3
Q

Financial activity of primary government classified in these ways:

A
  1. Governmental activities

2. Business-type activities

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4
Q

What fund is excluded from government-wide financial statement presentation

A

Fiduciary funds

They are however presented individually as fund financial statements

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5
Q

Governmental Fund Types: G.R.S.P.P.

A
  • Modified accrual accounting
  • Current* financial resources measurement focus
  • Carries current assets and liabilities only
G.- General fund
R.- Revenue (special) funds
S.- Service (debt) funds
P.- Projects (capital) funds
P.- Permanent fund
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6
Q

Proprietary Fund Types

A
  • Full accrual accounting
  • Economic resources measurement focus
  • Carries everything- fixed assets & L/T Debt
  1. Internal Service Funds
  2. Enterprise Funds
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7
Q

Fiduciary (Trust) Fund Types: P.A.P.I.

A

Full accrual accounting
Economic resources measurement focus
*Carries everything - fixed assets & L/T Debt

P.- Pension & other employee benefit trust funds
A.- Agency trust funds
P.- Private purpose trust funds
I.- Investment trust funds

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8
Q

Economic Resources Measurement Focus- Balance Sheet Presentation - Proprietary & Fiduciary Funds

A

Net position reported in 3 components:

  1. Net investment in capital assets
  2. Restricted (distinguishing b/t major categories of restrictions)
  3. Unrestricted
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9
Q

Pass Key- Reconciling b/t Governmental Funds & Government-Wide Financial Statements

A

Adding fixed assets excluded from governmental fund financial statements and subtracting non-current liabilities (also excluded) are two of the most significant reconciling items between governmental funds and government-wide financial statements.

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10
Q

Budgetary Account J/E

A

Budgetary accounts are “estimate accounts” which are opposite debit credit balances from usual accounting.

Ex: Estimated rev is Dr.

Dr. Est revenue control
Dr. Est financing sources
Dr. Budgetary control (negative/deficit)
   Cr. Appropriations control
   Cr. Est. other financing uses
   Cr. Budgetary control (positive/surplus)

At EOY, close for exactly as budget. Budgetary & actual activity closed separately.

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11
Q

Budgetary Control Account

A

Beginning of year, difference between estimated revenues and appropriations goes to an account called budgetary control (budgetary “equity” account)

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12
Q

Expenditures under Modified Accrual Accounting

Purchase & Consumption Method

A

Purchase Method- expenditure current assets when purchased

Consumption Method - set up as current asset when purchased, expenditure items as consumed

*Expenditure is similar to expense under accrual method

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13
Q

Pass Key - Fixed Asset Acquisitions under current financial resources measurement focus and economic resources measurement focus

A

Current Financial Resources Measurement Focus - “Expenditure”

Economic - capitalize and depreciate

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14
Q

Encumbrances

A

Open purchase orders or commitment of the available appropriations of a government.

The use of encumbrances help monitor the degree to which appropriations have been used.

Should not be viewed as GAAP expediture.

Budgetary control entry acts as a limitation or constraint that reduces the available fund balance.

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15
Q

Encumbrances- J/E of appropriation and actual use of funds

A

To set up:

Dr. Encumbrances
Cr. Budgetary control

Need to reverse when takes place:

Dr. Budgetary control
Cr. Encumbrances

Then record actual expenditure:

Dr. Expenditures
Cr. Vouchers payable (or cash)

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16
Q

Outstanding Encumbrances - J/E to close at EOY

A

Close and reserve the fund balance:

Dr. Budgetary control
Cr. Encumbrances

Close budgetary accounts related to outstanding POs

Dr. Unassigned fund balance (year-end surplus)
Cr. Fund balance, committed

17
Q

B.A.E.

A

B.- Budget - appropriations is example

A.- Activity - expenditures, actual bills incurred

E.- Encumbrances - restrictions of fund balance due to POs

Budget
-Activity
-Encumbrances
= Remaining available appropriations

18
Q

Deferred Outflows & Inflows

A

Deferred outflow (like an asset)- positive effect on net position, reported after assets. Consumption of net assets applicable to future reporting period.

Deferred inflow (like a liability) - negative effect on net position, reported following liabilities. Acquisition of net assets applicable to future reporting period.

19
Q

Special Revenue Fund

A

Accounts for revenues and expenditures that are legally restricted or committed for specific purposes other than debt service or capital projects.

20
Q

Expendable Trust Activities

A

Special revenue fund - i.e. scholarship and endowment funds

21
Q

Debt Service Fund

A

Accounts for accumulation of resources (cash & investments) and payment of currently due interest and principal on L/T general obligation debt.

Pays off debt of GRSPP funds

Does NOT pay off debt of SE-PAPI funds

Encumbrance accounts NOT used

Expenditures should be recorded when legally payable per bond agreement. No allocation b/t interest and principal. NO accrual of interest payable or amortization of discount/premium.

22
Q

Capital Projects Funds

A

Can be considered “purchasing department”

Established for construction or purchase or leasing of significant fixed assets for GRSPP funds only.

23
Q

Capital Projects Funds - Expenditures & Encumbrance Types

A

Expenditures usually classified as capital outlay.

During construction, encumbrances recorded as commitments are incurred.

Vouchers recorded when liability is incurred and expenditure known.

When vouchers recorded, encumbrance reversed.

24
Q

Pass Key

A

Special revenue fund - has operating expenditures

Debt service fund - has debt service expenditures

Capital projects fund - has capital outlay expenditures

25
Q

Permanent Funds

A

Used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for the purposes that support the reporting government’s programs.

26
Q

L/T Debt Enterprise Funds Carry

A
  1. Revenue bonds backed only by proprietary fund
  2. Revenue bonds backed by proprietary fund with general obligation backing
  3. General obligation bonds paid with proprietary fund revenues
27
Q

Fiduciary Funds - Pension Trust

A

Changes in net pension liability typically included in pension expense of government-wide financial statements and the appropriate funds responsible for funding the pension obligation.

28
Q

Agency Trust Fund

A

Collects cash to be held temporarily for an authorized recipient to whom it will be later disbursed.

Record no fund balance because current assets must equal current liabilities.

29
Q

Private Purpose Trust Fund

A

Designated fund for reporting all other trust arrangements under which principal and income are for the benefit of one of the following:

  1. Specific individuals
  2. Private organizations
  3. Other governments

Becker FAR (12 decks)

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