Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Becker FAR Cards > FAR Chapter# 8 > Flashcards

FAR Chapter# 8 Flashcards

1
Q

FAR 8-1 - GOVERNMENT ACCOUNTING OVERVIEW | Name the primary authoritative body for GAAP for governmental entities.

A

Governmental Accounting Standards Board (GASB)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

FAR 8-2 - GOVERNMENT ACCOUNTING OVERVIEW | What are the three accounting themes addressed by governmental accounting?

A

Fund structure

Fund accounting

External reporting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

FAR 8-3 - GOVERNMENT ACCOUNTING OVERVIEW | Identify the major categories of funds used by state and local governmental units.

A

Governmental

Proprietary

Fiduciary

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

FAR 8-4 - GOVERNMENT ACCOUNTING OVERVIEW | What terms define the manner and timing of transaction recognition in governmental fund accounting?

A

Fund accounting principles are defined by:

  • Measurement Focus (how transactions are recognized)
  • Basis of Accounting (when transactions are recognized)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

FAR 8-5 - GOVERNMENT ACCOUNTING OVERVIEW | What are the objectives of external reporting?

A

Operational accountability

Fiscal accountability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

FAR 8-6 - GOVERNMENT ACCOUNTING OVERVIEW | What types of external reports meet the accountability objectives of government?

A

Operational accountability: Government-wide financial statements

Fiscal accountability: Fund financial statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

FAR 8-7 - GOVERNMENT ACCOUNTING OVERVIEW | Name each governmental fund type.

A 
G - General Fund
R - Special Revenue Funds
a
S - Debt Service Funds
P - Capital Project Funds
P - Permanent Funds
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

FAR 8-8 - GOVERNMENT ACCOUNTING OVERVIEW | What are the fund accounting principles applicable to governmental funds?

A

Measurement Focus: Current financial resources

Basis of Accounting: Modified accrual

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

FAR 8-9 - GOVERNMENT ACCOUNTING OVERVIEW | What specialized accounti practices are followed by the governmental funds?

A

B - Budgetary Accounting
A - Activity (Actual) Accounting
E - Encumbrance Accounting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

FAR 8-10 - GOVERNMENT ACCOUNTING OVERVIEW | Name and define the five classifications of fund balances used by governmental fund types

A

Non-spendable: Resources that are not available to be spent (e.g., inventories).

Restricted: Resources that are constitutionally, legislatively, or otherwise externally limited as to use.

Committed: Resources that are internally limited as to use by the governments highest level of decision-making authority.

Assigned: Resources intended to be used by the government for specific purposes whose constraints do not rise to the level of restricted or committed.

Unassigned: Residual classifciation of equity that represents resources that are the least limited as to use.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

FAR 8-11 - GOVERNMENT ACCOUNTING OVERVIEW | Name each proprietary fund type.

A

Internal Service Funds

Enterprise Funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

FAR 8-12 - GOVERNMENT ACCOUNTING OVERVIEW | What are the fund accounting principles applicable to proprietary funds.

A

Measurement Focus: Economic resources

Basis of Accounting: Full accrual

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

FAR 8-13 - GOVERNMENT ACCOUNTING OVERVIEW | Name each fiduciary fund type.

A

P - Pension Trust Funds
A - Agency Funds
P - Private Purpose Trust Funds
I - Investment Trust Funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

FAR 8-14 - GOVERNMENT ACCOUNTING OVERVIEW | What are the fund accounting principles applicable to fiduciary funds?

A

Measurement Focus: Economic resources

Basis of Accounting: Full accrual

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

FAR 8-15 - GOVERNMENT ACCOUNTING OVERVIEW | Distinguish between alternative measurement focuses.

A

Current Financial Resources (GRaSPP)

  • No fixed assets are recorded; capital outlays displayed as expenditures
  • No depreciation
  • No noncurrent liabilities are recorded; debt proceeds displayed as resource inflows
  • Principal payments displayed as an expenditure
  • Premiums and discounts on debt are not amortized; they are included as an increase ofr decrease of debt proceeds

Economic Resources (SE PAPI)

  • Fixed assets are recoreded
  • Noncurrent liabilities are recorded
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

FAR 8-16 - MODIFIED ACCRUAL ACCOUNTING | Define modified accrual and list the funds that use it as a basis of accounting.

A

Modified accrual:

Revenues should be recognized when measurable and available: expenditures are generally (with the exception of interest expenditures) recognized when fund liability is incured.

Funds using modified accrual basis: 
G - General Fund
R - Special Revenue Funds
S - Debt Service Funds
P - Capital Project Funds
P - Permanent Funds
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

FAR 8-17 - MODIFIED ACCRUAL ACCOUNTING | What do the terms “measurable” and “available” mean in the context of the modified accrual basis of revenue accounting?

A

Measurable means reasonably estimable or of a known determined amount.

Available means collectible within (generally) 60 days of year-end.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

FAR 8-18 - MODIFIED ACCRUAL ACCOUNTING | When are revenues recorded in governmental funds?

A

Governmental funds record revenues when measurable and available. This concept applies to accrual of different types of revenues depending on the character.

Accrue when:
Billed/Recorded (Imposed non-exchange transactions)
Real estate taxes (due)

Received (Derived non-exchange transactions)
Income taxes
Sales taxes

Earned (Government mandated and voluntary non-exchange transactions)
Real estate taxes paid in advance
Restricted grants

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

FAR 8-19 - MODIFIED ACCRUAL ACCOUNTING | Define the different classifications of expenditures.

A

Expenditure classification include:

  • Function (e.g., public safety)
  • Organizational unit (police, fire, etc)
  • Activity (drug enforcement, highway safety patrol)
  • Character (current, capital outlay, debt service)
  • Object (personal services, building occupancy, insurance)
20
Q

FAR 8-20 - MODIFIED ACCRUAL ACCOUNTING | What is the journal entry to record the annual budget?

A

Dr. Estimated revenues
Cr. Appropriations
Cr. Unreserved fund balance

Actual expenditures have a natural debit balance. Appropriations to which those expenditures are compared have a natural credit balance. Computation of unexpended appropriations is a pure arithmetic sum of these two accounts.

21
Q

FAR 8-21 - MODIFIED ACCRUAL ACCOUNTING | Define encumberance and give the journal entry to recognize a purchase order on supplies.

A

Encumberance: A commitment related to an underperformed contract for goods or services (generally an open purchase order).

  Dr.     Encumbrance
  Cr.            Reserve for encumbrance

Encumbrances have a natural debit balance. Appropriations, to which those encumbrancves are compared, have a natural credit balance. Computation of unencumbered appropropriations is a pure arithmetic sum of these two accounts. Computation of unexpected and unencumbered appropriations is the sume of the three accounts: Appropriations (credit), Expenditures (debit), and Encumbrances (debit).

22
Q

FAR 8-22 - MODIFIED ACCRUAL ACCOUNTING | What journal entries are made to record the liabilities incurred associated with previously encumbered funds?

A

Expenditure of previously encumbered funds results in the following entries:

Dr. Expenditure
Cr. Accounts Payable

Dr. Reserve for Encumbrance
Cr. Encumbrance

The entries serve to reverse the full effect of the encumbrance entry and record the full amount of the expenditure (BAE - BAE)

23
Q

FAR 8-23 - MODIFIED ACCRUAL ACCOUNTING | When are budgetary, actual, or encumberance entries combined?

A

Never

Budgetary, actual, and encumberance transactions are always segregated on the books, do not net:

B B
A A
E E

At the beginning of the year: Book Budget
Througout the year: Book actuals, book encumberances
At year end: Close the budget, close the acutals, close the encumbrances

24
Q

FAR 8-24 - MODIFIED ACCRUAL ACCOUNTING | What are the colsing budget, activity and encumberance journal entries?

A

Activity, Budget (Deficit), Encumberance

Dr.  Revenue
Dr.  Unreserved fund balance
Cr.        Expenditures
Dr.  Appropriations
Cr.        Estimated revenues
Cr.        Budgetary fund balance
Dr.  Reserve for encumberance
Cr.         Encumberances

At the beginning of the next year, the above encumberance entry is reversed. The entry will keep the Reserve for Encumberance intact in order to account for resources spent in the next year that would have been budgeted in the current year. Reserves are recorded purely for internal purposes and are not displayed as “reserves” for external reporting.

25
Q

FAR 8-25 - MODIFIED ACCRUAL ACCOUNTING | Journal entry to recognize supplies remaining at year-end.

A

Purchase Method
Dr. Supplies on hand inventory
Cr. Fund balance , non-spendable

This journal entry indicates that these supplies are not available spendable resources.

Consumption method:
No entry may be needed as supplies were debited to inventory and then recognized as expenditures as the were used. A corresponding entry changing the related non-spendabel classification of fund balance should have been done as each use of inventory was recorded.

26
Q

FAR 8-26 - GOVERNMENTAL FUNDS | What is the purpose of the general fund?

A

The general fund is created at the beginning of the governmental unit and it exists throughout the life of that unit. The general fund accounts for the general activities of a governmental unit that are not accounted for by any other fund.

The general fund is always a major fund.

27
Q

FAR 8-27 - GOVERNMENTAL FUNDS | What are the typical revenue sources of the general fund?

A

Taxes (property taxes)

Public safety and regulations (fines, inspection fees, etc.)

Intergovernmental (shared revenues)

Charges for services

Other revenues (interest income)

28
Q

FAR 8-28 - GOVERNMENTAL FUNDS | What is the purpose of the special revenue fund?

A

Special revenue funds account for revenues and expenditures that are restricted or committed for specific purposes. The life of a special revenue fund may be limited or unlimited.

29
Q

FAR 8-29 - GOVERNMENTAL FUNDS | What are the typical revenue sources of a special revenue fund?

A

Intergovernmental revenues (e.g., sales taxes or gasoline taxes restricted for use)

Intergovernmental revenues (e.g., grants and other financial assistance provided for a specific purpose)

Specific fees (e.g., parking fees, museum admission fees, etc)

Seizure of assets surrendered as a result of illegal acts (e.g., Forfeiture Act)

30
Q

FAR 8-30 - GOVERNMENTAL FUNDS | What is the purpose of the debt service fund?

A

The debt service fund is created to account fo rthe accumulation of restricted, committed, or assigned resources (cash and investments) for the payment of currently due interest and principal on a long term general obligation debt.

Debt service funds pay GRSPP debt.

Debt service funds do not pay SE PAPI debt.

31
Q

FAR 8-31 - GOVERNMENTAL FUNDS | What are the typical components of revenue and other financing source classifications for debt service funds?

A

Revenues

  • Investment income
  • Taxes levied specifically for debt repayment

Other financing sources

  • Transfers from other funds to meet bond indenture requirements
  • Debt proceeds associated with refunding debt
32
Q

FAR 8-32 - GOVERNMENTAL FUNDS | What is the purpose of the capital project fund?

A

Capital projects funds are established to account for resources restricted, committed, or assigned for the construction or purchase or leasing of significant fixed assets used by the governmental (GRSPP) funds. Capital projects funds are not used for proprietary (SE) or fiduciary (PAPI) funds.

33
Q

FAR 8-33 - GOVERNMENTAL FUNDS | What are typical components of revenue and other financing source classifications for capital project funds?

A

Revenues

  • Investment earnings
  • Tax revenues specifically levied to fund capital improvement

Other financing sources

  • Debt proceeds used to fund construction
  • Transfers from other funds
34
Q

FAR 8-34 - GOVERNMENTAL FUNDS | What is the purpose of the permanent fund?

A

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

35
Q

FAR 8-35 - GOVERNMENTAL FUNDS | What are the required fund financial statements for the individual governmental fund types?

A

GRSPP Funds require:

  • Balance Sheet
  • Statement of Revenues, Expenditures, and Change in Fund Balance
36
Q

FAR 8-36 - PROPRIETARY FUNDS | What is the purpose of the internal service fund?

A

Internal service funds are established to finance and account for services and supplies provided exclusively to other departments within a governmental unit or to other governmental units, typically on a cost-reimbursement basis.

Major fund reporting requirements do not apply to internal service funds.

37
Q

FAR 8-37 - PROPRIETARY FUNDS | What are typical revenue sources for internal service funds?

A

Operating Revenues
Charges for services provided to other funds. (These charges are NOT transfers or other financing sources.)

Nonoperating Revenues

  • Investment income
  • Grant revenues
38
Q

FAR 8-38 - PROPRIETARY FUNDS | What is the purpose of the enterprise fund?

A

Enterprise funds are used for operations that are financed and operated in a manner similar to private business enterprises. Activities should be reported in enterprise funds if the activity is funded by debt secured by a pledge of net revenue from fees and charges, laws required that activity fees be recovered through fees, or fees are designed to recover costs.

39
Q

FAR 8-39 - PROPRIETARY FUNDS | What are typcial revenue sources for enterprise funds?

A

Operating Revenues
Charges for services (utility fees, patient fees, tuition, other exchange type fees)

Nonoperating Revenues

  • Shared / grant revenues
  • Investment income
40
Q

FAR 8-40 - PROPRIETARY FUNDS | What are the required fund financial statements for the individual proprietary fund types?

A

SE funds require:

  • Statement of Net Assets
  • Statement of Revenues, Expenses, and Changes in Fund Net Assets
  • Statement of Cash Flows
41
Q

FAR 8-41 - FIDUCIARY FUNDS | What is the purpose of the pension trust fund?

A

Pension (and other employee benefit) trust funds account for government-sponsored defined benefit and defined contribution plans and other employee benefits, such as postretirement health care benefits.

42
Q

FAR 8-42 - FIDUCIARY FUNDS | What are the unique note disclosures and required supplemental information reporting associated with pension funds?

A

Note Disclosures
Plan description
Contributions and reserves
Risk concentratrations

Required Supplementary Information
Schedule of funding progress (last six years)
Schedule of employer contributions (last six years)
Notes to support the schedules

43
Q

FAR 8-43 - FIDUCIARY FUNDS | What is the purpose of the agency trust fund?

A

An agency fund collects cash to be held temporarily for an authorized recipient to whom it later will be disbursed. This recipient may be another fund or some individual or fund or even government outside of the reporting government.

44
Q

FAR 8-44 - FIDUCIARY FUNDS | What is unique about agency fund revenues and expenses?

A

Agency funds do not report revenues and expenses, only assets and liabilities.

45
Q

FAR 8-45 - FIDUCIARY FUNDS | What is the purpose of the private purpose trust fund?

A

The private purpose trust fund is the designated fund for reporting all other trust arrangements under which principal and income are for the benefit of one of the following: specific individuals, private organizations, and other governments.

46
Q

FAR 8-46 - FIDUCIARY FUNDS | What is the purpose of the investment trust fund?

A

Investment trust funds account for external investment pools sponsored by a governmental entity.

Example: A state may act as the investment agent for counties and cities. The investments “external” to state government, those administered on behalf of the counties and cities, are reported in an investment trust fund.

47
Q

FAR 8-47 - FIDUCIARY FUNDS | What are the required fund financial statements for the individual fiduciary fund types?

A

Most PAPI funds require:

  • Statement of Fiduciary Net Assets
  • Statement of Changes in Fiduciary Net Assets (Note: Agency funds [the “A” in PAPI] do not require this statement)

Becker FAR Cards (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions