FAR - Government Flashcards
Why does GASB require the use of full accrual accounting?
So that users are better able to assess the financial health of the government. It also lets taxpayers to assess the cost of the government’s operations - are the costs of services provided by the govt being paid for in full with tax and other revenues that were levied and collected during the current year, or do the costs>revenues, causing a financial burden on taxpayers in future years.
How are unrestricted grants recognized in govt accounting?
Revenue. It was used to pay for expenditures incurred during the year. The grant was measurable and available during the year.
What is internal service fund activities reported as - business type or govt activities on the govt wide statement of net position?
Internal service fund activities are normally reported in govt activities on the govt wide Statement of Net Assets.
Which govt unit fund records depreciation? capital projects debt service internal service special revenue
Internal service records deprec
What is the JE when the budget is recorded?
Assuming a surplus
DR Estimated Rev XX
CR Appropriations XX
CR Budgetary fund balance XX
Appropriations represent max expenditure authority (future liabilities).
What are encumberances? When is it DR/CR?
Encumberances are commitments related to unperformed (executory) contracts for goods or services.
It is debited when goods are ordered and credited when goods are received.
When is Fund Balance - Reserved for Encumberances credited?
Credited when goods are ordered and is subsequently debited when the goods are received.
Which is a derived tax revenue?
Motor fuel taxes are an example of a derived tax revenue. These result from taxes assessed by govts on exchange transactions. The taxes are derived from the underlying exchange transactions. In the case of motor fuel taxes, exchange transactions between the service station and consumers provide the basis for the collection of the motor fuel taxes.
What is considered an expenditure of a govt unit general fund?
Routine employer contributions from general fund to a pension trust fund is an expenditure.
Not to be confused with transfers from general fund.
What is an enterprise fund?
An enterprise fund is used to account for the activities of a govt unit to which the govt provides goods and services which are 1. rendered primarily to the general public, 2. financed substantially or entirely through user charges, 3. intended to be self supporting.
An example is equipment used for supplying water to residents.
What is an expenditure of the general fund and would impact the excess of revenues over expenditures?
Purchase of fixed assets is an expenditure and it would impact the excess of revenues over expenditures
Payment to a debt service fund is an expenditure
Where are special items presented?
Presented at the bottom of the statement after computation of the excess of revenues over expenditures in the general fund statement. Proceeds from the sale of a capital asset is a special item.
Where is special assessment debt reported?
LT debt is not recorded in any govt fund.
If a govt is obligated in some manner to assume the pmt of related debt service in the event of default by property owners, all transactions related to capital improvements financed by special assessments should be reported. It is treated as general obligation debt and should be reported as any other govt obligation debt (in govt wide statements only).
Under the modified accrual basis of accounting for govt funds of a govt unit, revenues are recognized in the accounting period in which they…
Become available and measurable. Revenue is available when it is collectible within the current period, or soon enough thereafter to be used to pay liabilities of the current period.
What can be reported on the govt wide statement of net assets?
In addition to govt activities, both business type activities and discretely presented component units can be reported.
What is considered revenue for the year? What is the expenditure in Debt Services fund?
- debt principal matured
- unmatured accrued interest on OS debt PY
- interest on matured debt
- unmatured accrued interest on OS debt CY
- interest revenue from investments
- cash transferred from General fund for retirement of debt principal
- cash transferred from General fund for pmt of matured interest
Transfers from a fund receiving revenue to a fund through which the resources are to be expended is considered another financing source. Interfund transfers of this nature should be distinguished from revenues, expenses, or expenditures in the FS.
Financial resources received in other funds for transfer to the debt service fund do not constitute revenue to the debt service fund.
The only revenue is the investment income.
Principal and interest on general obligation LT debt are typically not recognized as expenditures until due. In modified accrual, interest is not being recognized as an expenditure in the accounting period in which the fund liability is incurred. Debt principal matured and interest on matured debt is exp in debt service fund.
What is the JE when fixed assets are purchased from General Fund revenues are received?
General fixed assets do not represent financial resources available for expenditure, but are items for which financial resources have been used. When a general FA is purchased, expenditures would be debited and AP credited.
FA purchased with GF revenues are not assets of the GF but are assets of the govt unit as a whole which will be reported in govt wide FS
If bonds are issued in the year and interest is payable beginning next year, what amount of bond interest is reported in the statement of REC (revenues, expenditures, and changes in fund balance) at the end of fiscal year?
0
General obligation bonds are accounted for in debt service funds (uses modified accrual basis of accounting). Only interest cost paid in the period is included in interest expense.
