FAR-Government Flashcards
What are the five major sections of a governmental accounting Comprehensive Annual Financial Report (CAFR)?
- Management Discussion and Analysis
- Government-wide Financial Statements
- Fund Statements
- Notes to the financial statements
- Required Supplementary Information (RSI)
In governmental accounting, what is the accounting formula in the Statement of Position?
Assets + Deferred Outflows of Resources - Liabilities - Deferred Inflows of Resources = Net Position
What two statements are presented in Government-wide Financial Statements?
- Statement of Net Position (or assets)
2. Statement of Activities
What is the net investment in capital assets?
Total of capital assets - accumulated depreciation and obligations
What is the restricted Net Position?
Restricted Assets - liabilities and deferred inflows of resources that are related to restricted assets.
What are deferred outflows?
Consumption of net assets that are applicable to a future reporting period
What are deferred inflows?
Acquisitions of net assets that are applicable to a future reporting period. An example is Grant Funds received in advance. Deferred revenue is not an example as it will be matched by an obligation.
What are the four columns in the Government Statement of Net Position?
- Governmental Activities
- Business-type activities
- Total
- Component Units
In government accounting, what are the 5 fund balance classifications?
‘Not Right Can’t All United’
- Nonspendable Fund Balance (Can’t be spent)
- Restricted Fund Balance (restricted by law or by an external party)
- Committed Fund Balance (restricted by authority)
- Assigned Fund Balance (Intended for a purpose, but is not formally restricted or committed)
- Unassigned Fund Balance (Self explanatory; only found in the General Fund; Is available for any use deemed appropriate)
Which statements are issued for Proprietary Funds?
- Statement of Net Position
- Statement of revenues, expenses, and changes in fund net position
- Statement of Cash Flows
With GASB, What are the FOUR sections of of the Proprietary Funds Statement of Cash Flows? And is in each section?
- Operating Activities
- Investing
- Non-Capital Financing
- Capital and Related Financing
- Reconciliation of operating income using the indirect method
Operating
-Direct Method is Required (No Interest or Dividends Rec’d; Similar to IFRS)
Investing
-Include Interest and Dividends Rec’d; Similar to IFRS
Non-Capital Financing
-Includes interest expense on nonsecured loans
-Transfers, grants, subsidies, and property taxes rec’d
Capital and Related Financing
-Includes interest expense on secured loans
-Includes financed purchased and sales of capital assets
What method is used to create the Operating Section of the Proprietary Funds’ Statement of Cash Flows?
Direct Method
What are the two statements issued with Fiduciary Funds?
- Statement of Fiduciary Net Position
2. Statement of Changes in Fiduciary Net Position
In Governmental Accounting, Financial Reports are used primarily to show which four things?
ACE The Financial Statements
A - Actual vs. Budget
C - Compliance with Finance-related laws, rules, and regulations
E - Efficiency and Effectiveness
F - Financial condition and results of operations
What three characteristics affect financial reporting for Governmental-type activities?
Primary characteristics
Control characteristics
Other characteristics
See Lecture 29.13
What objective is set by GASB Concept Statement #1?
Financial reporting should asset in fulfilling government’s duty to be publicly accountable and should enable users to assess that accountability.
What are the four different types of cash transfer that may take place between different funds?
Operating Transfers
Quasi-external transfers
Reimbursements
Loans
In government accounting, what is an expenditure?
How much something actually costs
In government accounting, what is an encumbrance?
(An Expenditure to be); The amount that is expected to be spent.
In government accounting, what is an appropriation?
The amount that is authorized to be spent be the budget.
How are monies spent on capital projects recorded in Fund Financial Statements?
They are expenditures. Dr. Expenditure, Cr. Cash or Voucher Payable
How are monies spent on capital projects treated and recorded in Govt wide Financial Statements?
They are capitalized. Dr. Asset Cr. Cash or Voucher Payable
Why are capital projects accounted for differently in Fund Financial Statements?
Because Fund Financial Statements do not include a net income figure.
What is the main purpose of Government-wide Financial Statements?
To report on all assets at the disposal of the government as well as all liabilities that must be paid.
In government accounting, what is a fund?
A separate quasi-independent bookkeeping system.
What are the 4 types of Required Supplementary Information (RSI) that are required by GASB?
Budgetary Comparison Schedules Information about Infrastructure Assets Claims Development Information 2 Pension Schedules *Schedule Funding Progress *Schedule of Employer Contributions
In government accounting, What is included in Management Discussion & Analysis (MD&A)
Comparison with prior year Overall financial Statements Individual fund statements Variance Analysis Long-term activities Expected Events
What is the difference between an expense and an expenditure?
An expense is matched with revenue (FASB), while an expenditure is an outflow that is not matched with revenues (GASB).
In governmental accounting, what is the definition of modified accrural accounting?
Since the government does not earn revenues in the same way that private businesses do, and instead get revenues via mandates, the record revenue when it is measurable and available.
When are monies from restricted grants recognized as revenue?
When it is spent for approved purposes
What kind of inflow is created from money from bonds?
Money from bonds are a ‘Source of Funds’. Bonds are not a revenue device.
What is a non-exchange transaction?
A transaction where equal amounts are not given or received
What are the four types of non-exchange transactions?
- Derived Tax Revenues (Sales tax, income tax, fuel tax)
- Imposes non-exchange transactions (Taxes not derived from transactions - property taxes; fines, etc)
- Government-mandated non-exchange transactions (federal grants)
- Voluntary non-exchange transactions (unrestricted grant or donation)
What is the mnemonic for Fiduciary Funds, and what does it mean?
People Prance Inside Alley
• Pension Trust (Employee Benefits)
• Private Trust (Fund for private persons, such as unclaimed funds tax refund, etc)
• Investment Trust (Pooled resources to be invested on behalf of multiple government entities)
• Agency (Holds fund that must go to others. Assets = liabilities)
Which governmental funds use the accrual method?
Government wide Activities (Governmental Funds)
How are revenues recognized in Governmental Accounting? Include the name of the method.
Modified Accrual Approach. Revenues are recognized when they satisfy two requirements:
- Measurable
- Available to Spend (collectible in the current period or within 60 days of year-end
Which source of government money is cannot be recognized as revenues?
A transfer in or a source ARE NOT AND CANNOT be revenues
What are the four hierarchies in GASB Statement 55?
- GASB Statements and Interpretations
- GASB Technical Bulletins, and AICPA Guidelines cleared by GASB
- AICPA Practice Bulletins cleared by GASB
- GASB Implementation Guidelines
Under GASB, what is an asset?
An asset has present service compacity
Under GASB statements, what are the elements of resource flow statements?
Outflow of resources and inflow of resources
What is the object of SEA Reporting?
Service Efforts and Accomplishments The objective of SEA reporting is to provide more complete information about a governmental entity‘s performance than can be provided by the traditional financial statements
GASB: What is the basic criterion used to determine the reporting entity for a governmental unit?
Financial Accountability
What are the requirements for blending a component?
- The governing body of the component unit is substantially the same as that of the primary government and
a) There is a financial benefit or burden relationship between the primary govt and component unit
or b) Management of the primary govt has operation responsibility - The component unit provides services entirely, or almost entirely, for the primary govt or for the benefit of the primary govt
- The component unit’s total outstanding debt is expected to be repaid entirely, or almost entirely, but the primary govt.
How are capital assets, net of infrastructure assets, listed in the government-wide statement of net position?
Cost less accumulated depreciation.
Under the modified accrual approach, how are infrastructure assets reported?
- They are listed at cost WITHOUT subtracting depreciation
- Costs to extended the life of the infrastructure assets are listed as an expense
- Certain information about infrastructure assets is disclosed under supplementary information
What is the full spelled out name of SEA?
Service Efforts and Accomplishments
In what basis are the government-wide financial statements prepared?
Accrual Basis
In what basis are the government-fund prepared?
Modified Accrual Basis
What approach do government funds use?
The current financial resources approach
(Current assets and liabilities only; no fixed assets of LT debt)
*Roger 29-21
What is the Interperiod Equity Concept?
GASB: A state of equilibrium in which a government is neither deferring costs to the future nor using accumulated resources to provide current-period services.
http://gasb.org/cs/ContentServer?c=GASBContent_C&pagename=GASB%2FGASBContent_C%2FUsersArticlePage&cid=1176156731381
Roger: No depreciation is recorded on assets and interest and principal owed on long-term debt are not recorded until the periods in which they must be paid. (Page 29-1)
What lead(s) to the use of fund accounting by a governmental organization?
Financial Control and legal restrictions
What is the only propritery fund that is included in government-wide funds?
Internal service funds
What is the measurement focus and the basis of accounting for the government-wide financial statements?
Measurement focus: Economic Resources
Basis of Accounting: Accrual
What is the Nmenonic for the funds that use modified accrual?
PD-Consents-To-Smoking-Grass Permanent Debt Service Capital Projects Special Revenue General *These are the same as 'Go Speed Car Down Parkway'
What is the Nmenonic for the funds that use accrual?
I-Pipe-Alot Internal Service Pension Trust Investment Trust Private purpose trust Enterprise Agency
These are all Proprietary Fund and Fiduciary funds.
Internet Explorer
People Prance In Alley
What is the presentation method to present component units in combined financial statements?
Discreet Presentation Method
What is the role of a General Fund?
General Fund (Ordinary Funds such as: ordinary operations, public safety, public works, etc)
What is the role of a Special Fund?
Special Revenue Fund (Earmarked revenues)
What is the role of a Capital Fund?
Capital Projects Fund (Revenue for capital projects such as new bridges, etc)
What is the role of a Debt Service Fund?
Debt Service Fund (Makes principal and interest payments on tax supported debts)
What is the role of a Permanent Fund?
Permanent Fund (Funds that cannot be spent—only interest on the funds may be spent. Interest from the fund investments are spent on items such as cemeteries)
Which of three items would be reported as program revenues on a local government’s government-wide statement of activities?
(1) charges for services
(2) operating grants and contributions
(3) capital grants and contributions.
Which two fund types should be included in the Budgetary Comparison Schedule?
General and Major Special Revenue
A component unit is a legally separate organization for which the elected officials of the primary government:
Are financially accountable
What kind of revenue or source is an appropriation?
Nonoperating revenue
What kind of exchange are property taxes?
They are imposed.
