FAR Government Flashcards
What type of non exchange transaction is a 2% tax on hotel charges
It is a non exchange transaction because you exchange hotel use for cash
- It is a derived tax revenue (non exchange transaction) ) because it is an assessment imposed on an exchange transaction
- exchange - because you trade a hotel stay for cash
- derived - because the tax results from the exchange
When you have an internal service fund - and have a net increase in net assets - how does this impact the governmental activities
- internal service funds are classified as gov activities on gov. wide statements
- So if you have an increase in an internal service fund (9,000) you will add that to the the 25k increase in fund balance for total gov. funds
- 25K + 9k = 34 net change in assets for governmental activities
What is included in the first section of the CAFR introductory section
- Letter of Transmittal
This is followed by the financial section:
- Auditor's report - MD&A - gov wide and fund financial statement - Notes to F/S - Required Supplementary Info
Lastly is statistical section - which is not required
When reconciling the Statement of Revenues, expenditures, and changes to fund balance to Gove-Wide statement of activities - what do you need to subtract from changes in fund balance
- Book Value of capital Assets sold during the year
You do this because Government -wide statements of activities would only report the GAIN while fund statement would report total proceeds from the sale
For the general fund - what are considered revenues
- these are funds that are derived from taxes, assessments, fines and activities of the gov.
- $ from debt and money from other funds are called: Other Financing Sources
What funds prepare a statement of cashflows
Enterprise funds including utilities use accrual methods and have a statement of cash flows
Cash outflows from a city utility representing payments in lieu of property taxes appear on what statement and for what type of fund
Enterprise fund - statement of cashflows
When is an enterprise fund used
- for activities where you provide goods and services in exchange for VOLUNTARY payments
- it used when Net income info is required
- it is used for an entity that eater partially or wholly is supported by voluntary payments or customer fees - example municipal landfill where the loss are to be recovered with charges to customers
What kind of fund is used when the accounting for the financing of an agency’s services to other government departments be on a cost - reimbursement basis
The is an internal fund
How does the general fund report transfers to other funds
- These are Other financing Uses as a form of expenditure under modified accounting
How do Enterprise, Internal, and pension trusts transfer funds to other funds
The are Receivables
What do you do with Interest expense and interest accrued on Government wide statements
- Government wide are accrual based so -
interested is expensed when paid and is accrued as interest payable
What is included in the MD&A section
It include comparative info to last year with emphasis on current year
- Overall and individual fund financial statements
- variance analysis information
- info about long term activities and expected events
What is it called when an Enterprise fund or Internal Fund receives an Unrestricted Grant from another government
If they are Unrestricted to either operating or capital functions they are considered “Nonoperating Revenue” on the Statement of Revenues, Expenses, and Changes in Fund Net Assets
An increase to PBO is what
A PBO Loss
A decrease in PBO is what
A PBO Gain
What is the pension equation for PBO
Beginning PBO \+ Service cost \+ Interest Cost \+ Prior year service cost - Prior year service credit \+/- Liability Gain/Loss = ending PBO
Where does annual pension expense go and where does excess amortization of PBO and Plan Asset so
Pension expense - is an I/S Item
Excess amortization PBO and Plan Asset - OCI
The PBO is a balance sheet item - Non current Liability (deferred liability)
what does the balance sheet reflect regarding the funded status of a defined-benefit pension plan
Funded status = PBO - Plan Assets
If PBO is greater than Plan Assets - liability
If Plan Assets is greater than PBO - net asset
example: Plan Asset - 62K
PBO 68,100
68,100 - 62,000 = 61,00 liability on the balance Sheet
What is the service cost and how is it calculated
Service cost is the increase in PBO that results from services performed by the employees during the current year
- they are the benefits earned
Property tax is an example of what kind of revenue source
imposed nonexchange revenue
these are defined as assessments imposed on non governmental entities, including individuals, other than assessment on exchange transactions
Personal income tax is an example of what kind of derived revenue
derived tax revenue
“resulting from assessments imposed on exchange transactions - general from earnings or consumption - such as sales tax and income tax”
Under modified accrual - revenues can only be accrued if considered available which means
collectible within 60 days
anything called “not available” means that it is outside of the 60 day window and therefore would not be included on the modified accrual statements for governmental funds
Are salaries payable, revenue receivable, or liabilities payable within 60 days accrued on the modified accrual based statement?
YES! as long as they are in the 60 day window that will appear on the modified accrual statement
Dayne County’s general fund had the following disbursements during the year:
Payment of principal on long-term debt $100,000
Payments to vendors $500,000
Purchase of a computer $300,000
What amount should Dayne County report as expenditures in its governmental funds statement of revenues, expenditures, and changes in fund balances?
900,000
A governmental fund financial statement is prepared on the modified accrual basis and therefore utilizes the expenditure principle, which requires that virtually all outflows be recorded as expenditures. The GAAP principles of matching and amortizing costs do not apply. Therefore, all the costs given are reported as expenditures, for a total of $900,000 (100,000 + 500,000 + 300,000 = 900,000).
Carlson City’s fiscal year ends December 31. On August 1, the city issued a purchase order for new vehicles to be delivered at the rate of two per month beginning October 15. Twelve vehicles were delivered as scheduled and payments of $264,000 were made upon delivery. If these were the only transactions made by the city, which of the following balances would appear on the balance sheet as of December 31?
dr Fund balances $132,000
cr Reserved for encumbrances $132,000
Because the vehicles were delivered at a rate of two per month starting in October, and twelve vehicles were delivered in all, only six vehicles were actually delivered and paid for during the fiscal year ending December 31. Therefore, half of the funds (1/2 X $264,000 = $132,000) for the vehicles would still be encumbered as of December 31. The balance sheet would therefore show both a fund balance of $132,000 and a Reserved for encumbrances balance of $132,000.
How should state appropriations to a state university choosing to report as engaged only in business-type activities be reported in its statement of revenues, expenses, and changes in net position?
Nonoperating revenues.
State appropriations to a state university would be reported as nonoperating revenues in its statement of revenues, expenses, and changes in net assets, because they are revenues which do not arise directly from the university’s operations.
Harland County received a $2,000,000 capital grant to be equally distributed among its five municipalities. The grant is to finance the construction of capital assets. Harland had no administrative or direct financial involvement in the construction. In which fund should Harland record the receipt of cash?
agency fund
Because Harland County will have no administrative or direct financial involvement in the construction of the capital assets, but will rather be acting as an agent for other entities by distributing the funds, the cash should be recorded in an agency fund.
What is the modified approach regarding assets
the modified approach is when infrastructure assets are not required to be depreciated if certain requirements are met
- Instead expenditures for assets that meet the requirements are EXPENSED as incurred.
Must disclose when the modified approach is used information about the condition of the assets and the cost to maintain and preserve them
They would NOT be depreciated on the government wide statement of activities
What do you do in a debt service fund
You make principle and interest payments on debt service fund
A debt service fund is used to make principal and interest payments on the tax supported debts of the government and collect funds for that purpose. Funds accumulated for both principal and interest are accounted for in the debt service fund. Related items that may be accounted for in the general fund include transfers made to the debt service fund for the payment of principal or interest.
Edgerton Township ordered a machine at an estimated cost of $3,500, which had not been delivered as of the end of its fiscal year. The machine was delivered early in the next period at an actual cost of $3,800. Which of the following entries will be made when the machine is delivered?
dr expenditure - prior year 3500
dr expenditure 300
cr vouchers payable 3800
When the machine is delivered at an actual cost of $3,800, a voucher payable will be recognized with a credit in that amount. Since the machine had been ordered in the previous year, the budgeted amount of $3,500 will be recognized as an expenditure related to the prior period and the excess of $300 will be recognized as an expenditure in the current period.
A city taxes merchants for various central district improvements. Which of the following accounting methods assist(s) in assuring that these revenues are expended legally?
fund accounting, budgetary accounting?
Both find accounting and budgetary accounting
Both fund accounting and budgetary accounting assist in assuring that government revenues are expended legally. Fund accounting segregates financial resources into sets of self-balancing accounts with each set controlled by a government entity with a specific mission and legal restrictions on the use of the resources. Budgetary accounting is based on forecasts and estimates, and enables the planning, preparation and tracking of a balanced budget wherein estimated expenditures equal estimated revenues and legal restrictions on use of funds are followed.
