FAR - Governmental Accounting Part 1

Question 1

What are the three objectives of the financial statements?

Answer 1

1. Timeliness
2. Consistency
3. Comparability

Question 2

What are the three major categories of funds?

Answer 2

1. Governmental (GraSPP)
2. Proprietary (SE)
3. Fiduciary (CIPPOE)

Question 3

What accounting basis to the 3 major fund categories use?

Answer 3

Proprietary (SE) and Fiduciary (CIPPOE) use full accrual accounting

Governmental funds use the modified accrual basis of accounting

Question 4

What are the characteristics of the Financial Reports?

Answer 4

1. Understandability
2. Reliability
3. Relevance
4. Timeliness
5. Consistency
6. Comparability

Govt Accounting is a RRUT CC

Question 5

How are unused encumbrances recorded at YE?

Answer 5

they are recorded to the fund balance commitment account

Question 6

What is considered reciprocal fund activity?

Answer 6

interfund loans and interfund services provided and used

Question 7

what is the most restricted classification of gov’t funds?

Answer 7

committed funds

Question 8

How to record an supplies order?

Answer 8

When PO is issued:

dr encumbrances, cr budgetary control

When supplies are received and invoiced:

dr budgetary control and cr encumbrances (for the same amount above)

then dr expenditures and cr vouchers payable (to record the actual expense)

Question 9

What accounting basis do the following funds use:

Governmental funds
Fiduciary funds
Proprietary funds

Answer 9

Government uses modified accrual

Fiduciary and Proprietary use full accrual

Question 10

Who are the primary users of governmental financial reports?

Answer 10

1. Citizens (taxpayers)
2. Legislative and oversight bodies
3. Investors and creditors

Question 11

What is the cornerstone of governmental financial reporting?

Answer 11

Accountability. Interperiod equity is a significant part of accountability. This is the concept of balancing the budget. Using current year tax revenue to pay for current year expenses.

Question 12

What are the characteristics of governmental financial reports?

Answer 12

“U R MICE”

Understandability 
Reliability
Make a difference in-relevance
Timeliness
Consistency
Entity to entity comparability

Question 13

What are the three themes that differentiate governmental accounting from NFP and commercial accounting?

Answer 13

1. Fund Structure
2. Fund Accounting
3. External Reporting

Question 14

What are are the different funds?

Answer 14

1. Governmental

Question 15

what does a balanced budget demonstrate?

Answer 15

intraperiod equity - whether current year revenues are sufficient to pay for the services provided that year

Question 16

What is the entry to record an acquisition of a general fixed asset through a contract that transfer ownership with a gov’t fund?

Answer 16

dr expenditure - capital outlay

cr other financing source - lease

Question 17

what is the difference between derived tax revenues and imposed non exchange revenues?

Answer 17

1. derived tax revenues - sales tax and income tax. these are taxes imposed on or derived from EXCHANGE transactions
2. imposed non exchange revenues - fines or property taxes. taxes imposed on NON exchange transactions