FAR Own Flashcards 7

Question 1

What is a deferred outflow of resources?

Answer 1

It is a consumption of net assets that is applicable to a future reporting period. Deferred outflows of resources have a POSITIVE effect on net position and are reported after assets but before liabilities. (Think of it as a prepayment for rent)

Question 2

What is deferred inflow of resources?

Answer 2

Deferred inflow of resources is an acquisition of net assets that is applicable to a future reporting period. Deferred inflows of resources have a NEGATIVE effect on net position are are reported following liabilities but before equity. (Think of it as deferred revenue)

Question 3

What is the formula for government-wide statement of net position?

Answer 3

Assets and deferred outflows of resources - liabilities and deferred inflows = Net Position (net position format)

Question 4

What is the governmental fund balance sheet?

Answer 4

Assets and deferred outflows of resources = liabilities and deferred inflows of resources + Fun Balance (balance sheet format)

Question 5

When do you recognize revenue for Real estate taxes due and fines and penalties? (imposed non-exchange transactions)

Answer 5

When they are billed (levied) or recorded

Question 6

When do you recognized revenue for income taxes and sales taxes? (Derived tax revenue)

Answer 6

When received

Question 7

When do you recognized revenue collected in advanced, unearned when collected, real estate taxes paid in advance, restricted grants?

Answer 7

When the revenue is earned

Question 8

What is the purpose of the debt service fund?

Answer 8

The debt service fund accounts for the accumulation of resources to pay off debt (general long-term principal and interest)

Question 9

What is the purpose of the general fund?

Answer 9

The general fund accounts for all of the financial resources of the governmental entity, except those that are required to be accounted for in another fund.

Question 10

What is the purpose of the capital projects fund?

Answer 10

Think construction. It accounts for the financial resources to be used for the acquisition or construction of major capital facilities not accounted for in proprietary or trust funds.

Question 11

What is the purpose of the special revenue fund?

Answer 11

It accounts for the proceeds of specific revenue sources that are legally restricted to expenditure for specific purposes.

Question 12

Capital assets donated to a governmental unit are recorded at?

Answer 12

the estimated fair value when received, plus any ancillary charges if there.

Question 13

What is the journal entry to record a capital lease for the acquisition of a general fixed asset in governmental accounting?

Answer 13

DR: Expenditure - capital lease
CR: Other financing sources - capital lease

Question 14

What is the purpose of the permanent fund?

Answer 14

The permanent fund accounts for principal that is restricted and may not be expended. Earnings may be used for purposes that benefit the public. Used to report resources that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the government

Question 15

What are the types of revenue sources for the general fund?

Answer 15

Taxes, Public Safety and Regulation, Intergovernmental(Shared or grant revenue from other governments), Charges for Services, and Other revenue

Question 16

What are expendable trust activities and what fund are they accounted in?

Answer 16

They represent funding whose principal and income may be expended in the course of their designated operations so that they are depleted by the end of their designated lives. They should be accounted for in a special revenue fund.

Question 17

What is the proper presentation for comprehensive income?

Answer 17

It may be shown on the face of the income statement of a combined “statement of income and comprehensive income”, a separate section below net income, or in a separate section of comprehensive income, or as component of changes in SE equity (for us gaap only)

Question 18

Under the installment method, when is gross profit recognized?

Answer 18

When cash is collected (GP percentage * cash collected)

Question 19

How will the investment account be effected for the cost method and the equity method if they received dividends in excess of the investors share of investee’s earnings?

Answer 19

Under both the cost and the equity methods, liquidating dividends reduce the carrying amount of the investment account?

Question 20

Where are the assets and liabilities of a internal service fund reported in the government-wide financial statements?

Answer 20

They are reported in the governmental activities column (not the business column) because they act to serve the governmental funds