FAR SEC 19 Flashcards
What do governmental funds emphasize?
Governmental funds emphasize sources, uses, and balances of current financial resources.
For governmental funds, how is the fund balance computed?
In these funds, (a) expendable assets are assigned to funds based on their intended use, (b) current liabilities are assigned to funds from which they will be paid, and (c) the difference is the fund balance.
How does the current financial resources measurement focus relate to governmental funds?
Thus, the governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting
What is the measurement focus and basis of accounting for governmental funds? (3 elements)
1) Governmental funds emphasize sources, uses, and balances of current financial resources.
2) In these funds, (a) expendable assets are assigned to funds based on their intended use, (b) current liabilities are assigned to funds from which they will be paid, and (c) the difference is the fund balance.
3) Thus, the governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting.
For governmental and proprietary fund financial statements, what is the distinction between major vs. nonmajor fund reporting?
Governmental and proprietary fund financial statements emphasize major funds. But major fund reporting does not apply to internal service funds.
Is the main operating fund (the general fund) always a major fund?
Yes.
On the governmental funds financial statement, how is each major fund presented?
Each major fund is presented in a separate column.
On the governmental funds financial statement, how are nonmajor funds presented?
Nonmajor funds are aggregated in one column.
Are combining statements required for nonmajor funds?
No. Combining statements are not required for nonmajor funds.
What are the conditions for recognizing a governmental fund as major? ( 2 elements)
1) Any individual governmental or enterprise fund must be reported as major if
i) Total assets, liabilities, revenues, or expenditures or expenses (excluding extraordinary items) of the fund are at least 10% of the corresponding element total (assets, etc.) for all funds of its category (i.e., all governmental or all enterprise funds), and
ii) An element that met the 10% standard above is at least 5% of the corresponding element total for all governmental and enterprise funds.
2) To determine whether major fund criteria are met,
i) Deferred outflows of resources are combined with assets and
i) Deferred inflows of resources are combined with liabilities.
What is another way that a fund could qualify as major?
Any governmental or enterprise fund believed to be particularly important to users also may be reported in the same way as a major fund.
Any individual governmental or enterprise fund must be reported as major if _______________. (2 elements)
1) Total assets, liabilities, revenues, or expenditures or expenses (excluding extraordinary items) of the fund are at least 10% of the corresponding element total (assets, etc.) for all funds of its category (i.e., all governmental or all enterprise funds), and
2) An element that met the 10% standard above is at least 5% of the corresponding element total for all governmental and enterprise funds.
To determine whether major fund criteria are met___________. (2 elements)
1) Deferred outflows of resources are combined with assets and
2) Deferred inflows of resources are combined with liabilities.
What is the general fund? (2 elements)
1) The general fund accounts for all resources not required to be reported elsewhere.
2) The reporting entity has only one general fund.
What are special revenue funds? (4 elements)
1) Special revenue funds account for restricted or committed proceeds of specific sources of revenue. Expenditure must be for a specified purpose (but not debt service or a capital project).
2)Thus, the basis of the fund is a substantial inflow from restricted or committed revenue sources.
3) Examples of resources accounted for are federal grants, shared revenue, and gasoline taxes.
4) The following are examples of the uses of special revenue funds:
i) Operation of a municipal auditorium
ii) Upkeep of a zoo
iii) Road maintenance
What are three examples of the uses of special revenue funds?
1) Operation of a municipal auditorium
2) Upkeep of a zoo
3) Road maintenance
How are donations to programs treated?
Donations provided for programs to be administered by the government also are accounted for in special revenue funds.
Are special revenue funds used for resources of a trust held as a fiduciary activity?
No, a special revenue fund is not used for the resources of a trust held as a fiduciary activity.
How is the general fund of a blended component unit reported?
The general fund of a blended component unit is reported as a special revenue fund.
Are special revenue funds required?
Special revenue funds are not required unless legally mandated.
What are capital projects funds? (3 elements)
1) Capital projects funds account for financial resources restricted, committed, or assigned to be expended for capital purposes.
-These resources include general obligation bond proceeds to be used to acquire or construct major capital facilities for general government use (e.g., schools, bridges, or tunnels).
2) Capital projects financed by proprietary funds or in trust funds are accounted for in those funds.
3) The assets themselves are not accounted for in these funds.
What are debt service funds? (3 elements)
1) Debt service funds account for resources restricted, committed, or assigned to payment of the principal and interest.
2) They are required if
i) They are legally mandated, or
ii) The resources are for payment of principal and interest due in future years.
3) If the government has no obligation on special assessment debt, the debt service transactions are accounted for in a custodial fund.
What are permanent funds?
1) Permanent funds account for resources that are restricted to the use of earnings for the benefit of the government or its citizens.
i) An example is a perpetual-care fund for a public cemetery.
2) Permanent funds are not private-purpose trust funds.
i) Private-purpose trust funds are reported with the other fiduciary funds.
What is the balance sheet format for governmental funds?
A balance sheet is required for governmental funds. It should be in balance sheet format with a total column.
Balance Sheet Format:
Assets + Deferred outflows of resources = Liabilities + Deferred inflows of resources + Fund balances