Format & Content of Comprehensive Annual Financial Report 1 - Measurement/Budgetary Accounting

Question 1

What are the two types of measurement focus of accounting used for Governmental Accounting?

Answer 1

1) Flow of current expendable financial resources
- similar in concept to cash flow
2) Change in economic resources
- Net income determination

Question 2

What are the two basis types of Governmental Accounting?

Answer 2

1) Modified Accrual Basis

2) Accrual Basis

Question 3

Which measurement focus relates to which basis type

Answer 3

Measurement Focus: Basis of Accounting:
__________________ _________________
1) Flow of current expendable
financial resources 1) Modified Accrual

2) Flow of economic
resources 2) Accrual

Question 4

What is another way to view Financial Sources and Financial Uses under Modified Accrual basis of Accounting?

Answer 4

Financial Sources - Financial Uses = Fund Balance
eg:
Taxes Salaries
Licenses & Fees Utilities
Grant Revenues Capital Expenditures
Transfers from Repayment on Debt
other funds Transfers out to other funds
Proceeds from
bonds
ie.

Assets - Liabilities = Fund Balance

Question 5

What Fund types use the Modified Accrual Basis of Accounting?

Answer 5

General Fund
Special Revenue Fund
Capital Project Fund
Debt Service Fund
Permanent Fund

ie. Governmental

Question 6

What Fund types use the Accrual Basis of Accounting?

Answer 6

Internal Service Funds
Enterprise Funds
Pension Trust Funds
Investment Trust Funds
Private-Purpose Trust Funds 
Agency Funds

ie. Proprietary Funds & Fiduciary Funds

Question 7

When is revenue recognized under the Modified Accrual basis of Accounting?

Answer 7

Revenues are recognized when

• Measurable: can be reasonably estimated
• Available: legal right to collect, which extends into 60 days after year end
  * if collected before legally available: classify as deferred inflow of resources
• “Susceptible to Accrual”: when both measurable & available prior to cash receipt

some revenues accounted for as cash others on accrual basis

Question 8

When are expenditures recognized under the Modified Accrual basis of Accounting?

Answer 8

Expenditures are recognized when

• incurred or due to be paid from currently available resources in the governmental fund
• ie not carried over into a new period
• never referred to as expenses under Modified Accrual, always Expenditures

Question 9

What is the purpose of Budgetary accounting?

Answer 9

Planning and Control

Question 10

What are the type of Budgetary accounts?

Answer 10

Appropriations: authorized spending (planned expenditures)

Estimated Revenues: forecast of financial resource inflows from revenue (eg. taxes, licenses, & fees)

Estimated other financing sources and uses:
eg. interfund transfers, proceeds from bonds

Question 11

What are some basic journal entries for Budgetary Accounting?

Answer 11

*what to keep in mind, these are usually entered as the opposite of their respective balances, ie revenues are usually recorded as a credit, but enter as a debit when estimated *reversed & closed at end of year, & then revenue & expenditure accounts are closed

Balanced Budget:
Dr. Estimated Revenues $100
Cr. Appropriations $100

Surplus Budget:
Dr. Estimated Revenues $110
Cr. Appropriations $100
Cr. Fund Balance $10

Deficit Budget:
Dr. Estimated Revenues $90
Dr. Fund Balance $ 10
Cr. Appropriations $100

With other financing sources & uses
Dr. Estimated Revenues $110
Dr. Estimated Other Financing Sources $ 10
Cr. Appropriations $100
Cr. Estimated Other Financing Uses $ 20

Question 12

What funds are required to report budget information?

Answer 12

General Fund and Major Special Revenue Funds (based on quantitative rules)

Question 13

What is the purpose of budgetary reporting? And how is it formated?

Answer 13

Purpose:
Report budget-to-actual results
Demonstrate compliance with related laws
Assist in evaluating performance

Format:
Original Budget
Final Budget
Actual on budgetary basis
If Non-GAAP budget basis include reconciliation to GAAP
Variance column (optional)