G&NP Chapter 3

Question 1

General Fund

Answer 1

Used to account for and report all financial resources not accounted for or reported in another fund. The General Fund is established at the inception of a government and exists throughout the government’s life

Question 2

Special Revenue Funds

Answer 2

Established to account for general government financial resources that are raised from specific revenue sources that are restricted or committed to expenditure for specific purposes other than debt service or capital outlay

Question 3

How are most financial resources of the General Fund and Special Revenue Funds expended

Answer 3

for current operating purposes such as salaries and supplies

Question 4

The General Fund and Special Revenue Funds are essentially

Answer 4

Net financial assets entities

Question 5

Fund Balance

Answer 5

Net Financial ASsets
fund financial assets (cash, investments, receivables and other financial assets) less any fund related liabilities and deferred inflows

Question 6

Property taxes receivable accrue…

Answer 6

when they are formally levied by the legislative body of the city

Question 7

Revenues that do not accrue or are not deemed sufficiently measurable to be accrued in the accounts prior to collection are…

Answer 7

debited to Cash and credited to Revenues when collected. Using the NET Revenue approach

Question 8

the purchase of equipment also affects the

Answer 8

General Capital Assets and General Long-Term Liabilities (GCA - CLTL) accounts

Question 9

Nonreciprocal transactions

Answer 9

interfund reimbursement

interfund transfers

Question 10

reciprocal transfactions

Answer 10

interfund loans

interfund services

Question 11

Interfund Reimbursements

Answer 11

nonreciprocal transactions in which a government determines that an expenditure or expense initially recorded in the current year in one fund should be accounted for and reported as an expenditure or expense in a different fund

Question 12

Accounting for interfund reimbursements requires

Answer 12

Removing the expenditure or expense from the accounts of the fund in which it was initially recorded
and
Recording the expenditure or expense in the reimbursing fund(s)

Question 13

Interfund Transfers

Answer 13

normally involve moving assets (such as cash or inventory) accounted for in one fund to another fund without a reciprocal flow of resources or services in return

Question 14

Interfund Transfers are reported in a special classification of changes in fund balance called

Answer 14

the Statement of Revenues, Expenditures, and Changes in Fund Balance

Question 15

Interfund Services

Answer 15

Sales and purchases of goods and services between funds for a price approximating their external market value

Question 16

Interfund Loans

Answer 16

loaning the resources of one fund to another fund with a requirement and expectation of repayment

Question 17

Extraordinary Items

Answer 17

a term used in both the FASB and GASB standards, transactions or events that are not within the control of management and are both unusual in nature and infrequent in occurence

Question 18

Special Items

Answer 18

within the control of management and either unusual or infrequent

Question 19

Revenue Adjustments

Answer 19

interest on investments
delinquent taxes
unbilled charges for services
unrestricted intergovernmental grants that have been earned and are available but have not been billed by year end

Question 20

Expenditure Adjustments

Answer 20

interest on short term debt

accrued payroll

Question 21

Purpose of the closing entries are to:

Answer 21

1) close the operating accounts in the general ledger so they will begin the next year with zero balances and update the fund balance account to it’s actual end of year balance
2) close the revenues subsidiary ledger and expenditures subsidiary ledger accounts so they are ready to record the next year’s detailed operating data

Question 22

Unassigned Fund Balance

Answer 22

the amount of governmental fund net assets with no constraints on their use

Question 23

Four Fund Balance Classifications

Answer 23

1) Nonspendable Fund Balance
2) Restricted Fund Balance
3) Committed Fund Balance
4) Assigned Fund Balance

Question 24

Nonpendable Fund Balance

Answer 24

Amounts held in inventories and prepaid assets. In the General Fund it also includes fund balances related to long-term receivables (and property acquired for resale) that do not have restrictions, commitments or assignments of the eventual proceeds.
NEVER be negative

Question 25

Restricted Fund Balance

Answer 25

assets restricted - by external parties, constitutional provisions, or enabling legislation - for expenditure for a specific purpose less liabilities and deferred inflows related to those restricted assets.
NEVER be negative

Question 26

Committed Fund Balance

Answer 26

Assets committed for a purpose less liabilities and deferred inflows related to those committed assets
NEVER be negative

Question 27

Assigned Fund Balance

Answer 27

Assets assigned for a purpose less liabilities and deferred inflows related to those assigned assets
can also include
encumbrances outstanding not related to already restricted, committed, or assigned fund balance
amounts to reflect the budgeted use of ending fund balance to finance an excess of appropriations over budgeted in flows in the next years budget
NEVER be netative

Question 28

Unassigned Fund Balance

Answer 28

the positive or negative residual amount of fund balance in excess of the other fund balance classifications

Question 29

Any noncurrent interfund receivable or payable should be recorded as…

Answer 29

advance to (fund) or advance from (fund)

Question 30

unmatured general obligation long-term liabilities are NOT recorded as liabilities of the General Fund but found in…

Answer 30

separate nonfund General Long Term Liabilities accounts

Question 31

Statement of Revenues, Expenditures, and Changes in Fund Balances

Answer 31

presents the revenues, expenditures and other increases and decreases in total fund balance during a year

Question 32

comparative financial statements or schedules

Answer 32

two or more periods
the cumulative effect of accounting changes or error corrections on fund balance for periods prior to the earliest period reported should be reported as a restatement of the beginning fund balance of that period and the data reported for later periods should be restated to reflect the changed accounting principle or error correction

Question 33

The function or program classification is the …

Answer 33

minimum amount of detail permitted in the basic financial statements

Question 34

The major accounting classifications of expenditures are

Answer 34

1) fund
2) function (program)
3) organization unit
4) activity
5) character
6) object class