G&NP Chapter 3 Flashcards
General Fund
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
Special Revenue Funds
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
How are most financial resources of the General Fund and Special Revenue Funds expended
for current operating purposes such as salaries and supplies
The General Fund and Special Revenue Funds are essentially
Net financial assets entities
Fund Balance
Net Financial ASsets
fund financial assets (cash, investments, receivables and other financial assets) less any fund related liabilities and deferred inflows
Property taxes receivable accrue…
when they are formally levied by the legislative body of the city
Revenues that do not accrue or are not deemed sufficiently measurable to be accrued in the accounts prior to collection are…
debited to Cash and credited to Revenues when collected. Using the NET Revenue approach
the purchase of equipment also affects the
General Capital Assets and General Long-Term Liabilities (GCA - CLTL) accounts
Nonreciprocal transactions
interfund reimbursement
interfund transfers
reciprocal transfactions
interfund loans
interfund services
Interfund Reimbursements
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
Accounting for interfund reimbursements requires
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)
Interfund Transfers
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
Interfund Transfers are reported in a special classification of changes in fund balance called
the Statement of Revenues, Expenditures, and Changes in Fund Balance
Interfund Services
Sales and purchases of goods and services between funds for a price approximating their external market value
Interfund Loans
loaning the resources of one fund to another fund with a requirement and expectation of repayment
Extraordinary Items
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
Special Items
within the control of management and either unusual or infrequent
Revenue Adjustments
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
Expenditure Adjustments
interest on short term debt
accrued payroll
Purpose of the closing entries are to:
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
Unassigned Fund Balance
the amount of governmental fund net assets with no constraints on their use
Four Fund Balance Classifications
1) Nonspendable Fund Balance
2) Restricted Fund Balance
3) Committed Fund Balance
4) Assigned Fund Balance
Nonpendable Fund Balance
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
Restricted Fund Balance
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
Committed Fund Balance
Assets committed for a purpose less liabilities and deferred inflows related to those committed assets
NEVER be negative
Assigned Fund Balance
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
Unassigned Fund Balance
the positive or negative residual amount of fund balance in excess of the other fund balance classifications
Any noncurrent interfund receivable or payable should be recorded as…
advance to (fund) or advance from (fund)
unmatured general obligation long-term liabilities are NOT recorded as liabilities of the General Fund but found in…
separate nonfund General Long Term Liabilities accounts
Statement of Revenues, Expenditures, and Changes in Fund Balances
presents the revenues, expenditures and other increases and decreases in total fund balance during a year
comparative financial statements or schedules
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
The function or program classification is the …
minimum amount of detail permitted in the basic financial statements
The major accounting classifications of expenditures are
1) fund
2) function (program)
3) organization unit
4) activity
5) character
6) object class
