Government Accounting Flashcards
Derived (non-exchange) tax revenue
It represents taxes imposed on or derived from exchange transactions such as commercial sales (sales taxes).
Imposed non-exchange revenues
It include property taxes and fines
Encumbrance
Governmetal funds use modified accrual accounting. Under modified accrual accoutning, the issuing of a purchase order (commitment to purchase) is recorded for internal booking as:
Emcumbrance Dr.
Budgetary Control Cr.
Fund Balance
Appropiations
Less: Encumbrances
Less: Expenditures
DO NOT INCLUDE: Vouchers payable because it is already included in Expenditures.
Interperiod Equity
It is a significant part of accountability on behalf of a governmental entity. It helps users assess whether CY Revenues are sufficient to pay for the services provided that yr and whether future taxpayers will be required to assume burden for services previously provided. Residual equity is an obsolete term included as a distracter.
When property taxes are levied:
Property taxes receivable Dr.
Allowance for uncollectible property taxes Cr.
Revenues Cr.
Thus, revenue control is increased.
Issues a purchase order
A purchase order is a binding document and thus is recorded when issued.
Encumbrances Dr.
Budgetary Control Cr.
Estimated revenue control account
- It is part of the budget
- Entry:
Estimated Control Dr.
Budgetary control Cr.
Object
Wages and salaries is an example of an object classification. Expenditures of governmental resources should be classified by object classes, according to the type of items purchased or services obtained.
Program
It groups activities, or organizational units that are directed to the attainment of specific purposes or objectives.
Function
It groups related activities that are aimed at accomplishing a major service or regulatory responsability
Activity
It provides data for calculating expenditures per unit of activity. An activity is a specific and distinguishable line of work performed by an organizational unit.
Expenditures
They are decreased in net financial resources other than through interfund transfers. General fixed assets, such as land, buildings, and equipment, purchased with general fund resources should be recorded as expenditures in the general fund.
Expenditures Dr.
Vouches Payable Dr.
Expenditures > one period
They may be allocated between or among accounting periods.
To record the budget
Estimated Revenues Dr.
Appropiations Cr.
Budgetary control Cr.
Estimated Other Financing Sources
Proceeds of debt issue and interfund transfer
Encumbrances
Commitments related to unfilled contracts for goods and services including purchase orders. The purpose of encumbrance accounting is to prevent further expenditure of funds in light of commitments already made. At year-end, encumbrances still open are not accounted for as expenditures and liabilities but, rather,as reservations of fund balance. When an estimated or contractual liability is entered into, the entry is to debit encumbrances for the estimated amount and credit reserve for encumbrances . When the actual expenditure of an amount previously encumbered is known, there are two entries. The first entry is to reverse the original encumbrance. The second entry is to record the expenditure by debiting expenditures and crediting voucher payable. At year-end, the encumbrance account is closed out against fund balance.
Encumbrance at year end is the remaining goods ordered but not yet received at year end.
It is debited when a PO is approved.
Net property tax revenues
Collections during the year.
Expected collections within 60 days of YE
Unassigned fund balance in its general fund balance sheet
Assets - Liabilities (it includes budgetary control (open purchase orders))
Revenues
Property Taxes Receivables Dr.
Revenues Cr.
When taxpayers are billed for property taxes.
Estimated Revenues Control Account
It is eliminated when the budgetary accounts are closed.
Encumbrances at year-end
They do not constitute expenditures or liabilities. Therefore, at year-end encumbrances are classified as a commitment of assignments of fund balance that is not appropriable for expenditure.
Nonoperating revenues
Receiving state appropiations represent a non-exchange transaction and will be treated as nonoperating revenues.
Governmental Funds report interfund transfers
As other financing sources (uses)
Permanent Fund
It is used to account for principal that is restricted and may not be expended.
Special revenue funds
It accounts for proceeds of specific revenue sources (other than permanent funds or capital projects)
Reconciliation of the change in fund balances
G change in governmental fund balance
O other financing sources
E expenditures capital outlay (net of depreciation)
S internal service fund bet income
Comprehensive annual financial report
Introductory section
Basic financial statements
Required supplementary information
Blended
It is used when the component unit is so interwined with the primary government that is in substance the same as the primary government. One indication of blending is the failure of the “legal entity” test. Entities that are not legally separate entities are blended with the primary government.
Discrete presentation
It is financially accountable to the city.
Governmental Funds
Do not present cash flows
Unassigned fund balance
It represents the amount of current resources carried forward into the following year that will be available for appropriations. Assuming there are no encumbrances at year end and expenditures were less than appropriations, any commitment or assignment of fund balance for encumbrances would be released and unassigned fund balance would increase.
Program Revenue
S Charges (for services)
O Operating and contributions
C Capital grants and contributions
Cash Flows from noncapital financing activities
-Proceeds or payments related to borrowing not attributable to the acquisition, construction or improvement of capital assets
-Cash receipts or payments related to grants or subsidies not attributable to capital purposes
property taxes not designated to capital purpose
-Cash paid to other funds
Proprietary Funds
Must use direct method when preparing their cash flows.
Government wide fs
Uses economic resources measurement focus and the accrual basis of accountinh
