Government Accounting

Question 1

Derived (non-exchange) tax revenue

Answer 1

It represents taxes imposed on or derived from exchange transactions such as commercial sales (sales taxes).

Question 2

Imposed non-exchange revenues

Answer 2

It include property taxes and fines

Question 3

Encumbrance

Answer 3

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.

Question 4

Fund Balance

Answer 4

Appropiations
Less: Encumbrances
Less: Expenditures
DO NOT INCLUDE: Vouchers payable because it is already included in Expenditures.

Question 5

Interperiod Equity

Answer 5

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.

Question 6

When property taxes are levied:

Answer 6

Property taxes receivable Dr.
Allowance for uncollectible property taxes Cr.
Revenues Cr.

Thus, revenue control is increased.

Question 7

Issues a purchase order

Answer 7

A purchase order is a binding document and thus is recorded when issued.
Encumbrances Dr.
Budgetary Control Cr.

Question 8

Estimated revenue control account

Answer 8

1. It is part of the budget
2. Entry:
   Estimated Control Dr.
   Budgetary control Cr.

Question 9

Object

Answer 9

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.

Question 10

Program

Answer 10

It groups activities, or organizational units that are directed to the attainment of specific purposes or objectives.

Question 11

Function

Answer 11

It groups related activities that are aimed at accomplishing a major service or regulatory responsability

Question 12

Activity

Answer 12

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.

Question 13

Expenditures

Answer 13

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.

Question 14

Expenditures > one period

Answer 14

They may be allocated between or among accounting periods.

Question 15

To record the budget

Answer 15

Estimated Revenues Dr.
Appropiations Cr.
Budgetary control Cr.

Question 16

Estimated Other Financing Sources

Answer 16

Proceeds of debt issue and interfund transfer

Question 17

Encumbrances

Answer 17

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.

Question 18

Net property tax revenues

Answer 18

Collections during the year.

Expected collections within 60 days of YE

Question 19

Unassigned fund balance in its general fund balance sheet

Answer 19

Assets - Liabilities (it includes budgetary control (open purchase orders))

Question 20

Revenues

Answer 20

Property Taxes Receivables Dr.
Revenues Cr.

When taxpayers are billed for property taxes.

Question 21

Estimated Revenues Control Account

Answer 21

It is eliminated when the budgetary accounts are closed.

Question 22

Encumbrances at year-end

Answer 22

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.

Question 23

Nonoperating revenues

Answer 23

Receiving state appropiations represent a non-exchange transaction and will be treated as nonoperating revenues.

Question 24

Governmental Funds report interfund transfers

Answer 24

As other financing sources (uses)

Question 25

Permanent Fund

Answer 25

It is used to account for principal that is restricted and may not be expended.

Question 26

Special revenue funds

Answer 26

It accounts for proceeds of specific revenue sources (other than permanent funds or capital projects)

Question 27

Reconciliation of the change in fund balances

Answer 27

G change in governmental fund balance
O other financing sources
E expenditures capital outlay (net of depreciation)
S internal service fund bet income

Question 28

Comprehensive annual financial report

Answer 28

Introductory section
Basic financial statements
Required supplementary information

Question 29

Blended

Answer 29

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.

Question 30

Discrete presentation

Answer 30

It is financially accountable to the city.

Question 31

Governmental Funds

Answer 31

Do not present cash flows

Question 32

Unassigned fund balance

Answer 32

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.

Question 33

Program Revenue

Answer 33

S Charges (for services)
O Operating and contributions
C Capital grants and contributions

Question 34

Cash Flows from noncapital financing activities

Answer 34

-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

Question 35

Proprietary Funds

Answer 35

Must use direct method when preparing their cash flows.

Question 36

Government wide fs

Answer 36

Uses economic resources measurement focus and the accrual basis of accountinh