Government Organization Accounting Flashcards
Typical questions:
- GASB
- Financial reporting entity
- Types of financial statements
- Deferred outflows and inflows
- Net position and Fund Balance
- Modified Accrual
- Fund Accounting
- Budgetary Accounting & Encumbrance Accounting
- Capital Assets and Infrastructure
- Governmental Not-For-Profit Organization
What types of questions?
- Which funds to use?
- Revenue and Expenditures
- Budget and Encumbrance JEs
- Determine the financial reporting entity
- “Equity” accounts
Hot topics:
- Deferred outflow of resources and deferred inflows and net position
What are three main characteristics that drive financial reporting for government accounting?
1) Fund accounting
2) budgetary reporting
3) Government wide reporting
When referring to government wide reporting, what is the statement and formula used?
Balance sheet (single report)
Assets \+ Deferred outflows of resources - Liabilities - Deferred inflows of resources = net position
What are the 5 “general government” funds?
- General fund
- Special revenue fund
- Debt Service Fund
- Capital project funds
- Permanent fund
Combined is the general government
What are concept statements?
1) Concept statements are not authoritative (NO GAAP)
1) Objectives of financial reporting
2) Service efforts
3) Financial reporting
4) Elements of financial reporting
5) Service efforts and accomplishments
What are the characteristics of financial reporting for government financial statements? 1
1) Timeliness
2) Relevance
3) Understandability
4) Comparability
5) Consistency
6) Reliability
TRUCCR
Are service efforts & Accomplishments voluntary or no?
They are voluntary..
Examples:
- Service efforts (inputs)- Cost of fire department
- Service accomplishments
- Output- # of fire alarms responded to
- Outcome- Percentage of fire alarms within 5 minutes
What are the 5 elements of financial statements
1) Assets
2) Liabilities
3) Deferred outflow of resources
4) Deferred inflow of resources
5) Net position
*KNOW THIS
What are the two elements to measuring financial statements for goverment
Two approaches:
1) Initial amounts
2) Re-measured amounts
Four measurement attributes:
1) Historical Cost
2) Fair value
3) Replacement cost
4) Settlement amount
What are the three categories of funds?
1) Governmental Funds- Accounts for general government financial resources and uses
2) Proprietary funds- Accounts for business-type activities
3) Fiduciary funds- Accounts for resources held by a government in its capacity as a trustee or custodian of the benefit of others
What the the five types of government funds?
1) General fund- Accounts for everything not required to be accounted for by a different type of fund
2) Special revenue funds- Specific revenue sources that are restricted or committed to expenditure for a specific purpose
3) Capital project funds- Accounts for resources that are restricted, committed, or assigned for construction or acquisition of capital facilities and other capital assets
4) Debt Service Funds- Accounts for resources that are restricted, committed, or assigned for debt service principal or interest expenditures
5) Permanent funds- Endowments in which its earnings are restricted to support government programs
What are two types of proprietary funds
1) Enterprise fund- Accounts for business type activities
2) Internal service funds- Accounts for business type actives in which other governmental departments are the primary user
What are the four types of fiduciary funds?
1) Custodial funds- Accounts for assets held in a custodial fashion
2) Pension Trust Fund- Accounts for assets held in trust to provide employee retirement pensions
3) Investment trust fund- Assets held in a trust for other participants/governments
4) Private-Purpose Trust Funds- Accounts for assets held in trust crated to benefit individuals
What is the memory aide given by Wiley CPA Excel for remembering the different types of funds?
C-PIPP DRIP the CEG
1) C-PIPP (FIDUCUARY FUNDS)
- Custodial
- Pension
- Investment
- Private-Purpose
2) DRIP (GOVERNMENT)
- Debt Service Fund
- Special Revenue Fund
- Permanent Fund
- Capital Project Fund
- Enterprise Fund
- General Fund
Which funds used modified accrual basis of accounting?
- General funds
- Special Service Fund
- Capital Projects Fund
- Debt Service Fund
- Permanent Funds
Which funds use accrual basis of accounting?
Internal Service Funds Enterprise Funds Pension Trust Funds Investment trust Funds Private Purpose Trust Funds Custodial Funds
Under modified accrual accounting, revenues can be recognized when?
1) Measurable- Can reasonably be estimated
2) Available- Legal right to collect and collected in the current period or soon thereafter to pay liabilities in the current period (usually within 60 days after year-end)
If you don’t meet this criteria, then it is a deferred inflow
What is the purpose of budgetary accounting?
Planning and control
What are the budgetary accounts?
1) Appropriates- Authorized spending
2) Estimated Revenues- Forecast resource inflows
3) Estimated other financing sources and uses- Inter-fund transfers, proceeds from bonds
What would be the entry for recording estimated revenues?
Estimated Revenues. DB
Appropriates. CR.
Notice they are the opposite of what the normal balance would be for recording an expense or revenue
Which fund will ALWAYS have to report on it’s budget?
GENERAL FUND
Under encumbrance accounting, when a purchase order is issued, what is the journal entry made?
Encumbrances. DB
Budgetary Fund Balance. CR
Under encumbrance accounting, when a purchase order is filled, what is the journal entry made?
Budgetary Fund Balance. DB
Encumbrances. CR
Under encumbrance accounting, when an invoice is received, what is the journal entry?
Expenditure. DB
Voucher Payable. CR
The residual amount (equity) in government wide financial statements is called?
Net Position- Residual amount of proprietary funds and fiduciary funds
What are the categories of Net Position on the financial statement?
Net Investment in Capital Assets
Restricted (by external parties or creditors)
Unrestricted- funds set aside for some purpose
How is net investment in capital assets calculated?
Capital assets not depreciated XX
+ Capital assets net of depreciation (XX)
Total capital assets XX
- Long-term debt related to Cap assets XX
Net investment in capital assets XX
What are the 5 classifications for changes in fund balance?
1) Non spendable
2) Restricted
3) Committed
4) Assigned
5) Unassigned
What is included in the non spendable fund balance?
1) Not a spendable form
2) Legally or contractually required to maintain in tact
What is included in the restricted fund balance?
Amounts that are being used for external parties and imposed by enabling legislation
What is included in the committed fund balance?
Constraints by the government’s highest level of decision making authority. The constraint imposed on the use of the resource is separate from the authority to raise the resources.
What is included in the assigned portion of the fund balance?
Amounts constrained by the government’s intent to be used for a specific purpose but are neither restricted or committed.
What does the general fund represent?
Amount of resources that are available for any purpose.
This is the only account that can have a positive unassigned balance
What are deferred inflows and outflows?
Timing difference- happen this year but are related to future periods.
Deferred inflow of resources is considered a unearned revenue or deferred revenue?
False- deferred revenues and unearned revenues are not allowed under GASB. It is considered Deferred inflow of resources.
What are the five types of governmental funds?
GOVERNMENT FUNDS: Debt Service Funds Special Revenue Funds Permanent funds Capital Project Funds
A property tax levy of $100 million is recorded, 3% is estimated to be uncollected.
Property Taxes Receivable - Current 100
Estimated Uncollectible taxes- Current (3)
Revenues- Property Taxes (97)
Bond principal of $80,000 is paid along with $4,000 in interest. What is the journal entry?
Expenditures- Interest 4000
Expenditures- Principle 80000
Cash (84000)
Bonds to finance construction of a fire station are sold: 250,000
Cash $250,000
Other financial resources $250,000
Capital expenditures from the bond are used, 247,000
Expenditures- Capital Outlay $247,000
Cash $247,000
T/F: Proprietary funds use only accrual accounting?
True
What are the three sections of the Comprehensive annual financial report (CAFR)?
1) Introduction: Letter of transmittal, organization chart, principal officers
2) Financial- Independent audit report, MD&A, Basic financial statements, RSI, combining statements and individual fund statements
3) Statistical- Financial trends, revenue capacity, debt capacity, demographic and economic, operating information, other
What are the basic financial statements?
1) Government-Wide Financial Statements
2) Governmental fund financial statements
3) Proprietary Fund Financial Statements
4) Fiduciary Fund Financial Statements
For the government wide balance sheet or statement of net position, which funds are not included?
- Fiduciary Funds are not included
- Internal Service fund is eliminated
Separate columns for DRIP CEG (INTERNAL SERVICE FUND ELIMINATED)
Statement of activities using which form of accounting (i.e. accrual or modified accrual)
Accrual
What sections are included in the statement of activities
1) Program Expenses
2) Program revenues
3) net program (expense) revenue
4) General Revenues
- Fiduciary funds are not included
Define the primary government?
A general purpose unit characterized as
- Elected governing body
- Separate legal entity
- Fiscal independent from another government
A primary government can have a component unit which is essentially like a subsidiary. This exists when the primary government can APPOINT voting majority of the units governing body or create or abolish the organization. Has the ability to impose its will or has the potential to receive financial benefits
How can a component unit be presented in the financial statements?
Blended- Treated as a fund of the primary government
Discretely presented- Separate column in the financial statements of the primary government
When can you use the blended approach?
Component unit and the primary government are substantially the same. CU provides services ONLY for the PG itself
How can expenditures be classified?
By fund Program or function Activity under the program By organizational unit By Character By Object
When is it appropriate to use expenditures/fund balance versus Expense/net Position
Governmental funds: Expenditures and fund balance
Proprietary and Fiduciary Funds: Expense/Net Position
