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CPA - Financial Reporting > Governmental Accounting 1 > Flashcards

Governmental Accounting 1 Flashcards

1
Q

Primary user groups of external financial reports of a state government

A
  • The citizenry: to which government is accountable to
  • Legislative & Oversight bodies: who represent the citizenry
  • Investors & Creditors: those who participate in the lending process
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2
Q

What is included in general-purpose external financial reporting

A
  • financial statements
  • notes to the financial statements
  • required supplemental information
  • other supplemental information
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3
Q

Involuntary Resource Provider

A

Cannot choose whether or not to pay; like taxes

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4
Q

Purpose of Financial Reporting

A
  • Accountability: taxpayer has right to know by providing information to help in determining whether government was operated within legal constraint

Interperiod Equity: shows whether current-year revenues are sufficient to pay for current-year services or whether future taxpayers will be required to assume burdens for services previously provided

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5
Q

Financial Reporting Implications

A
  • Expression of public policy
  • Expression of financial intent
  • Form of control
  • May provide basis of evaluating performance
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6
Q

Outcome Measures

A

indicate the results that occur because of services provided including accomplishments as a result of the services provided like clearance rate of crime

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7
Q

6 Characteristics of Effective Financial Reporting

A
  • Understandability
  • Reliability
  • Relevance
  • Timeliness
  • Consistency
  • Comparability
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8
Q

Output Measures

A

Quantity of service provided like miles or road repaired

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9
Q

Accounting Equation for a Fund

A

Assets + Deferred Outflows of Resources = Liabilities + Deferred Inflows of Resources + Fund Balance

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10
Q

3 Types of Funds

A
  • Governmental
  • Proprietary
  • Fiduciary
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11
Q

Governmental Funds

A

Nonexchange revenues like taxes, intergovernment revenues, and grants provide resources or most of the general government’s expenditures

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12
Q

Proprietary Funds

A

Use exchange transactions from examples like public utilities, convention centers, motor pools, and airports. They charge users for goods

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13
Q

Fiduciary Funds

A

Used to manage resources on behalf of entities or individuals

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14
Q

Basis of Accounting for Funds

A

Government: modified accrual
Proprietary: accrual
Fiduciary: accrual

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15
Q

Types of Government Funds

A 
Government Fund
Special Revenue Fund
Debt Service Fund
Capital Project Fund
Permanent Fund
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16
Q

Types of Proprietary Funds

A

Enterprise Funds

Internal Service Funds

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17
Q

Types of Fiduciary Funds

A

Custodial Funds
Pension Trust Funds
Investment Trust Funds
Private Purpose Trust Funds

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18
Q

Fund Balance Equation

A

Current Assets + Deferred Outflows of Resources − Current Liabilities − Deferred Inflows of Resources = Fund Balance

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19
Q

General Fund

A
  • Revenues usually come from taxes, licensing, fines, and other fees
  • Expenditures can be made for any general government services not specifically accounted for in another fund
  • The only required fund & there can only be one general fund
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20
Q

Special Revenue Fund

A

Accounts for specific revenues for purposes other than debt service or major capital projects like a gasoline tax that is for road maintenance

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21
Q

Capital Projects Fund

A
  • Account for monies designated for acquisition or construction of significant capital items like land, buildings, and equipment
  • Any remaining money is usually transferred to debt service funds unless there was debt then it goes to general fund
22
Q

Debt Service Fund

A

Account for monies set aside to pay interest and principal on the governmental unit’s long-term general obligation debt.

23
Q

Permanent Fund

A

ccount for resources received by the governmental entity with the stipulation that the principal amount remain “intact” but that earnings must be spent, for purposes that benefit the governmental entity

24
Q

Proprietary Fund Equation

A

(Current Assets + Capital Assets + Deferred Outflows of Resources) − (Current Liabilities + Long-Term Liabilities + Deferred Inflows of Resources) = Net Position

25
Q

Enterprise Funds

A

Account for activities that provide goods and services to the general public as well as to the governmental entity itself

26
Q

Internal Service Fund

A

Account for activities that provide goods and services only to other government agencies and departments (i.e. motor pools, printing services, data processing services, central supplies, etc.)

27
Q

Custodial Fund

A

Just holds it and distributes it

28
Q

Private Purpose Trust Fund

A

Hold and distribute other entities besides the government and are often held longer than custodial

29
Q

Investment Trust Fund

A

Account for monies received into an investment pool created through a formal legal trust or similar arrangement from other governmental agencies to be included in the governmental entity’s investment pool

30
Q

Measurement Focus Basis of Accounting

A

Modified Accrual > Flow of Financial Resources > Net Current Financial Position

Full Accrual > Flow of Economic Resources > Financial Position

31
Q

Modified Accrual Revenue recognition

A

Recognized when -

Measurable: amount is known and can be reasonably estimated

Available: amount is both legally due and cash is received whether it is by the end of the fiscal period or in time to pay obligations in current fiscal period (60 day rule)

32
Q

Modified Accrual Revenue Recognition 60 day rule

A

A governmental entity may recognize monies received during the first 60 days of a new fiscal period as revenue of the old fiscal period.

33
Q

60 day example

In Fiscal Year X, Bishop County levied property taxes totaling $5,000,000. The County received payments of $4,000,000 by the end of Fiscal Year X, received $300,000 during the first 60 days of the Fiscal Year Y, received an additional $500,000 by the end of Fiscal Year Y, and received the remaining $200,000 during the first 60 days of Fiscal Year Z.

A

Bishop County recognizes $4,300,000 (4,000,000 + 300,000) of property tax revenue in Fiscal Year X and $700,000 (500,000 + 200,000) of property tax revenue in Fiscal Year Y.

34
Q

Modified Accrual Revenues Subject to Accrual Accounting

A

Revenues that are measurable and legally due prior to the receipt of cash are normally recognized on the accrual basis. These revenues typically result from charges that are billed to the customer/constituent by the governmental entity

  • Property taxes
  • Interest and penalties on delinquent taxes
  • Investment revenue
  • Regularly billed charges for services
  • Taxes collected by other government units but not yet remitted
35
Q

Journal Entries for amounts billed and received in current period and first 60 days of next period

A

Receivables
—–Revenues

Revenue
—–Deferred Inflows of resources

36
Q

Modified Accrual Ependitures

A

Generally on the accrual basis that is expenditure is recognized when liability in incurred and measurable expect for 4 things

37
Q

4 things expenditures under modified accrual accounting not accounted for under accrual method

A

Interest on general long term debt: not recorded until actually due

No distinction between capital expenditures like land or buildings and period expenditures like wages or rent, they are all just expenditures

Prepaids are recognized as expenditures either when purchased or when used

Increases & Decreases in fund balance other than revenues & expenditures

  • other financing sources
  • other financing uses
38
Q

Entry to record a budget and close it

A

Estimated Revenues
———-Appropriations

Appropriations
———-Estimated Revenues

39
Q

Surplus Budget Journal Entry

A

Estimated Revenues $110

  • ———Appropriations $100
  • ———Fund Balance $10

Fund Balance is an example of transfers from other funds or proceeds from Bonds

40
Q

Deficit Budget

A

Estimated Revenues $90
Fund Balance $10
———-Appropriations $100

Fund balance is an example of transfer out of other funds

41
Q

What Funds need budgetary comparison

A

General Fund and all major special revenue funds for which a budget is legally adopted.

42
Q

Other Financing Sources

A

Increases in the fund balance of a fund that do not result in an increase in the net position of the organization as a whole.

Proceeds from long term debt & transfers of assets from other funds; either reported with revenue or netted against other financing uses

43
Q

Other Financing Uses

A

Decreases in the fund balance of a fund that do not result in a decrease in the net position of the organization as a whole.

Transfers of assets to other funds(transfers out) is the most common example & are either reported with expenditures or netted against other financing sources

44
Q

Unassigned Fund Balance Shit

A

Closing Appropriations increases fund balance
Closing Expenditures account decreases fund balance

So if closing entries for appropriations is greater than actual expenditures then you have an increase in unassigned fund balance

45
Q

Encumbrance Order Issued J/E

A

Encumbrances

—-Budgetary Fund Balance

46
Q

Encumbrance Order Filled J/E and year end closing

A

Budgetary Fund Balance

———-Encumbrances

47
Q

To record invoice for goods received

A

Expenditures

—–Vouchers Payable

48
Q

Things that are rarely encumbered and not encumbered

A

Payroll and interfund transactions are rarely encumbered

Petty cash is never encumbered

49
Q

Amount of available appropriations

A

Authorized appropriation minus encumbrances and expenditures

But remember that encumbrances reverse and give way to the actual expenditure so appropriations may either decrease or increase depending if the expended amount is greater or less than the encumbrance

50
Q

Note about interfund transfers

A

If in governmental you transfer to other government funds it is considered a transfer but if you transfer to proprietary or fiduciary then is an expenditure

CPA - Financial Reporting (26 decks)

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