Governmental Accounting Flashcards
Debt service fund and bond amortization on premiums and discounts
Since the debt service fund measurement focus is sources & uses of financial resources no amortization is recognized
Characteristics if governmental accounting
- TIMELINESS
- CONSISTENCY
- COMPARABILITY
- understandability
- reliability
- relevance
What is the purpose of fund financial statements?
To report additional and detailed information about the government
Governmental Funds - GRaSPP
G - General fund R - special Revenue fund a S - debt Service fund P - capital Projects fund P - Permanent fund
Accounting for Government Funds
- Modified accrual basis of accounting
2. Current financial resources measurement focus
Proprietary Funds - SE
S - internal Service fund
E - Enterprise fund
Accounting for Proprietary Funds
- Full accrual basis of accounting
2. Economic resources measurement focus
When are enterprise funds required?
- Activity of fund is financed by debt secured by a pledge or fee revenue
- Collection of fees to recover costs
- Pricing policies
Fiduciary Funds - CIPPOE
C - Custodial funds I - Investment trust funds P - Private purpose trust funds P - Pension trust fund OE - Other Employee benefit trust fund
Accounting for Fiduciary funds
- Full accrual basis of accounting
2. Economic resources measurement focus
What does CURRENT financial resources mean for GRaSPP
- no fixes assets are reported
2. no long term debt reported
Modified accrual revenue accounting
Recognized when measurable and available and by available I mean collectible in the current period + 60 days
Modified Accrual Book and close
Book - budget, activity, encumbrances
Close - budget, activity, encumbrances
BAE BAE accounting
Sources of governmental resources
- income and sales tax
- property and real estate taxes
- fines and penalties
- other financing sources = debt proceeds from bonds & notes and interfund transfers
Journal entries for the Bs in BAE BAE accounting or Budget part of modified accrual accounting
Beginning of the year Dr. Estimated revenue control Dr. Budget control deficit Cr. Appropriation control - approved spending Cr. Budget control surplus
End of Year Dr. Appropriation control Dr. Budget control surplus Cr. Estimated revenue control Cr. Budget control deficit
Nonexchange revenue
Collections during the year plus collections from first 60 days of next year equals revenue
Expenditure journal entry
Dr. Expenditure
Cr. Voucher payable
Inventory purchase method journal entry
Buying item
Dr. Expenditure
Cr. Voucher payable
No entry when items are used
On hand at end of year
Dr. Supplies inventory
Cr. Nonspendable fund balance - inventory
Inventory consumption method journal entry
Buying item
Dr. Supplies inventory
Cr. Voucher payable
Use of items
Dr. Expenditure
Cr. Supplies inventory
No journal entry at end of year
Classification of governmental expenditures
Functional program - Public and safety
Organizational unit - Police and fire
Activity - drug and highway for police
Fixed asset journal entry for modified accrual
Dr. Expenditure - capital outlay
Cr. Vouchers payable or cash
Debt journal entries for modified accrual
Proceeds from bond issue
Dr. Cash
Cr. Other financing source - bonds issued
Debt service payments
Dr. Expenditure - principal
Dr. Expenditure - interest
Cr. Cash
Lease journal entries for modified accrual - lessee
Recording lease
Dr. Expenditure - capital outlay
Cr. Other financing sources
Paying
Dr. Expenditure - principal
Dr. Expenditure - interest
Cr. Cash
Lease journal entries for modified accrual - lessor
Dr. Lease receivable - cash
Cr. revenue - principal
Cr. Deferred inflow of resources - plug
Dr. Interest receivable
Cr. Interest revenue
Receiving cash
Dr. Cash
Cr. Lease receivable - principal
Cr. Interest receivable - Interest
Lease for Proprietary and Fiduciary
Lessee is same is FASB Lessor Recording lease Dr. Lease receivable Cr. Deferred inflow of resources
Revenue
Dr. Cash
Cr. Interest income
Cr. lease receivable
Dr. Deferred inflow of resources - total divided by number of years
Cr. Revenue
Journal entry for property taxes for modified accrual
Dr. Property taxes receivable - current - full amount
Cr. Property tax revenue - estimated difference
Cr. Allowance
Journal entry to book, close, and expense encumbrances
To book
Dr. Encumbrances
Cr. Budgetary control
To close
Dr. Budgetary control
Cr. Encumbrances
To expense
Dr. Expenditures - actual amount
Cr. Vouchers payable or cash
Journal entries for encumbrances that roll into the next year
To close
Dr. Budgetary control
Cr. Encumbrances
To reclassify
Dr. Unassigned fund balance(year end surplus)
Cr. Fund balance, committed
To expense
Dr. Expenditure - prior year
Cr. Vouchers payable or cash
Other financing source and use classification
Other financing use is for the one sending the money and other financing source is the one receiving money
Categories of Fund balances - NU CAR
N - Nonspendable fund balance - prepaids & inventory
U - Unassigned fund balance
C - Committed fund balance - government obligated
A - Assigned fund balance - government intents to obligate
R - Restricted fund balance - restricted from outside by legislation, creditors and grantors
General Fund - fund categories
NU CAR all of it and has positive balance for unassigned
Special Revenue fund - fund categories
Doesn’t have assigned fund
Debt Service fund - fund categories
Doesn’t have nonspendable
Capital Projects fund - fund categories
Doesn’t have nonspendable
Permanent fund - fund categories
Doesn’t have nonspendable, committed, or assigned
Reciprocal vs nonreciprocal transactions
Reciprocal means there is an exchange and nonreciprocal means its one sided
How to record a deferred inflow of resources
Dr. Accounts receivable
Cr. Deferred inflows of resources
General Fund revenue sources
- Taxes when recorded/billed and owed
- Public & Safety: fines, fees, licenses and permit revenue
- Intergovernmental: shared or grant revenue from other funds
- Investment earns & miscellaneous earnings
- Charges for services if government elects to use general fund instead of Proprietary funds
General Fund expenditures
- General government: admin functions like city manager or finance
- Public Safety: police and fire department etc.
- Culture & Recreation: parks, libraries, etc
General Fund Balance sheet formula
Current Assets & Deferred outflows = Current Liabilities & Deferred inflows
General Fund Balance Sheet
- Assets
- Liabilities
- Fund Balance: NU CARR
- Current items only*
- No fixed assets & long term debt*
General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance
- Revenues
- Expenditures
- Other Financing Sources & Uses: transfers & bond proceeds
- Special Items
No depreciation expense
Special Revenue Fund - revenues and expenditures
- Revenue: legally restricted for a specific purpose and either classified as intergovernmental revenue or fees; also grants
- Expenditures: current operating expenditures like street maintenance or capital outlays(highway construction)
Special Revenue Fund Statement of Revenue, Expenditures, and Changes in Fund Balance
- Revenues
- Expenditures
- Other Financing Sources & Uses: transfers & bond proceeds
- Special items
Debt Service Fund revenue sources
- Interfund transfers
Dr. Cash
Cr. Interfund transfer from fund - Income from investment
Dr. Cash
Cr. Revenue - investment income
Debt Service Fund expenditures
- Payment of interest
Dr. Expenditure
Cr. Cash or matured interest payable - Payment of principal
Dr. Expenditure - face amount
Cr. Cash or matured bonds payable
Debt Service fund balance sheet
- Assets
- Liabilities
- Fund Balance: NU CARR
Debt Service fund and interest note
You record it when you pay; do not accrue it for governmental
Journal entries to record capital grants from Capital project fund
Unrestricted government grant
Dr. Cash
Cr. Revenue
Restricted government grants - revenue when spent
Dr. Cash
Cr. Revenue collected in advance
Cost reimbursement contract restricted revenue - revenue when spent Dr. Cash Cr. Vouchers payable/cash Dr. Revenue collected in advance Cr. Revenue
General fund for special revenue fund transfer
Dr. Cash due from fund
Cr. Interfund transfers
Capital projects fund bond proceeds
- Reported as other financing source
2. No amortization of bond premium or discount
Bond journal entries for capital projects fund
Bond issue Dr. Cash - issue price Dr. Other financing sources - discount Cr. Other financing sources - bond issue - Face amount Cr. Other financing sources - premium
To transfer premium or discount to debt service fund
Dr. Interfund transfer
Cr. Cash
When you invest in cd
Dr. Investment in CD
Cr. Cash - Face
Interest Revenue
Dr. Cash
Cr. Revenue - interest income
Transfer to debt service fund
Dr. Interfund transfer
Cr. Cash - interest
Expenditure and encumbrance for capital projects fund
Contracts signed
Dr. Encumbrances
Cr. Budgetary control
Completed contract
Dr. Budgetary control
Cr. Encumbrances
To record purchased/constructed assets
Dr. Expenditures
Cr. Vouchers Payable or cash
Note to determine where public restricted funds are recorded
- Principal & interest = special revenue fund
2. Interest only = permanent fund
Internal Service Fund sources of revenue
- Restricted grants that are recognized when spent
2.Operating revenues from services
Dr. Cash
Cr. Billings - Nonoperating revenue like interest
Establishing internal service fund
Interfund transfer
Dr. Cash
Cr. Interfund transfer
Contribution of assets
Dr. Capital Assets
Cr. Contribution
Sale on general obligation bonds
Dr. Cash
Cr. Long term bonds payable
Advances from other funds to be paid
Dr. Cash
Cr. Due from other fund
Order of presentation for statement of Revenues, Expenses, and changes in net position - INCASET
Income from operating Nonoperating income & expense Capital contributions Additions to endowments Special items (unusual or infrequent) Extraordinary items Transfers
Establishing enterprise fund
Capital contribution
Dr. Capital assets
Cr. Capital contributions
Bond issue
Dr. Cash
Cr. Long term bonds payable
Fiduciary funds and cash flows
Don’t have cash flows statement
Statement of Changes in Fiduciary Net Position
Statement of Fiduciary Net Position
