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Governmental Accounting Flashcards

1
Q

What are the three major types of funds in governmental accounting?

A

Governmental, Proprietary, Fiduciary

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2
Q

Which two accounting bases are used in governmental accounting?

A

Accrual basis - current economic resources focus (revenues recognized when earned)

Modified accrual basis - current financial resources focus (revenues recognized when available and measurable)

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3
Q

What is a budget appropriation?

A

The highest amount allowed for a particular expenditure under a budget.

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4
Q

What is an encumbrance?

A

Records purchase and reserves it for the encumbrance.
Record when purchase order is approved

Encumbrances
Reserved for Encumbrance

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5
Q

What is the opening budgetary entry?

A

Dr Estimated Revenues Control
Cr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)

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6
Q

What is the closing budgetary entry?

A

Dr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
Cr Estimated Revenues Control

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7
Q

What are the types of governmental funds?

A

General Fund - unassigned
Special Revenue Fund-restricted/committed
Permanent Fund -restricted, non expendable

Capital Projects Fund
Debt Service Fund
= both restricted, committed, assigned

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8
Q

What is a General Fund?

A

The operating fund of the governmental unit

Records Significant Revenues: Taxes; Tickets; Fines; Licenses

Records Significant Expenditures: Police; Education; Fire Dept

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9
Q

What is a Special Revenue Fund?

A

Restricted for a specific purpose such as street repair.

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10
Q

What is a Permanent Fund?

A

Legally restricted fund; where only earnings can be used to fund programs.

Principal remains intact.

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11
Q

What is a Capital Projects Fund?

A

Used to acquire and build facilities.

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12
Q

What is a Debt Service Fund?

A

Handles repayment of long-term debt and related interest.

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13
Q

Which fund statements are issued in Governmental Accounting?

A

Balance Sheet

Statement of Revenues; Expenditures; and Changes in Fund Balance

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14
Q

When is Revenue recorded in Governmental Accounting?

A

When it is BOTH available and measurable; regardless of when it is spent.

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15
Q

What is Derived Tax Revenue?

A

Money collected from people doing things:

Sales tax (buying cars) or income tax (people working)

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16
Q

What is Imposed Tax Revenue?

A

Tax assessed just because things exist

Example: property tax on a car (even if it’s never driven); real estate tax

Recorded as a revenue when BUDGETED.

Estimated uncollectible property tax revenues don’t offset revenues; so don’t net them.

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17
Q

What are the types of Proprietary Funds?

A

Internal Service Funds - to serve the needs of other governmental units (i.e. motor pool)

Enterprise Funds - provide goods or services to external users (i.e. post office)

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18
Q

What are the Fund Balance Types?

A 
Restricted - Restricted by Contributor 
 Committed - Restricted by Government
 Assigned - Intended for a purpose
 Unassigned - Available to be spent
 Non-spendable - Not in a spendable state
19
Q

What are the types of Fiduciary Funds?

A

Agency Fund - government acts as an agent or custodian

Pension Trust Fund - Government is a trustee for a pension plan

Investment Trust Fund - Government is a trustee over a series of investments

Private Purpose Trust - Trust that benefits various individuals and entities

20
Q

How are Assets & Liabilities presented on the Statement of Net Position?

A

Assets (Current & Non-Current)
Deferred Outflows of Resources
Liabilities (Current & Non-Current)
Deferred Inflows of Resources

21
Q

How are Capital Assets shown on a governmental Statement of Net Assets?

A

They are shown net of debt

Asset Cost - Accumulated Depreciation - Asset Liabilities : Net Assets

22
Q

How is infrastructure reported on a governmental Statement of Net Assets?

A

Modified approach:

Reported at cost; no accumulated depreciation

23
Q

How is a Statement of Net Assets divided?

A

Into Governmental Activities and Business Activities

24
Q

How are activities presented in a Statement of Activities?

A

They are divided by function

If the activities of a component are distinguishable from the rest of the governmental entity; then discreet presentation is required

If the activities of the component cannot be identified and separated from the rest of the governmental activities; then blended presentation is warranted.

Component units are reported in the Entity-Wide Financial Statements and not the Fund Financial Statements.

25
Q

What is the primary objective of governmental accounting?

A

To provide information that is useful and benefits a wide range of users including:

Costs of services provided

Sufficiency of revenues to cover costs

Financial position of entity

26
Q

Government wide financial statements demonstrates

A

operational accountability

-how effective the organization was in using resources

27
Q

Fund financial statements demonstrates

A

fiscal accountability

organization’s compliance with rules and regulations on spending activities

28
Q

Government Reporting Model

A

focuses on fiscal and operational accountability
fiscal - fund FS
operational - government wide FS

29
Q

Basic governmental FS

A
  1. MD & A
  2. GOVERNMENT WIDE FS
    Statement of Net Position
    Statement of Activities
  3. FUND FINANCIAL STATEMENTS:
    1. Governmental(modified accrual)
      Balance Sheet
      Statement of Revenues, Expenditures and
      Changes in Fund Balances
    2. Proprietary (accrual)
      Statement of Net Position
      Statement of Revenues, Expenses and
      Changes in Fund Net Position
  4. Fiduciary Funds
    Statement of Fiduciary Net Position
    Statement of Changes in Fid. Net Position
  5. NOTES TO FINANCIAL STATEMENTS
  6. REQUIRED SUPPLEMENTARY INFORMATION
    other than Management’s Discussion and
    Analysis
30
Q

Required Supplementary Information

A
  1. Ten year schedule of selected information
    • for entities that provide pensions through
      pension funds administered thru trust funds
  2. Budgetary Comparison Schdule
  3. Information about Infrastructure assets
  4. Claims Development Information when the government sponsors a public entity risk pool

Other supplementary schedules (not mandatory)

CAFR

31
Q

CAFR - comprehensive annual financial report

A

Major sections are introductory, statistical and financial.

Introductory - transmittal, organization chart,
list of principal officials (unaudited)

Financial section - includes auditor’s report

Statistical - various schedules:

  • net position by component
  • demographics
  • debt capacity
  • revenue capacity etc
32
Q

Special purpose governments- what FS are required?

A

Example: park districts, tollway authorities, school districts, sanitation districts

Engaged in:

governmental activities
business type
fiduciary
or both governmental and business type

Guide:

Criteria #1

If engaged in governmental activities and have one
more than one program

OR

If engaged in both governmental and business type activities

= BOTH GOVERNMENT WIDE FS AND
FUND FINANCIAL STATEMENTS
REQUIRED

Criteria #2

If engaged in only ONE GOVERNMENTAL ACTIVITY = combine Government Wide and Fund Financial Statements

Criteria #3

If engaged in only:

Business type activities or
Fiduciary activities
= Fiduciary or
Proprietary Fund FS only

33
Q

Primary government

A
  1. state government
  2. general purpose local government
  3. special purpose local government
  • has a separately elected governing body
  • legally separate
  • fiscally independent of other state or local government
34
Q

Component is

A
  • legally separate organization for which the elected officials of a primary government are financially accountable.

Assumption of financial accountability:

  1. When the primary government appoints a voting majority of the organization’s governing board
  2. it is able to impose its will on that organization
  3. there is a potential for the organization to provide specific financial benefits to or impose specific financial burdens on the primary government
  4. the organization is fiscally dependent on and there is a potential for the organization to provide specific financial benefits to, or burdens on, the primary government
    - regardless of the primary government’s influence of the governing board

Omission of the component in the primary government’s FS would cause it to be misleading

IS DISCRETELY PRESENTED IN THE GOVERNMENT WIDE FINANCIAL STATEMENTS

CAN BE BLENDED IF CRITERIA ARE MET.

35
Q

Criteria for a component unit to be blended in the FS

A
  1. governing body of the component unit is substantially the same as that of the primary government
  2. there is a financial benefit or burden relationship between the primary government and the component unit
  3. management of the primary government has operational responsibility for the component unit
  4. the component unit provides services ENTIRELY or ALMOST ENTIRELY for the primary government or for the benefit of the primary government
  5. the component unit’s TOTAL debt outstanding, including leases, is expected to be repaid entirely or almost entirely by the primary government
36
Q

Management’s Discussion and Analysis

A
  • overview of the government’s financial activities
  • provides comparison of the current year results with prior year, with emphasis on the prior year

INCLUDES:

  1. brief discussion of the financial statements
  2. condensed financial information from the government wide FS and individual fund FS
  3. analysis of significant variations between the original budget, final budget and current year results
  4. description of significant capital asset and long term debt activity for the year
  5. a discussion by those governments using the modified accrual approach - about infrastructure assets regarding the condition of these capital assets and changes from the prior year
  6. any know facts, conditions, decisions that have significant effect on the governments financial position and results of operations
37
Q

Government wide FS format

A

Statement of Net Position

Assets
\+ Deferred Outflows
- Liabilities
- Deferred Inflows 
= Net Assets
38
Q

Deferred Outflow

cash payments

A
  • asset
  • consumption of net assets that is applicable to a FUTURE PERIOD

Example:

  1. grant expenditure paid in advance
  2. deferred amounts from refunding of debt (debit)
    • advance cash payment
  3. cost to acquire rights to FUTURE revenues
  4. deferred loss from sale and leaseback
  5. negative fair value of government hedge of a FUTURE transaction
39
Q

Deferred inflows

cash received

A
  • liabilities
  • acquisition of net assets applicable to a FUTURE reporting period

Example:

  1. grants received in advance
  2. deferred amounts from refunding of debt (credit)
  3. proceeds from sale of future revenues
  4. deferred gain from sale and leaseback
    positive fair value on govt hedge of a future transaction
  5. advanced revenue from imposed nonexchange transactions
40
Q

Government Wide FS - Statement of Net Position Format

A 
GA     BTA      Total    CU
Assets
Deferred Outflows
Liabilities
Deferred Inflows
Net Assets
   Net Investment in Capital Assets
   Restrited
   Unrestricted

GA - governmental activities
- all govt funds + internal service

BTA - business type activities
- enterprise fund only

FIDUCIARY FUNDS NOT INCLUDED HERE

Assets include:

Capital assets - net of depn
Internal balances (transfers) - not eliminated
- GTA to GA transfers (vice versa)

41
Q

Government Wide FS - Statement of Activities Format

Additional disclosures are in this statement not in the financial position

A

Column Headings:

FUNCTIONS/PROGRAMS:

EXPENSES - program expenses by function

                - NO DEPRECIATION here
                - includes interest on long term debt

PROGRAM REVENUES:
Charges for services
Operating grants and contributions
Capital grants and contributions

GOVERNMENTAL ACTIVITIES
BUSINESS TYPE ACTIVITIES
TOTAL
COMPONENT UNITS

ROW Headings;

Functions/Programs:

Primary Government
  Governmental activities
       - expenses by function/program
  Business Type activities 
  Total primary activities

Component Units
Total component units

Below the totals:

GENERAL REVENUES:

Taxes
Transfers
Total general revenues, taxes and transfers

Change in Net position
Add: Net position beginning
Net position end

Taxes include:

property taxes levied for general purposes
property taxes levied for debt service
franchise taxes
public service taxes
payment from City
grants and contributions not restricted to specific 
       programs
investment earnings
miscellaneous
special items - gain on sale of land

Transfers:

debit (credit) amounts in the governmental activities and business type activities columns

42
Q

Funds Statement - Governmental Funds
Balance Sheet
Additional disclosures are in here not in the Statement of activities

A

Column headings:

By Fund type:

    Major Funds:
    General
    HUD programs
    Community development
    Route 7 construction
Other governmental funds
TOTAL GOVERNMENTAL FUNDS

ROW Headings:

Assets - includes Due from other funds
            - no capital assets here
Deferred Outflow
Liabilities - includes Due to other funds
Deferred Inflow
Fund Balances:
   Nonspendable
   Restricted
   Committed
   Assigned
   Unassigned
TOTAL FUND BALANCES (final total)

ADDITIONAL DISCLOSURES AT THE BOTTOM:

Reconciliation and discussion of total fund balances to fund balances in the Statement of Net Position in government wide FS:

Amounts reported for governmental activities in the statement of net assets are different because:

ADD THESE AT THE BOTTOM OF THE TOTAL FUND BALANCES FROM ABOVE (LAST COLUMN)
Capital assets
Other long term assets
Internal Service Fund
Long term liabilities

NET POSITION OF GOVERNMENTAL ACTIVITIES
- FINAL TOTAL - DOUBLE RULE IN THE COLUMN OF TOTAL GOVT FUNDS ONLY

43
Q

Fund Statements
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances

A

COLUMN HEADING:

By major fund type (same as in the BS)

General 
HUD programs
Community development
Route 7 construction
Other governmental funds
Total governmental funds

ROW HEADINGS:

Revenues - by source i.e taxes, fees, fines
- Expenditures - by character
    Current
    Debt service
    Capital outlay
     Total expenditures
= Excess (Deficiency) of total revenues 
            over expenses
Other financing sources (uses)
    Proceeds of refunding bonds
    Payment to bond refunding
    Proceeds of long term debt
     Transfer in
    Transfer out
    Total

Special Items:
Proceeds from sale of land

NET CHANGE IN FUND
Add: Beginning
FUND BALANCE END

FAR (41 decks)

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