Governmental Accounting Flashcards
Restricted net position in the government-wide statement of net profit
Restricted net position in the government-wide statement of net position is presented on the accrual basis. Restricted fund balances in the governmental funds balance sheet is presented on the modified accrual basis.
In the government-wide statement of net position, restricted capital assets should be included in the
Net investment in capital assets includes unrestricted and restricted capital assets. However, debt related to significant unspent proceeds is classified in the same net position component as those proceeds.
Balances not eliminated by the government
internal service funds that are not eliminated are usually reported in the government activities column because these funds’ activities are ordinarily more governmental than business-type.
Unrestricted net position in the government-wide statement of net position
Unrestricted net position includes items that may be internally committed or assigned. However, the designation is not reported on the financial statements.
Enterprise fund
Enterprise funds use the accrual method of accounting.
General revenues reported in the government-wide statement of activities
General revenues are revenues not required to be reported as program revenues. They are reported separately after total net (expense) revenue for all functions in the government-wide statement of activities. All taxes, including those levied for a special purpose, are general revenues.
Custodial.
When capital improvements are financed by special assessment debt, the debt service transactions of a special assessment issue for which the government is not obligated should be reported in a custodial fund in the statement of fiduciary net position, not a debt service fund.
Total governmental fund balances should be reconciled to the net position of governmental activities in the government-wide statements of net position.
The first step in preparing government-wide financial statements is to convert the data in the governmental fund financial statements. Because those data are presented using the modified accrual basis, adjustments are necessary to convert the data to the full accrual basis. The conversion is performed at the total governmental fund summary level, not at the individual fund level. Liabilities due in the current period are reported in the governmental fund financial statements. Thus, bonds payable in the current period is not a reconciling item.
The government wide statement of activities should report which of the following categories of programs revenues.
Program revenues include (1) charges for services, (2) program-specific operating grants and contributions, and (3) program-specific capital grants and contributions. They may also include earnings on (1) endowments, (2) permanent fund investments, or (3) other investments restricted to a given program. Earnings of endowments or permanent funds that finance general fund programs or general operating expenses are not program revenues. However, when earnings on a program’s invested accumulated resources are legally restricted for use by the program, those earnings are program revenues.
When preparing worksheets to convert governmental fund financial statements to government-wide financial statements, conversion entries
The first step in preparing government-wide financial statements is to convert the modified accrual data in the governmental fund financial statements. Thus, reconciliation adjustments are necessary to convert the data to the full accrual basis. The conversion is performed at the total governmental fund summary level, not at the individual fund level.
A summary reconciliation of the government-wide and fund financial statements
A government must provide a summary reconciliation to the government-wide statements at the bottom of the fund statements or in a schedule. Brief explanations on the face of the statements may suffice, but a more detailed explanation in the notes may be necessary.
A state or local government’s change in fiduciary net position
Government-wide statements display information about the government as a whole, including the primary government and its component units. But they exclude fiduciary activities. Fiduciary funds, including fiduciary component units, are reported only in the statements of fiduciary net position and changes in fiduciary net position. Thus, information about fiduciary activities is not reported in the government-wide financial statements. For this reason, no reconciliation is possible.
government-wide financial statement
Two major distinctions are made in the government-wide financial statements: (1) between the primary government and its discretely presented component units and (2), within the primary government, between governmental activities and business-type activities.
With regard to the statement of cash flows for a governmental unit’s proprietary funds, items generally presented as cash equivalents are
Cash equivalents are highly liquid investments, readily convertible to known amounts of cash with an original time to maturity at acquisition of 3 months or less. The T-bills and CDs both meet these criteria and are presented as cash equivalents.
A state or local government’s statement of changes in fiduciary net position most likely
A statement of changes in fiduciary net position reports additions to and deductions from the fiduciary net position for (1) pension (and other employee benefit) funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds.
A government entity is required to include a statement of cash flows
The proprietary funds financial statements are the statements of (1) net position; (2) revenues, expenses, and changes in fund net position; and (3) cash flows. A statement of cash flows also is required for entities engaged in business-type activities, e.g., public colleges and universities.
An enterprise fund must be used when
Enterprise funds need not be used to report insignificant activities. They may be used for activities for which fees are charged to external users, but they must be used if one of three criteria (applied in the context of the activity’s principal revenue sources) is satisfied. The activity should be reported as an enterprise fund if it is financed with debt, and the only security is a pledge of the activity’s net revenues from fees and charges. If the debt is also secured by the full faith and credit of a related governmental entity, the debt is not payable solely from the activity’s net revenues.
Custodial.
Custodial funds account for grants and other financial assistance to be transferred to, or spent on behalf of, a secondary recipient if the recipient government acts purely as a conduit, that is, if it receives the monies and transmits them without having any administrative or direct involvement in the program. If the recipient government has such involvement, the pass-through grant is accounted for in an appropriate governmental, proprietary, or trust fund.
Statement of Financial Positions
Assets Liabilities Deferred inflow of resources deferred outflow of resources and net position
Government Fund Accounting
Accrual Accounting revenue are recorded when measurable and earned
Three Different types of funds
Government, Proprietary and Fiduciary
What are the Five Governmental Funds
General Fund, Special Revenue, Capital Project Funds Debt Service Funds and Permanent Funds
General Funds
Everything that is not required in another type of fund
Special Revenue Fund
Revenue Sources that are restricted or committed to be spent for specific purposed purposes
Capital Projects Funds
Restricted Funds for Construction or Acquisition of Capital Facilities in sure for buildings land or improvements
Debt Service Funds
Restricted or Committed for Debt Service Principal and Interest Expenditures. Which are used to pay interest and principal on long term debt
Permanent Funds
for Endowments which the earning are restricted to support governments programs dedicated for public use
Proprietary Funds
Business Type Funds
Enterprise Funds
Accounts for Business-type activities that the public is the primary user of
Internal Service Funds
Other Governments agencies are the primary user
Fiduciary Funds
Money held for others
Custodial Funds
Assets held briefly then distributed such as special assessments, tax collections or payroll deductions
Pension trust funds
Assets held in trust to provide employee retirement benefits
Private purpose trust funds
Assets held in trust to benefit individuals
Investment trust funds
accounts for assets held in trust for other governments
