Governmental Accounting Flashcards
What do Government funds not have?
Profit motive
income statements
matching principle
accrual method
Operational accountability
Timeliness, consistency, comparability
What financials represent operational accountability
Government wide financials
What type of accrual does government wide financials use?
full accrual
fiscal accountability
government shows that they used the money in the current period for the purpose that they were supposed to use the money for and that the resources were not diverted to other needs
what financials demonstrate fiscal accountability
fund based financials
what accrual basis does fund based financial use?
modified accrual
What is budgetary accounting used for?
Controlling spending
What is activity accounting used for?
flow of current financial resources and has an annual budgetary focus
What is encumbrance accounting used for?
Recording purchase orders and is designed to monitor spending for increased budgetary control.
What funds is budgetary used for?
General
Revenue (special fund)
Service (debt) fund
Projects (capital) fund
Permanent fund
T/F budgets are based on actual revenues and appropriations
F - based on estimated revenue and appropriations
What are the main sources of government revenue?
Taxes and fines/penalties
Debt proceeds
Interfund transfers
What account does the difference between estimated revenues and appropriations go to at the beginning of the year?
Budgetary control
What is the journal entry for budgetary control?
Dr. Estimated revenue control
Dr. budgetary control (negative/deficit)
Cr. Appropriations control
Cr. budgetary control (positive/surplus)
What happens to the budgetary control account at the end of the year?
budget is reversed and closed using the same amounts that were recorded at the beginning of the period +/- any amendments
What is the journal entry to close the budgetary control account?
Dr. Appropriations control
Dr. Budgetary control (positive)
Cr. Estimated revenue control
Cr. Budgetary control (negative)
T/F budgetary accounts and actual activity are included in the year end adjusting entry
F - actual activity is closed out separately
What are the requirements used used for governmental fund financial statements?
Time and eligibility
Non-exchange transactions
entity gives/receives value without directly receiving/giving equal value in return
Derived tax revenue
taxes imposed on exchange transactions or wealth such as commercial sales or taxpayer income
Imposed non-exchange revenue
taxes imposed on non-exchange transactions such as fines or property taxes
When are receivables recorded?
When government has an enforceable legal claim
What is the journal entry to record accrual of real property taxes
Dr. Real property tax receivable
Cr. Revenue
Cr. Allowance for uncollectible tax
What is the journal entry to record the collection of property taxes
Dr. Cash
Cr. Real property tax receivable - current
What is the journal entry to reclassify receivables as delinquent
Dr. Property tax receivable - delinquent
Cr. real property tax receivable - current
What is the journal entry to reclassify current allowance for uncollectible taxes and adjust revenue?
Dr. Revenues
Dr. Allowance for uncollectible tax - current
Cr. Allowance for uncollectible tax - deliquent
When are revenues recognized?
In the period in which resources must be used and revenue is measurable and available
When is revenue measurable and available?
Collection periods doesn’t exceed 60 days after year end
What are expenditures?
capital purchases, debt service payments, and operating expenditures
purchase method
record an expenditure when purchased and record a current asset and non-spendable fund balance at year end for any items not used
consumption method
record a current asset when purchased and record an expenditure as consumed during the period
Journal entry to record buying an item under Purchase vs Consumption
Purchase
Dr. Expenditure
Cr. Vouchers Payable
Consumption
Dr. Supplies inventory
Dr. Payable
Journal entry to record use of an item under Purchase vs Consumption
Purchase
None
Consumption
Dr. Expenditure
Cr. Supplies
Journal entry to record on hand at year end under Purchase vs Consumption
Purchase
Dr. Supplies
Cr. Nonspendable fund balance
Consumption
None
How are expenditures classified?
According to the appropriate fund
Function or program classification
provides information on the overall purchase of the expenditures
Function
major services
Program
activities, operations, organizational units
Which of the following are function vs program
Elderly services
highways
public safety
drug addiction
Elderly services - P
highways - F
public safety - F
drug addiction - P
Organizational unit
organizational structure of the governmental entity
current expenditures
benefit the current fiscal period
capital outlays
presumed to benefit both the present and the future
debt service
prior fiscal periods
intergovernmental
one governmental unit transfers resources to another
Which funds use modified accrual vs full accrual?
governmental funds use modified accrual
proprietary and fiduciary funds use full accrual
Other financing sources
proceeds from long-term debts are recorded in governmental funds
What is the journal entry to record a lease receivable (lessor)
Dr. Lease receivable (full amount)
Cr. Revenue
Cr. Deferred inflows of resources
Dr. Interest receivable
Cr. Interest revenue
Journal entry to record the lease (lessee)
Dr. Right of use asset
Cr. Lease liability
Journal entry to record lease payments (lessee)
Dr. lease liability
Dr. Interest expense
Cr. Cash
Dr. Amortization expense
Cr. Accumulated ROU
Journal entry for recording short term leases for GRSPP funds vs SE-CIPPOE funds (lessor)
Dr. Receivable
Cr. Revenue
Journal entry for recording contracts that transfer ownership (lessor)
GRSPP
Dr. Receivable
Cr. current revenue and deferred inflow
SE-CIPPOE
Dr. Receivable
Cr. Revenue
journal entry for leases other than short term vs contracts that transfer ownership (lessor)
GRSPP
Dr. Receivable
Cr. current revenue and deferred inflow
SE-CIPPOE
Dr. Receivable
Cr. Deferred inflow
Journal entry for recording short term leases for GRSPP funds vs SE-CIPPOE funds (lessee)
Dr. Lease expense
Cr. Cash/payable
Journal entry for recording contracts that transfer ownership (lessor)
GRSPP
Dr. Capital outlay expenditure
Dr. Other financing source
SE-CIPPOE
Dr. Capital asset acquired
Cr. Lease liability
journal entry for leases other than short term vs contracts that transfer ownership (lessee)
GRSPP
Dr. Capital outlay expenditure
Dr. Other financing source
SE-CIPPOE
Dr. Right of use asset
Cr. Lease liability
What requirements are unique to voluntary non-exchange transactions?
contingency
what is used to record the details of budgetary accounts, and encumbrances
subsidiary ledger
what is the journal entry to record an encumbrance?
Dr. Encumbrance
Cr. Budgetary control
what is the journal entry to record actual expenditure?
Dr. Expenditures
Cr. Vouchers payable
T/F encumbrances are generally used for recurring expenditures
F - recorded for spending/appropriations control purposes
how are encumbrances recorded if they are outstanding at year end?
Reverse the journal entry and include outstanding encumbrances in an appropriate fund balance classification such as “fund balance, committed” or “fund balance, assigned”
T/F outstanding encumbrances at year end will be carried forward
T
What is the journal entry to close budgetary accounts related to outstanding purchase orders
Dr. Unassigned fund balance
Cr. Fund balance, committed
how are budget, activity, and encumbrances closed
Budget closed for same amount as booked
Activity is closed for actual amount
Encumbrance is reversed so same amount as booked
Interfund activity
represents the flow of resources between funds and between the primary government and its component units
Reciprocal interfund activity
exchange type transactions
Nonreciprocal interfund activity
non exchange type transactions
Which are reciprocal vs nonreciprocal activities
Interfund loans
interfund transfers
Interfund reimbursements
Interfund services provided and used
Interfund loans - R
interfund transfers - NR
Interfund reimbursements - NR
Interfund services provided and used -R
