Governmental Accounting Flashcards
What are the three major types of funds in governmental accounting?
Governmental, Proprietary, Fiduciary
Which two accounting bases are used in governmental accounting?
Accrual basis - current economic resources focus (revenues recognized when earned)
Modified accrual basis - current financial resources focus (revenues recognized when available and measurable)
What is a budget appropriation?
The highest amount allowed for a particular expenditure under a budget.
What is an encumbrance?
Records purchase and reserves it for the encumbrance.
What is the opening budgetary entry?
Dr Estimated Revenues Control
Cr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
What is the closing budgetary entry?
Dr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
Cr Estimated Revenues Control
What are the types of governmental funds?
General Fund Special Revenue Fund Permanent Fund Capital Projects Fund Debt Service Fund
What is a General Fund?
The operating fund of the governmental unit
Records Significant Revenues: Taxes; Tickets; Fines; Licenses
Records Significant Expenditures: Police; Education; Fire Dept
What is a Special Revenue Fund?
Restricted for a specific purpose such as street repair.
What is a Permanent Fund?
Legally restricted fund; where only earnings can be used to fund programs.
Principal remains intact.
What is a Capital Projects Fund?
Used to acquire and build facilities.
What is a Debt Service Fund?
payment of currently due interest and principal on long term debt by setting aside cash
Which fund statements are issued in Governmental Accounting?
Balance Sheet
Statement of Revenues; Expenditures; and Changes in Fund Balance
When is Revenue recorded in Governmental Accounting?
When it is BOTH available and measurable; regardless of when it is spent.
What is Derived Tax Revenue?
Money collected from people doing things:
Sales tax (buying cars) or income tax (people working)
What is Imposed Tax Revenue?
Tax assessed just because things exist
Example: property tax on a car (even if it’s never driven); real estate tax; fines
Recorded as a revenue when BUDGETED.
Estimated uncollectible property tax revenues don’t offset revenues; so don’t net them.
What are the types of Proprietary Funds?
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)
What are the Fund Balance Types?
Restricted - Restricted by Contributor, an EXTERNAL authority
Committed - Restricted by Government,
Assigned - Intended for a purpose
Unassigned - Available to be spent
Non-spendable - Not in a spendable state (ex: inventory, prepaid expenses)
What are the types of Fiduciary Funds?
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
How are Assets & Liabilities presented on the Statement of Net Position?
Assets (Current & Non-Current)
Deferred Outflows of Resources
Liabilities (Current & Non-Current)
Deferred Inflows of Resources
How are Capital Assets shown on a governmental Statement of Net Assets?
They are shown net of debt
Asset Cost - Accumulated Depreciation - Asset Liabilities : Net Assets
How is infrastructure reported on a governmental Statement of Net Assets?
Modified approach:
Reported at cost; no accumulated depreciation
How is a Statement of Net Assets divided?
Into Governmental Activities and Business Activities
How are activities presented in a Statement of Activities?
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.
What is the primary objective of governmental accounting?
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
What are the basic objectives of the F/S?
- Timeliness 2. Consistency 3. Comparability
Purpose of funds
Funds are legal restrictions. Easily monitor and report compliance with spending purposes.
Who establishes accounting standards for Governmental Entities? NFP Entities?
Governmental: GASB; NFP: FASB
Which funds are reported under the Governmental Activities on the Statement of Net Position?
GRaSPP + S (General, Special Revenue, Debt Service Fund, Permanent Fund, Capital Projects Fund) + (Internal Service Fund)
Which funds are reported under the Business Activities on the Statement of Net Position?
Enterprise Funds
Where are the fiduciary funds reported on the Statement of Net Position?
Trick question: They are NOT on the Statement of Net Position!
How are governmental funds presented on the Balance Sheet?
Current Assets + Deferred Outflows = Liabilities + Deferred Inflows + Fund Balance
How are Proprietary and Fiduciary funds presented on the Balance Sheet?
Assets + Deferred Outflows - (Liabilities + Deferred Inflows) = Net Position
What is the Balance Sheet called for Proprietary and Fiduciary Funds?
Government Wide Statement of Net Position
What is the Balance Sheet called for Governmental Funds?
Governmental Fund Balance Sheet
Net position is reported in what components?
RUN 1. net investment in capital assets 2. restricted 3. unrestricted
Which is the only fund that may have a positive unassigned fund balance?
The General Fund
Define Available for recognition of revenues
collectible within the current period or soon thereafter (within 60 days of year end)
What are the alternatives for expenditure recognition?
- Purchase Method 2. Consumption Method *Note: may only use for current assets
Purchase Method
for Current Assets only. Expenditure CAs when purchased; Reverse (set up as a current asset) for items not used during the period (still on hand).
Consumption Method
Set up as a Current Asset when purchased. Expenditure items as consumed (by periodic physical count)
The debt service fund pays off the debt of which funds?
The GRASPP funds, NOT the SE-PAPI Funds!
In which fund must only earnings (or interest), and NOT principal, be used?
Permanent Fund
Name the two governmental funds that do NOT record encumbrances
Debt Service Fund & Permanent Fund
How to determine where public-restricted funds are recorded
- Special Revenue Fund - principal and interest are available for public spending. 2. permanent fund - interest only is available for public spending.
Which funds require a statement of cash flows?
Proprietary funds only
Which fund does not have an Income Statement?
Agency trust fund (it does not have a stmt of CFs either because it is a fiduciary fund)
Private Purpose trust fund is for whom?
designated for reporting all other trust arrangements for individuals, private organizations, and other governments. NOT general public use.
When the governmental unit is “not otherwise obligated” for the debt, the receivables and debit service transactions are accounted for where?
In the Agency Fund
Required Approach for Capital Assets
Assets should be recorded and depreciated
Modified Approach for Capital Assets
Not required to depreciate infrastructure assets if 1. the government’s asset management system meets certain requirements AND 2. The government documentation should included data on asset preservation
A Change from Required to Modified Approach for Capital Assets is treated as:
Change in Estimate
Government Wide F/S: Name the categories on the Statement of Activities.
- Governmental Activities 2. Business type Activities 3. Component Units Program Revenue Types: “SOC”1. Charges for Services 2. Operating Grants and Contributions 3. Capital Grant and Contributions
When to classify as a Major Fund
The fund must have 10% or more of the corresponding total revenues, expenses, assets, or liabilties of 1. all governmental funds OR 2. all enterprise funds. AND The fund must have 5% or more of revenues, expenses, assets, or liabilities of 1. all governmental funds AND 2. all enterprise funds. (aka the “total column”)
For proprietary funds, the statement of cash flows has which sections?
- operating 2. capital and related financing 3. noncapital financing 4. investing
Which method is required for proprietary funds statement of cash flows?
Direct Method
