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FAR Flashcards 2 > Governmental Accounting > Flashcards

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.

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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
Special Revenue Fund
Permanent Fund
Capital Projects Fund
Debt Service Fund
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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

payment of currently due interest and principal on long term debt by setting aside cash

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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; fines

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, 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)

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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

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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

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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

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22
Q

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

A

Modified approach:

Reported at cost; no accumulated depreciation

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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

What are the basic objectives of the F/S?

A
  1. Timeliness 2. Consistency 3. Comparability
27
Q

Purpose of funds

A

Funds are legal restrictions. Easily monitor and report compliance with spending purposes.

28
Q

Who establishes accounting standards for Governmental Entities? NFP Entities?

A

Governmental: GASB; NFP: FASB

29
Q

Which funds are reported under the Governmental Activities on the Statement of Net Position?

A

GRaSPP + S (General, Special Revenue, Debt Service Fund, Permanent Fund, Capital Projects Fund) + (Internal Service Fund)

30
Q

Which funds are reported under the Business Activities on the Statement of Net Position?

A

Enterprise Funds

31
Q

Where are the fiduciary funds reported on the Statement of Net Position?

A

Trick question: They are NOT on the Statement of Net Position!

32
Q

How are governmental funds presented on the Balance Sheet?

A

Current Assets + Deferred Outflows = Liabilities + Deferred Inflows + Fund Balance

33
Q

How are Proprietary and Fiduciary funds presented on the Balance Sheet?

A

Assets + Deferred Outflows - (Liabilities + Deferred Inflows) = Net Position

34
Q

What is the Balance Sheet called for Proprietary and Fiduciary Funds?

A

Government Wide Statement of Net Position

35
Q

What is the Balance Sheet called for Governmental Funds?

A

Governmental Fund Balance Sheet

36
Q

Net position is reported in what components?

A

RUN 1. net investment in capital assets 2. restricted 3. unrestricted

37
Q

Which is the only fund that may have a positive unassigned fund balance?

A

The General Fund

38
Q

Define Available for recognition of revenues

A

collectible within the current period or soon thereafter (within 60 days of year end)

39
Q

What are the alternatives for expenditure recognition?

A
  1. Purchase Method 2. Consumption Method *Note: may only use for current assets
40
Q

Purchase Method

A

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).

41
Q

Consumption Method

A

Set up as a Current Asset when purchased. Expenditure items as consumed (by periodic physical count)

42
Q

The debt service fund pays off the debt of which funds?

A

The GRASPP funds, NOT the SE-PAPI Funds!

43
Q

In which fund must only earnings (or interest), and NOT principal, be used?

A

Permanent Fund

44
Q

Name the two governmental funds that do NOT record encumbrances

A

Debt Service Fund & Permanent Fund

45
Q

How to determine where public-restricted funds are recorded

A
  1. Special Revenue Fund - principal and interest are available for public spending. 2. permanent fund - interest only is available for public spending.
46
Q

Which funds require a statement of cash flows?

A

Proprietary funds only

47
Q

Which fund does not have an Income Statement?

A

Agency trust fund (it does not have a stmt of CFs either because it is a fiduciary fund)

48
Q

Private Purpose trust fund is for whom?

A

designated for reporting all other trust arrangements for individuals, private organizations, and other governments. NOT general public use.

49
Q

When the governmental unit is “not otherwise obligated” for the debt, the receivables and debit service transactions are accounted for where?

A

In the Agency Fund

50
Q

Required Approach for Capital Assets

A

Assets should be recorded and depreciated

51
Q

Modified Approach for Capital Assets

A

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

52
Q

A Change from Required to Modified Approach for Capital Assets is treated as:

A

Change in Estimate

53
Q

Government Wide F/S: Name the categories on the Statement of Activities.

A
  1. 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
54
Q

When to classify as a Major Fund

A

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”)

55
Q

For proprietary funds, the statement of cash flows has which sections?

A
  1. operating 2. capital and related financing 3. noncapital financing 4. investing
56
Q

Which method is required for proprietary funds statement of cash flows?

A

Direct Method

FAR Flashcards 2 (9 decks)

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