Governmental Accounting

Question 1

FAR - CPA

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

Answer 1

Governmental, Proprietary, Fiduciary

Question 2

FAR - CPA

Which two accounting bases are used in governmental accounting?

Answer 2

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

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

Question 3

FAR - CPA

What is a budget appropriation?

Answer 3

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

Question 4

FAR - CPA

What is an encumbrance?

Answer 4

Records purchase and reserves it for the encumbrance.

Question 5

FAR - CPA

What is the opening budgetary entry?

Answer 5

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

Question 6

FAR - CPA

What is the closing budgetary entry?

Answer 6

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

Question 7

FAR - CPA

What are the types of governmental funds?

Answer 7

General Fund
Special Revenue Fund
Permanent Fund
Capital Projects Fund
Debt Service Fund

Question 8

FAR - CPA

What is a General Fund?

Answer 8

The operating fund of the governmental unit

Records Significant Revenues: Taxes; Tickets; Fines; Licenses

Records Significant Expenditures: Police; Education; Fire Dept

Question 9

FAR - CPA

What is a Special Revenue Fund?

Answer 9

Restricted for a specific purpose such as street repair.

Question 10

FAR - CPA

What is a Permanent Fund?

Answer 10

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

Principal remains intact.

Question 11

FAR - CPA

What is a Capital Projects Fund?

Answer 11

Used to acquire and build facilities.

Question 12

FAR - CPA

What is a Debt Service Fund?

Answer 12

Handles repayment of long-term debt and related interest.

Question 13

FAR - CPA

Which fund statements are issued in Governmental Accounting?

Answer 13

Balance Sheet

Statement of Revenues; Expenditures; and Changes in Fund Balance

Question 14

FAR - CPA

When is Revenue recorded in Governmental Accounting?

Answer 14

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

Question 15

FAR - CPA

What is Derived Tax Revenue?

Answer 15

Money collected from people doing things:

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

Question 16

FAR - CPA

What is Imposed Tax Revenue?

Answer 16

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.

Question 17

FAR - CPA

What are the types of Proprietary Funds?

Answer 17

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)

Question 18

FAR - CPA

What are the Fund Balance Types?

Answer 18

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

Question 19

FAR - CPA

What are the types of Fiduciary Funds?

Answer 19

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

Question 20

FAR - CPA

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

Answer 20

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

Question 21

FAR - CPA

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

Answer 21

They are shown net of debt

Asset Cost - Accumulated Depreciation - Asset Liabilities : Net Assets

Question 22

FAR - CPA

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

Answer 22

Modified approach:

Reported at cost; no accumulated depreciation

Question 23

FAR - CPA

How is a Statement of Net Assets divided?

Answer 23

Into Governmental Activities and Business Activities

Question 24

FAR - CPA

How are activities presented in a Statement of Activities?

Answer 24

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.

Question 25

FAR - CPA

What is the primary objective of governmental accounting?

Answer 25

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

Question 26

FAR - CPA

What Financial Statements are required for Defined Benefit Pension plans?

Answer 26

Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position

Question 27

FAR - CPA

What are the components of the Statement of Fiduciary Net Position for Defined Benefit Pension Plans?

Answer 27

Assets; Deferred Outfows; Liabilities; Deferred Outflows; Fiduciary Net Position

Question 28

FAR - CPA

What are the components of the Statement of Changes in Fiduciary Net Position for Defined Benefit Pension plans?

Answer 28

Additions (Contributions and Net Investment Income) - Deductions (Benefits Payments and Admin Expense) : Net Change in Fiduciary Net Position

Question 29

FAR - CPA

What should be included in the Financial Statement notes for Defined Benefit Pension Plans?

Answer 29

Types of Benefits; Plan Member Classes; Board Information; Investment Policies and FV Determination