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? (What are the bases’ focused on reporting?)
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 and when is it recorded?
Records purchase and reserves it for the encumbrance.
Recorded when a purchase order is made
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?
Handles repayment of long-term debt and related interest.
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
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 Committed - Restricted by Government Assigned - Intended for a purpose Unassigned - Available to be spent Non-spendable - Not in a spendable state
What are the types of Fiduciary Funds?
Agency Fund - government acts as an agent or custodian (Custodial assets could be held for other governments, such as taxes collected for another entity or could be held for individuals and private organizations.)
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 - O/S Mortgage or Bonds (reduced by unspent proceeds) : Net Assets
How is infrastructure reported on a governmental Statement of Net Assets?
Modified approach:
Reported at cost; no accumulated depreciation
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 Financial Statements are required for Defined Benefit Pension plans?
Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position
What are the components of the Statement of Fiduciary Net Position for Defined Benefit Pension Plans?
Assets; Deferred Outfows; Liabilities; Deferred Outflows; Fiduciary Net Position
What are the components of the Statement of Changes in Fiduciary Net Position for Defined Benefit Pension plans?
Additions (Contributions and Net Investment Income) - Deductions (Benefits Payments and Admin Expense) : Net Change in Fiduciary Net Position
What should be included in the Financial Statement notes for Defined Benefit Pension Plans?
Types of Benefits; Plan Member Classes; Board Information; Investment Policies and FV Determination
The Proprietary Fund Cash Flow Statement should be reported using what method?
Direct Method Only
Proprietary Funds report unrestricted grants and restricted operating grants as what?
Nonoperating Revenues
If an entiry has government risk pools and the government’s own agencies are not the predominant participants, what type of fund is used to report this?
Enterprise Fund
What are the 2 required financial statements for fiduciary funds?
A statement of fiduciary net position and a statement of changes in fiduciary net position
What are examples of what is included in the Required Supplementary Information section?
- Budgetary comparison schedules
- Information about the modified approach for reporting infrastructure assets
- Employee benefit information
- MD&A
How should a change from depreciation to the modified approach with regards to infrastructure be reported?
(Change in estimate or principal?)
Change in estimate - not restating prior periods
The government-wide statement of activities explains changes in____?
Total Net Position
When should net position should be reported as restricted?
If use is constrained either by externally imposed conditions such as from creditors or grantors, or by legislation.
(restricted debt proceeds and amounts raised from restricted taxes or other revenue sources)
A payment from the General Fund to a Pension Trust Fund is shown as what on the Statement of Revenues, Expenditures and Changes in Fund Balance?
Expenditure
What is included in a Proprietary Fund Cash Flow - Investing section?
- Interest and Dividend Income
- Loans Distributed
*No Capital Asset Activity here!
What is included in a Proprietary Fund Cash Flow - Noncapital Financing section?
- Interest expense on unsecured loans
- Transfers, grants, subsidies and property taxes received
What is included in a Proprietary Fund Cash Flow - Capital& Related Financing section?
- Interest expense on secured loans for capital assets
- Financed purchases and sales of capital assets
The letter of transmittal and the statistical section are considered what?
“Other” set of information included in a CAFR. They are not considered part of the basic financials or RSI
How are compensated absences reported on the gov’t wide statement (gov’t activities and business type activities) , gov’t fund statements, and proprietary fund statements?
Gov’t Wide Statement (Gov’t and Business Type) - fully accrued –> entire portion shown as a LT liability
Gov’t Funds- modified accrual - only report the amt expected to be claimed within 60 days
Proprietary Funds - fully accrued
Interest expense on note payables that clearly benefit a specific gov’t function should be reported how?
As a direct expense from those functions
Report any additional interest expense as an indirect expense on a separate line
Tuition and fee revenues should be recorded how?
Net of scholarship allowances and net of uncollectible amounts
When a bond is refinanced for a new bond how do you record the difference between the reacquisiton of the old bond and the net carrying value of the new bond under GASB?
Amortize the difference over the shorter of the remaining life of the old debt or the life of the new debt
How do you record Debt Issuance costs on the Gov’t Wide Statement?
Deferred and amortized
What are the objectives of governmental external reporting? What statements meet those objectives?
Operational accountability (Gov't Wide Stmts) Fiscal accountability (Fund Stmts)
What is the journal entry to record an annual budget?
Dr. Estimated Revenues
Cr. Appropriations
Dr./Cr. Budgetary Control
What is the journal entry to record an encumbrance?
Dr. Encumbrance
Cr. Budgetary Control
What is the journal entry to record an expenditure of a previously encumbered fund?
Dr. Expenditure
Cr. Accounts Payable
Dr. Budgetary Control
Cr. Encumbrance
What are typical operating and non-operating revenues for an internal service fund?
Operating - Charges for services provided to other funds (Not transfers or other financing sources)
Non-Operating - Investment Income, Grant Revenues
What is the basic structure of the statement of revenues, expenses and changes in net position for the proprietary funds?
Operating Revenues Operating Expenses ------------------------------ Operating Income Nonoperating Rev (Exp) ----------------------------- Income or Loss Before Contrib & Transfers Capital Contributions Transfers Out ------------------------------- Change in Net Position
What are the unique note disclosures and required supplemental info reporting associated with pension funds?
Note Disclosures:
- Plan Description
- Contributions and Reserves
- Risk Concentrations
Required Supplementary Info:
- Schedule of funding progress (last 6 years)
- Schedule of employer contributions (last 6 years)
- Notes to support the schedules
How are interfund transfers reported in governmental funds vs proprietary funds?
Governmental Funds - Other Financing Source
Proprietary Funds - Transfers
The portion of Fund Balance related to Prepaid Insurance and Supplies Inventory should be reported as what type of fund balance?
Non-Spendable
What focus and basis do governmental fund financial statements use?
The current financial resources measurement and the modified accrual basis
What focus and basis do proprietary fund financial statements use?
The flow of economic resources measurement focus and the accrual basis
Are taxes considered program revenues or general revenues?
General Revenues even if the tax is for a specific program
What 3 types of net position are displayed on a gov’t wide statement?
Invested in Capital Assets, Net
Restricted (by category)
Unrestricted
What is included in “program revenues” in the statement of activities?
Service Charges
Operating Grants and Contributions
Capital Grants and Contributions
