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?
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
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 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
What is the most authoritative literature for government accounting
GASB interpretations
What is the lowest level authority for government accounting
GASB implementation guides
Q&A
What is the purpose of service effects and accomplishment reporting
Necessary for accountability and making informed decisions
What are the elements of resource flows
Outflows of resources
Inflows of resources
What is the essential characteristic of an asset
Present service capacity
What is a deferred outflow
Consumption of net position by the government that is applicable to a future reporting period
What are the basic government financial statements
Government wide FS
Fund FS
Notes to FS
What is the basic criteria used to determine the reporting entity
Financial accountability
When is a component blended
Governing body substantially the same as primary gov
Services provided almost entirely to gov
Components debt will be repaid almost entirely by primary gov
What is required in the government wide FS
Statement of net position
Statement of activities
How are transactions of certain loan programs presented on statement of cash flows
Operating activity
What is the purpose of government wide FS
Provide operational accountability info for gov as a whole
How are fixed assets reported on the statement of net position
Assets less accumulated depreciation
How are fixed assets reported on statement if net position under government activities
Cost less accumulated depreciation less liability
Under the modified approach how are infrastructure assets reported
Assets at cost without accumulated depreciation
Cost to extend life is expensed
Supplemental info disclosed
For pensions over what time period are the effects of differences in expected and actual investment return recognized
5 years
If a state is not expected to make projected benefit payment how are projected future benefit payments discounted
Use 20 year rate of tax exempt bonds
Which reports reflect depreciation and why?
Proprietary
Government wide
Both use accrual method
What are government wide FS based on and what is their focus
Based on accrual method
Focus on economic resources
Where are component resources reported
On government wide FS
Not fund statements
How is interest received as return on investment reported on statement of cash flows
Cash from investing activities
What are included in proprietary financial statements
Statement of net position
Statement of revenue, expenses, change in find net position
Statement of cash flows
How are major and nonmajor finds reported on government funds
All nonmajor funds aggregated and reports in single column
How are fund balances reported
Reserved
Unreserved
On the statement net position for proprietary fund how are assets and liabilities and activities of internal service fund reported
Assets and liabilities as noncurrent
All activities of internal service fund aggregated and reported in single column
Where are agency funds reported
Statement of fiduciary net position
Where are private purpose trust funds reported
Statement of fiduciary net position
Statement of change in fiduciary net position
What FS reports statement of cash flows
Proprietary
What are the categories on statement of cash flows
Operating
Noncapital financial
Capital and related financing
Investing
What is the focus of the government fund
Focus on determination of current financial position rather than income determination
What is a nonexchange transaction
Government gives (receives) value without directly receiving (giving) equal in exchange
What is a government mandated nonexchange transaction
Providing government (state) requires receiving government to expend funds for a specific purpose
What is the basis of a pension trust
Accrual basis
In what account are proceeds from LT debt issues not recorded as fund liabilities
Other financing sources
What is the purpose of the debt service fund
Account for the accumulation of resources for and payment of LT debt principal and interest
What fund type does the debt service fund service
Governmental fund
What is the JE for cash payments from general fund for cash receipts and principal and interest payments
Dr cash
Cr transfer in - gov fund
Dr expenditure - principal
Dr expenditure - interest
Cr cash
At what value is real estate held as an investment by government endowment reported at
Fair value
Where are transactions between governmental and internal service fund reported on gov wide FS
In government activities
What is the JE for internal service fund to bill other departments
Dr billings to departments
Cr operating revenues
What is included in the transfers section on the gov wide FS
Transfers between government and business activities, except internal service to enterprise
What are some examples of transfers reported on gov wide FS
Permanent transfer from gov activities to business activities in order to establish enterprises fund
Annual transfer from government activities to subsidize enterprise fund
If a public university is only reporting business type activities use the same financial statements as
Enterprise funds
How are scholarships provided in exchange for services treated, including employee discounts
Recorded as expense, not reduction in tuition expense
