Governmental Accounting Flashcards by Matthew Krueger

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

Governmental, Proprietary, Fiduciary

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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)

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What is a budget appropriation?

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

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What is an encumbrance?

Records purchase and reserves it for the encumbrance.

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What is the opening budgetary entry?

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

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What is the closing budgetary entry?

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

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What are the types of governmental funds?

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

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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

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What is a Special Revenue Fund?

Restricted for a specific purpose such as street repair.

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What is a Permanent Fund?

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

Principal remains intact.

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What is a Capital Projects Fund?

Used to acquire and build facilities.

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What is a Debt Service Fund?

Handles repayment of long-term debt and related interest.

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Which fund statements are issued in Governmental Accounting?

Balance Sheet

Statement of Revenues; Expenditures; and Changes in Fund Balance

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When is Revenue recorded in Governmental Accounting?

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

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What is Derived Tax Revenue?

Money collected from people doing things:

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

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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.

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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)

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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

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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

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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

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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

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

Modified approach:

Reported at cost; no accumulated depreciation

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How is a Statement of Net Assets divided?

Into Governmental Activities and Business Activities

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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.

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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