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
Government Wide Financial Statements
Statement of Net Position
Statement of Activity
Fund Financial Statements (Governmental Funds)
Balance Sheet
Statement of Revenues
Statement of Expenditures
Changes in Fund Balance
Proprietary Funds
Statement of Net Position Statement of Revenues Statement of Expenses Changes in Fund Net Position Statement of Cash Flows
Examples of Deferred Outflows of Resources
Grant Expenditures paid in advance of meeting timing requirements
Deferred amounts from refunding of debt (debits)
Cost to acquire rights to future revenues
Negative fair value of government hedge of a future transaction
Examples of Deferred Inflows of Resources
Grant amount received in advance of meeting timing requirements
Deferred amounts from refunding debts (credits)
Proceeds from sale of future revenues
Positive fair value of government hedge of a future transaction
Examples of Items that Continue to Be Reported as Assets
Prepayments
Net Pension plan position in excess of employer’s total liability
Capitalized incurred costs for regulated activities
Examples of Items that Continue to Be Reported as Liabilities
Advances of derived tax revenues
Receipt of prepayment
Loan commitment fees
Refunds imposed by a regulator
Examples of Items Reported as Current Outflows
Debt issuance costs
Initial direct cost incurred by lessor for operating leases
Fees related to purchased loans
Examples of Items Reported as Current Inflows
Loan origination fees related to lending activities
Commitment fees charges to make a loan
Loan origination fees for mortgage loans held for investment
Define Agency Fund
Accounts for resources held by the reporting government in a purely custodial capacity.
Define Capital Projects Fund
Accounts for financial resources that are restricted, committed, or assigned to expenditures for acquisition or construction of capital assets.
Define Component Unit
A legally separate organization for which the elected officials of a primary government are financially accountable.
Define Debt Service Fund
Accounts for resources that are restricted, committed, or assigned to expenditures for the payment of general long term debt principal and interest.
Define Enterprise Fund
Accounts for activities that involve providing goods or service to external users for a fee.
Define Fiduciary Funds
Accounts for resources held and used by governments for the benefit of individuals and entities other than the government. Fiduciary funds include agency funds, pension and other employee benefit trust funds, investment trust funds, and private purpose trust funds.
Define Infrastructure Assets
Long lived capital assets that normally are stationary in nature and can normally be preserved for a significant number of years (eg. roads, tunnels, bridges, etc.)
Define Governmental Funds
Account for the current financial resources raised and expended to carry out general government purposes. Governmental funds include the general fund, special revenue funds, debt service funds, capital projects funds, and permanent funds.
Define General Fund
Accounts for all financial resources except those required to be accounted for in another fund.
Define Internal Service Fund
Reports activities that provide goods or services to other funds of the primary government on a cost reimbursement basis
Define Investment Trust Fund
Reports the external portions of investment pools, when the reporting government is the trustee
Define Permanent Fund
Accounts for resources that are restricted to the extent that only earnings and not principal may be used to support specified government programs
Define Proprietary Funds
Account for a government’s business type activities. Proprietary funds include internal service funds and enterprise funds.
Define Special Revenue Fund
Accounts for specific revenues that are restricted or committed to expenditures for specific current purposes other than debt service or capital projects
What is the basic criterion used to determine the reporting entity for a governmental unit?
Financial Accountability
In the government wide financial statement, the statement of net position, deferred out flows of resources are presented…
In a separate section following assets
