Governmental Accounting

Question 0

Resource Flows Statements

Answer 0

Outflow of Resources - consumption of resources

Inflow of Resources - acquisition of net assets

Question 1

Statement of Financial Position

Answer 1

Assets - resources with present service capacity
Liabilities - present obligations to sacrifice resources
Deferred outflow of resources - prepaid expenses
Deferred inflow of resources- unearned revenue
Net Position

Question 3

Required Financial Statements

Answer 3

A) Management’s Discussion and Analysis
B) Government-Wide Financial Statements
i) Statement of Net Position
ii)Statement of Activities

C) Fund Financial Statements

  i) Governmental Funds
        a) Balance Sheet
        b) Statement of Revenues, Expenditures, and Changes in Fund      Balance
  ii) Proprietary Funds
        a) Statement of Net Position
        b) Statement of Revenues, Expenditures, and Changes in Fund      Net Position
        c) Statement of Cash Flows

  iii) Fiduciary Funds
        a) Statement of Fiduciary Net Position
        b) Statement of Changes in Fiduciary Net Position

D) Notes to the Financial Statements
E) Required Supplementary Information other than MDA
i) Ten Year Schedules of Selected Information (for pensions administered through trust funds)
ii) Budgetary Comparison Schedules
iii) Information about Infrastructure Assets (if reporting under the Modified Approach)
iv) Claims Development Information When the Government Sponsors a Public Entity Risk Pool

Question 4

Authoritative Hierarchy

Answer 4

1. Officially established accounting principles - GASB Statements and Interpretations
2. GASB Technical Bulletins and AICPA Industry Audit and Accounting Guides and Statements of Position cleared by GASB
3. AICPA Practice Bulletins cleared by GASB and consensus positions of groups of accountants organized by the GASB
4. Implementation guides published by the GASB staff and practices that are widely recognized and prevalent.

Question 5

Single-Employer Defined Benefit Plan

Answer 5

1. If Pension Liability is recorded - discount rate used is the rate for 20-year, tax-exempt general obligation municipal bonds
2. Actuarial present value of projected benefit payments of each employee is attributed to periods using the Entry Age Actuarial Cost Method.
3. Effects on net pension liability of differences expected and actual investment returns is recognized in pension expense over a closed period of five years.

Question 6

Economic Resources Measurement Focus and Accrual Basis of Accounting

Answer 6

Measures all economic resources available to the governmental entity, including fixed assets and subtracting long-term debt. Fixed assets are depreciated.

Used for government-wide, proprietary fund and fiduciary fund statements

Question 7

Current Financial Resources Measurement Focus and Modified Accrual Basis of Accounting

Answer 7

Measures only the current financial resources available to the governmental entity. Does not account for fixed assets or long-term debt.

Used for governmental fund statements

Question 8

Nonexchange Transactions
(Revenue Recognition)

Answer 8

Eligibility Requirements:

1. Required Characteristics of Recipients
2. Time Requirements
3. Reimbursement
4. Contingency

Question 9

Nonexchange Transactions

Answer 9

1. Derived Tax Revenues: taxes assessed by governments on exchange transactions (sales tax, income tax, etc) Recognized when exchange transaction takes place
2. Imposed nonexchange transactions: taxes and other assessments not derived from underlying transactions (property tax, special assessments, etc) Recognized when levied
3. Government-mandated nonexchange transactions: when the providing government requires the receiving government to expend funds for a purpose. Recognize when all eligibility requirements are met
4. Voluntary nonexchange transactions: grants, entitlements and financial guarantees provided from a government to another entity where the providing government does not impose specific requirements upon the receiving entity. Recognize when all eligibility requirements are met

Question 10

modified accrual basis

Answer 10

revenues are recognized when measurable and available to finance expenditures of the current period. gain or loss on sale of receivables is recognized as revenue

expenses are recognized if current items, capital outlays, or debt services. payment of principal and interest on long-term indebtedness are recorded when due - even if paid earlier (rather than accrued)

Question 11

Consolidation Worksheets

Answer 11

To prepare Government-Wide Financial Statements from Fund Statements

1. Capitalization of Capital Outlay Expenditures: Reduces capital outlay expense (governmental funds) to zero and capitalize costs (government-wide)
2. Issuance of general long-term debt: Reduce other financing source from debt proceeds to zero (governmental funds) record liability and premium or discount (government-wide)
3. Debt service payments: reduce bond principle retirement expenditures (governmental funds) and debit bond principal and record accrued interest payable (government-wide)
4. Adjustments of revenue recognition: convert modified-accrual revenue accounts (governmental funds) to full accrual net of uncollectible receivable (government-wide)
5. Accrual of Expenses: convert modified-accrual expense accounts (governmental) to full accrual (government-wide) debit expenses and credit liabilities
6. Other: convert purchase method inventory to consumption method, record prepaid expenses
7. Reclassifications: Eliminate fiduciary funds, classify internal service funds as government activities, add discrete component untis

Question 12

Impairment of Capital Assets

Answer 12

No longer used by government: report at lower of carrying value or fair market value

Continued use: measured using the method that best reflects the asset’s diminished service utility

If affected by changes in environmental factors or obsolescence: impairment should be measured using an approach that compares the service units provided by the asset before and after the impairment (service units approach)