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, NOT when earned)
Accrual is used for proprietary funds, fiduciary funds, and government-wide statements.
Modified is only used for governmental funds.
BUDGETARY ACCOUNTING QUESTION: What is a budget appropriation?
The highest amount allowed for a particular expenditure under a budget.
What is an encumbrance?
Records purchases right when they are made so that you don’t end up spending more than you have
Dr. Encumbrance
Cr. Budgetary Fund Balance Assigned (or Committed) for Encumbrances
BUDGETARY ACCOUNTING QUESTION: What is the opening budgetary entry?
Dr Estimated Revenues Control
Cr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
Made at the beginning of the year (unless budget is altered mid-year)
BUDGETARY ACCOUNTING QUESTION: What is the closing budgetary entry?
Dr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
Cr Estimated Revenues Control
Made at the end of the year
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 unitRecords Significant Revenues: Taxes; Tickets; Fines; LicensesRecords Significant Expenditures: Police; Education; Fire Dept
Subject to budgetary accounting
What is a Special Revenue Fund?
Restricted for a specific purpose such as street repair.
Subject to budgetary accounting
What is a Permanent Fund?
Legally restricted fund; where only earnings can be used to fund programs.Principal remains intact. (An endowment)
What is a Capital Projects Fund?
Used to acquire and build facilities.
NOT subject to budgetary accounting
What is a Debt Service Fund?
Handles repayment of long-term debt and related interest.
May be subject to budgetary accounting.
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)
Activities that are self-supporting (cover 50% or more of their costs thru fees) must be accounted for in proprietary funds.
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?
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
Agency Fund - government acts as an agent or custodian
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)
= Net Position
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?
Accountability
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 are the characteristics of information in financial reporting?
TRUCCR timeliness relevance understandability comparability consistency reliability
SEA (service effort and accomplishment) reporting is voluntary. How is it measured?
Service efforts (inputs) can be measured
Outputs are certain quantity or quality measurements
An outcome is a direct result of the services provided
Should give comparisons, unintended effects, competing demand for resources, other factors influencing results
What is the hierarchy of disclosures?
Financial statements
Notes
Required supplementary info
Supplementary info (not required)
What is the accounting equation for a fund?
Assets + deferred Outflow = Liabilities + deferred inflow + fund balance (governmental) or net position (proprietary/fiduciary)
What is the number of funds principle?
Use the smallest number of funds possible consistent with laws and contracts and sound financial management
What is the measurement focus of modified accrual accounting?
Focuses on the flow of financial (cash-type) resources during the period
At the end of the period, the focus is on financial position (think Balance Sheet-type information)
What is the 60-day rule?
For the purposes of modified accrual accounting (determining when revenues are “available”), you can include monies received within the first 60 days of the next fiscal period.
What type of entity is a fund?
It is a separate accounting and fiscal entity.
What is the measurement focus of accrual accounting?
Focuses on the flow of economic resources/income determination/capital maintenance during the period
At the end of the period, the focus is on financial position (think Balance Sheet-type information)
What types of transactions qualify as expenditures in governmental accounting?
Any type of transaction where you spend money. NOT the same thing as an expense, but it is used instead of the term expense.
Note that only governmental funds use the term expenditures. Proprietary and Fiduciary funds use the term expense.
What are Other Financing Sources?
Bond issuance proceeds, transfers from anther fund
They do not increase the net position of the government entity as a whole.
What are Other Financing Uses?
Transfers TO another fund
They do not increase the net position of the government entity as a whole.
How do you determine if something is a major fund?
a major fund must meet the 10% criteria within its category and then also meet the 5% criteria associated with both categories
10% test - 10% of the total assets plus deferred outflows, or liabilities plus deferred inflows, revenues, or expenditures/expenses (excluding extraordinary items) for its fund category (governmental or enterprise funds)
5% test - comprises at least 5% of the corresponding total for all governmental and enterprise funds combined
What are the 4 types of non-exchange transactions?
- Imposed tax revenue (property taxes, parking fines - revenue when levied)
- Derived tax revenues (fuel tax, sales tax, etc. - revenue when transaction happens)
- Government mandated (revenue when eligibility requirements are met)
- Voluntary (contractual agreements between willing parties)
Revenues are classified by ___.
The most common classifications of expenditures are:
Source
Fund, program/function (in gov’t-wide stmts), character (in fund statements, relates to time), and object
