Governmental Accounting

Question 1

What are appropriations?

Answer 1

Appropriations represent legal spending limits prescribed by the entity’s governing body. Appropriations are usually established for departmental units and/or for various types of expenditures (salaries, equipment, supplies, etc.).

Question 2

What is an encumbrance?

Answer 2

Encumbrances Represent the Estimated Dollar Value of Purchase Orders Outstanding

Question 3

What amount is reported in the Debt Service Fund?

Answer 3

The Debt fund reports amount that is measurable and available as revenue.

If the tax is levied in year 1 but is not due to be collected till year 2, the tax will be recorded as “deferred inflow of resources” in year 1.

Question 4

What is nonSpendable fund balance classification?

Answer 4

It refers to the part of fund that cannot be spent because either it is in nonspendable form such as inventory or is legally or contractually restricted to maintain intact.

Question 5

What is Restricted Fund Balance Classification?

Answer 5

This classification should be when there are constraints imposed on use of the fund either by

1. External parties such as creditors, leasors, other govt units
2. law though an legislation or constitutional provisions.

Question 6

How are outstanding encumbrance reported?

Answer 6

Outstanding encumbrance are no longer reported in fund balance but rather disclosed in the notes to financial statement.

Question 7

Which fund can report a positive amount in unassigned fund balance?

Answer 7

General Fund

Question 8

What is considered CE by govt entities?

Answer 8

Any investment that matures within 3 months of a PURCHASE date.

It could have original maturity of longer period but if it is due to mature 3M from date of purchase it is considered CE.

Question 9

How are bonds anticipation notes recorded in Capital Projects fund?

Answer 9

If refinanced:
Dr: Cash
Cr: Other Financing Sources Control

If not refinanced:
Dr:Cash
Cr: Bond anticipation notes payable (Fund Liability)

Question 10

What is the difference in measurement basis of Governmental Funds, Proprietary Funds, Fiduciary Fund and Governmental Wide Financial Statement?

Answer 10

GF - Modified Accrual Basis (Measurable and Available , suseptible to Accrual)

Govt Wide Statements - Full Accrual Basis

PF - Accrual Basis

FF - Accrual Basis

Question 11

How are the funds received from other govt. recorded in trust funds (fiduciary fund)?

Answer 11

The contributions and disbursement are accounted as additions and deduction from the fund. (Words like revenue, contribution are not used)

Question 12

Shared revenues received by an Enterprise Fund of a local government for operating purposes should be recorded as?

Answer 12

Non Operating Revenue in period they are earned and become measurable.

Question 13

What are the two acceptable methods of presenting component units?

Answer 13

1. Discrete presentation in a separate column in the govt wide financial statement
2. Blended with primary govt

Question 14

What is the nature of principal of Private Purpose Trust Fund?

Answer 14

Expendable (Principal and/or earnings expendable)

Nonexpendable ( Principal to remain intact, Earnings may be expendable depending on the conditions eg. Loan fund)

Question 15

What is the transfer between funds classified as?

Answer 15

Other financing uses for fund that is giving

Other financing resources for recipient fund.

Question 16

What would be the pension payments made from the general fund classified as?

Answer 16

Expenditure.

It would not be considered interfund transfer (classified as Other financing uses) because pertains to employee and employer contributions to the pension plan and is part expenditure (employer share) and liability reduction (employee share that was due to the Pension Trust Fund).

Question 17

Which statements are presented by Agency Fund?

Answer 17

State of net position
State of change in net position.

Changes are reported as either additions or deductions. They do not recognize expenditure or revenue