Governmental Accounting Flashcards
HOW are investments held by endowments in a government’s permanent fund reported?
AT their fair values
What is the Journal Entry for when a governing body adopts a general fund budget for the year and it is comprised of Estimated Revenues and Appropriations?
Debit the Estimated Revenues Control Account
Credit the Appropriations Control account and
Credit the Budgetary Fund balance account
WHAT is considered an “expenditure” of a governmental unit’s general fund?
“Routine” employer contributions from the general fund to a pension trust fund
WHY? - Because it represents a quasi-external transaction and would therefore be reported as an expenditure
True or False.
The acquisition of a fixed asset is capitalized on the governmental fund statement of revenues, expenditures, and changes in fund balance.
FALSE.
The acquisition of a fixed asset is NOT capitalized on the governmental fund statement of revenues, expenditures, and changes in fund balance.
E.g. the acquisition of a new police car is NOT considered a “fixed asset” but rather an expenditure of the period.
WHAT would be considered “ACCRUED LIABILITIES” presented in the governmental activities column of the government-wide statement of net position?
(1) Compensated absences
(2) Salaries payable
WHAT governmental fund uses the current financial resources measurement focus?
Special Revenue Fund
i.e. IT uses the modified “accrual approach” which is characterized by the current financial resources measurement focus
Activities are required to be reported as enterprise fund activities if they meet one or more of the following criteria:
(1) The activity is financed with debt that is secured solely by a pledge of the net revenue from fees and charges
(2) Laws and regulations require that the cost of providing services be recovered through fees
(3) The pricing policies of the activity establish fees and charges designed to recover its costs
WHAT statements are required to be presented for Special-Purpose government entities engaged only in “business-type” activities (such as utilities)?
THE financial statements required for enterprise funds, including MD&A and RSI
WHY? - Because a special-purpose government entity engaged only in business-type activities is by definition an enterprise fund
True or False.
When a purchase order is issued, Encumbrances are CREDITED and Budgetary Fund Balance – Reserved for Encumbrances are DEBITED for the estimated amount
FALSE
When a purchase order is issued, Encumbrances are debited and Budgetary Fund Balance – Reserved for Encumbrances are credited for the estimated amount
NOTE: When the invoice is received, the entry is reversed and expenditures are recognized in the amount of the invoice
HOW would a government entity handle any art, artifact, or antique they received as a donation? AND they do NOT intend to sell the item but would use any proceeds from its sale to acquire similar items?
THEY may capitalize the asset, but are NOT required to do so; and
Depreciation is NOT required
HOW should “interest revenue” received in cash by a governmental proprietary fund be reported on the government’s’ Statement of Cash Flows?
AS an Investing Activity
WHAT is the minimum budgetary information required to be reported for Basic Financial Statements-and Management’s Discussion and Analysis-for State and Local Governments?
A schedule showing the:
(1) Original Budget
(2) Final Appropriations Budget, and
(3) Actual inflows, outflows, and balances on a budgetary basis
WHAT is “Derived Tax” Revenue?
Revenues “result(ing) from assessments imposed on exchange transactions”
(i.e. A city imposing a 2% tax on hotels which they plan to promote tourism)
WHAT basis is used to prepare a government entity’s Financial Statements (F/S) if their general fund’s annual budget was prepared on the Cash Basis of Accounting, but they also used Accrual Basis Accounting?
Cash Basis of Accounting
WHY? - Because Budgetary comparison schedules are prepared under the same basis of accounting that was used to prepare the fund’s budget
WHICH was the Cash Basis of Accounting
WHAT account is used for reporting major acquisition or construction activities of capital assets of a governmental entity?
THE Capital Project fund
IT is used for major acquisition or construction activities of capital assets, such as the construction of a homeless shelter
WHAT characteristics should the financial reports of a state and local government possess?
Understandability, Reliability, Relevance, Timeliness, Consistency, and Comparability
NOTE: Fairness has nothing to do with these characteristics
WHAT kind of classes of nonexchange transactions do Fines and Property Taxes represent?
Imposed Nonexchange Revenues
WHY? - Because these revenues by definition are those “result(ing) from assessments imposed on nongovernmental entities, including individuals, other than assessments on exchange transactions.”
HOW would a governmental entity report land that must remain intact but can use income generated from the land for general government services?
In their “Permanent restricted funds account”
WHY? - Because the resources are restricted so that only earnings, NOT principal, may be expended for the support of government programs which benefit the government or its citizens
WHAT is a “required” financial statement for an investment trust fund?
THE Statement of Changes in Fiduciary Net Position
WHAT categories are included in the government-wide statement of net position?
(1) Governmental Activities
(2) Component Units
(3) Business-type activities
What is the rule for any individual government or enterprise fund to be reported as a “Major” fund?
Total revenues, expenditures or expenses, assets, or liabilities (excluding extraordinary items) of the fund are
(1) at least 10% of the corresponding element total (assets, etc.) for all funds of the same category or type
E.g., All governmental or all enterprise funds, and
(2) The same element that met the 10% standard is at least 5% of the corresponding element total for all governmental and enterprise funds in the aggregate.
