Governmental Accounting Flashcards
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 are the three major types of funds in governmental accounting?
Governmental
Proprietary
Fiduciary
Defined by GASB 34
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?
GRaSPP/GSP-CD
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General Fund
Special Revenue Fund
And
Debt Service Fund
Capital Projects Fund
Permanent Fund
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What is a General Fund?
The operating fund of the governmental unit
5 star general - most powerful fund & can do anything
Records Significant Revenues: Taxes; Tickets; Fines; Licenses
Records Significant Expenditures: Police; Education; Fire Dept
What is a Special Revenue Fund?
Legally Restricted or committed for a specific purpose such as street repair, parking fees, gas tax
Resources are expendable
What is a Permanent Fund?
Legally restricted fund; where only earnings can be used to fund programs.
Principal remains intact.
** PRINCIPAL is PERMANENTLY restricted
Used for benefit of the public
What is a Capital Projects Fund?
**facilities require CAPITAL
Used to acquire and build facilities.
Used for construction, purchase, or lease of significant FA (used by GRaSPP only)
Fund has short life (limited to construction of 1-3 yrs)
What is a Debt Service Fund?
Handles repayment of long-term debt and related interest.
Pays off debt of GRaSPP funds (not SE PAPI funds)
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:
Derived = doing
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?
SE (PAPI) = IE
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)
- requires SCF
- records dep exp
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?
(SE) PAPI = APIP
Pension Trust Fund - Government is a trustee for a pension plan
Agency Trust Fund - government acts as an agent or custodian
Private Purpose Trust - Trust that benefits various individuals and entities
Investment Trust Fund - Government is a trustee over a series of investments
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.
Standards that governmental and NFP use
Govt = GASB NFP = FASB
Differences in focus and accounting for governmental and proprietary/fiduciary funds
Governmental = MAC GRaSPP
Modified
Accrual
Current fin resources measurement focus
Proprietary/fiduciary = SE PAPI ACE
Accrual
Carry FA & LTD
Economic resources measurement focus
Degrees of constraint for govt fund balances
NU CAR
Non spendable Unassigned Committed Assigned Restricted
Nature of govt fund constraints
N = practical U = none C = internal A = internal R = external
Differences b/w modified accrual acctg & commercial GAAP
Commercial:
IS –> RE –> BS –> next yr
Modified:
BAE-BAE –> BS –> next yr
Budgetary accounting (BAE-BAE)
General fund
Book on opposite side of control
Activity accounting (BAE-BAE)
(G)RaSP(P)
Revenue - measurable and available
Expend - all spending
Assets - expend
Debts - other fin sources (not LTD)
Encumbrance accounting
(GRaSP)P
Commit funds for PO
How to determine where public-restricted funds are recorded
Special rev fund = principal and interest available for spending
Permanent fund = only interest available for spending
What is an internal service fund?
S of SE PAPI
**INTERNAL = serves INTERNALLY (other govt units)
Finance and count for services & supplies provided exclusively to other depts within a govt unit to other govt units
Full accrual
Ex. Central (janitorial, garages, printing, repair)
What is an enterprise fund?
E of SE PAPI
**ENTERPRISE = EXTERNAL = serves the ENTERPRISE
Provides g/s to external users
account for operations financed and operated in a manner similar to a private business; recovers cost through fees assessed to public
Full accrual
Ex. Public utilities, hospitals, univ, transportation
Order of presentation of line items on proprietary fund Statement of Revenues, Expenses, and Changes in Fund net Position
INCASET
Income (op) Non operating inc & exp Capital contrib and Additions to endowments Special items (unusual/infrequent) Extraordinary items Transfers
What is the difference between expenses and expenditures?
Expenses = full accrual Expenditures = modified accrual
What is a pension trust
1st P of SE PAPI
Full accrual
NO statement of CF
Significant difference b/w fiduciary & proprietary funds
Fiduciary = CF statement not req'd (PAPI) Proprietary = CF statement req'd (SE)
What is an agency trust?
A of SE PAPI
**acts as AGENT and holds assets
Collects cash to be help temporarily for an authorized recipient to whom it will be later disbursed
“Govt is not obligated in any manner”
Ex. Tax fund
Full accrual
NO IS or SCF req’d - change in fiduciary net position req’d
What is a private purpose trust?
2nd P of SE PAPI
Designated fund for reporting all other trust arrangement a under which principal and income are for the benefit of:
Specific individual
Private org
Other govts
Full accrual
SCF not reqd
What is an investment trust?
I of SE PAPI
**govt is TRUSTEE over series of INVESTMENTS
A govt entity that sponsors 1+ external investment pools should report the external portion of each pool as a separate investment fund
Full accrual
SCF not req’d
What is required for reporting for general purpose govt units
MD&A Govt wide FS Fund FS Notes to FS Req'd supplementary information other than MD&A Other supplementary info
What is optional for reporting for general purpose govt units
Comprehensive annual financial report
Intro
Basic FS & req’d supplementary info
Statistical section
How does primary government report?
By itSELF
Separately elected governing body
Legally separate
Fiscally independent
How to calculate govt wide statement of net position
Assets Deferred outflows of resources - Liab Deferred inflows if resources = net position (not fund balance)
How to calculate governmental fund BS
Assets Deferred outflows of resources = Liab Deferred inflows of resouces \+ Fund balance
How funds relate to BS
1. GRaSPP = BS
CA, CL, fund balance
2. SE = statement of net position
A, L, net position
3. PAPI = statement if fiduciary net position
A, L, net positionHow funds relate to IS
- GRaSPP = statement of rev, exp, and changes in fund net position
Rev, expenditures, other financing sources (uses) - SE = same
Op rev & exp, nonop rev & exp - PAPI = statement if changes in fiduciary net position (not “A”)
Additions, deductions
How funds relate to SCF
- SE
Op, invest, capital, noncapital
Method of accounting for SE PAPI
- Full accrual
- Economic resource focus
- rev & exp model
- income determination
- transfer = reported separately after nonop rev
- expense
Method of accounting for GRaSPP
- Modified accrual
Budget = GRaSPP
Activity = GRaSPP
Encumbrances = GR(aS)S(P) - Current financial resources/position focus
- transfer = other fin source/use (not rev)
*exoenditure
Categories for equity
Invested
Restricted
Unrestricted
Government-wide FS focus
ECON resources
Accrual
(This is opposite of govt fund method)
What is req’d for entity to be considered primary govt?
- Legally elected governing body
- Legally separate
- Fiscally independent
(All 3)
How is an entity that is NOT primary govt reported?
- component unit
- discrete presentation
