Governmental Accounting Flashcards
6 characteristics of effective Gov financial reporting
Timeliness Consistency Comparability Understandability Reliability Relevance (difficult to achieve)
Accounting principles for
Gov
nfp
Government = GASB NFP = FASB
Separate fund financial statements should be presented for
Governmental and proprietary funds to report additional and detailed information about the primary government
The measurement focus for all governmental funds is
The flow of current financial resources
Modifies accrual basis is used
Primary users for governmental financial statements
Citizens/taxpayers, school boards, and investors and creditors. Internal users are not considered primary users.
Inter-period equity
Having current year revenues cover current year expenditures so that future taxpayers don’t end up paying for benefits provided to current tax payers
Modified accrual accounting
Revenues are recorded when they are measurable and available
Accrual accounting
Revenues are recorded when measurable and earned
Proprietary fund accounting
Accrual basis is used and measurement focus is the flow of economic resources
Government funds are MAC-GRSPP
M - modified A - accrual accounting C - current financial resource measurement focus G- general funds R- special Revenue S- debt Service P- capital Projects P- permanent
Proprietary and fiduciary funds have SPACE
SE-PAPI
SE- service ; enterprise
PAPI- pension, agency, private, investment
A- accrual accounting
C- carry fixed assets and long term debt
E- economic resources measurement focus
General fund
Accounts for everything not required to belong in another type of fund. Ordinary operations of a government unit
Special revenue fund
Account for revenue sources that are restricted or committed to be spent for specific purposes other than debt service or cap projects
Capital project funds
Funds that are restricted for construction or acquisition of capital facilities
Debt service funds
Fund restrictive or committed for debt service principal and interest expenditures
Enterprise fund (proprietary)
Accounts for business type activities that the public is the primary user on
(Often used for utilities, airports, and transit systems)
Accounts for fixed assets in a manner similar to a for profit organization
Internal service funds
Business type activities were other government agencies are the primary user
Fiduciary
Means money held for others
Pension trust funds
Assets held in trust to provide employee retirement benefits
Private purpose trust funds
Assets held in trust to benefit individuals
Not general public use
Statement of cash flows not required
Investment trust funds
Accounts for assets held in trust for other governments
Investment pools
Agency funds
Collects cash to be held temporarily for an authorized recipient to whom it will be later disbursed
(Ex. Taxes collected for another governmental entity)
No gov monitoring
Permanent funds
Accounts for endowments (donation of money or land) for which the earnings are restricted to support government programs dedicated for public purpose
Budgetary
Activity
Encumbrance
B- used to control spendin
A- emphasizes the flow of CURRENT financial resource
E- used to record purchase orders and aid in the control of spending
Accrued as receivable and revenue when collected within 60 days of year end (measurable and available)
Imposed non-exchange revs Billed/recorded =revenue -real estate taxes (due) -fines and penalties Derived tax revenue Received= revenue -income taxes -sales taxes Earned=revenue -collected in advance -restricted grants (earned when spent)
Voucher payable is recorded
DR expenditure
CR voucher payable
Derived (non exchange) tax revenue
Represents taxes imposed on or derived from exchange transactions such as commercial sales (Sales taxes)
JE to record budgeted amounts for estimated revenue and approved expenditures (appropriations)
DR estimated rev control
DR budgetary control (neg/deficit)
CR appropriations control
CR budgetary control (positive/surplus)
Expenditure elements belong to which type of classification ?
Object.
Expenditures of governmental resources should be classified by object classes- according to the type of items purchased or services obtained.
Ex.(salaries and wages)
Estimated revenues
Property taxes
Licenses
And fines
And intergovernmental revenues
Fixed assets
- not expected to contribute to the generation of revenue
- treated as an expenditure.
- will reduce the excess of revenue over expenditures.
An exchange transaction
A RECIPROCAL transfer in which each party receives and sacrifices something of approximately equal value
Bargained value in transaction
A non-exchange transaction
Involves giving/ receiving value without receiving/ giving equal value in return. No bargain value or arm’s-length transaction
NON-RECIPROCAL
Purchase method
- records expenditure when purchased
- initially records additions to inventory as an expenditure
- then establishes inventory balances and related non-spendable fund balance amounts based on physical count valuations at year-end
Consumption method
- record a current asset when purchased.
- record an expenditure as consumed during the period
Outstanding encumbrance at year end
Treated as a component of an appropriate classification of fund balance (generally committed or assigned)
Closing BAE BAE
Budget is booked, then closed for same amount.
Activity is booked and closed for actual amount
Encumbrance is booked then reversed for same amount
Non spendable
(Inventories)
Non spendable fund balances represent resources in a form that can’t be spent or are legally or contractually required to remain whole.
Unrestricted
Restricted
U- funds that army restricted or net investment in capital assets
R- the restriction needs to be due to an external reason such as creditors or legislation or debt covenants. “City council” would still be considered unrestricted
Net investment in capital assets
Balance is equal to capital assets - accumulated depreciation- any debt related to the capital assets
Committed
Constrained by the governments highest level of authority.
Assigned
Intended to be used for specific purpose doesn’t meet restricted or committed criteria
Unassigned
Resources available for any purpose
Fund balance
Net position
FB- equity section for governmental fund types
NP- equity section for proprietary and fiduciary fund types
Purchase order approved
DR encumbrances
CR budgetary control
Reciprocal and non reciprocal activity
R- interfund loans / interfund services provided and used
NR- interfund transfers/ interfund reimbursements
When a capital lease of a governmental unit represents the acquisition of a general fixed asset JE
DR expenditure- cap.lease
CR. other financing source-cap.lease
Grants from state government are considered
Revenue
of capital projects fund
Transfers are considered
Other financing sources
General
Order of presentation of line items on a proprietary fund statement of rev,exp, and changes in fund net position
I-income N-non-operating income and exp C-capital contributions A-additions to endowments S-special items (unusual or infrequent) E-extraordinary items T- transfers
