Governmental accounting Flashcards
How are expenditures related to long term bond issues that include issues costs and debt insurance?
Expenditures related to these services should be expensed in the period incurred.
What does not affect an internal service funds net income?
Temporary transfers since by nature of being temporary, the transfer will be undone at some point and will and should not affect the net income of the fund.
What is the journal entry for the receipt of supplies and approval of the expenditure?
Db - Expenditures control
Cr - Liability/Payable account
What is the budget entry when the budget is adopted?
Db - Estimated revenues control
Plug - Db/Cr - Budgetary Fund Balance
Cr - Appropriations
What is the entry to record purchase order issued or other contractual commitments made?
Db - Encumbrances Control (expected cost to be spent)
Cr - Encumbrances Outstanding
How is an impairment loss for a capital asset building recognized in governmental accounting?
It is not an expenditure in the general fund since capital assets and any revaluations are reported in the governmental funds.
Impairment is an expenditure and revaluation of capital assets and is reported in the statement of activities, usually as a program expense.
What accounts should be closed in governmental accounting?
Expenditures and Revenues
Generally, operating/income statement accounts that are used to periodically measure inflows/outflows of financial resources.
Which accounts are not closed at fiscal year end in governmental accounting?
Any balance sheet accounts
examples include: vouchers payable, fund balance, and fund balance-reserve for encumbrances
What is an example of the most significant characteristic in determining the classification of an activity of an enterprise fund?
The pricing policies of the activity establish fees and charges designed to recover its cost.
How are billings to other governmental units recorded by an internal service fund?
They are recorded as operating revenues
It is an exchange like reciprocal interfund activity
Interfund services provided and used should be reported as revenues in seller funds
Interfund services should be reported as expenditures or expenses in purchaser funds
What is the measurement focus for governmental fund accounting?
Current financial resources focus
Assets that can be spent are grouped with the appropriate liabilities
How can you calculate the amount available for use for the general fund for a county?
Appropriations (maximum amount allowed under budget) less encumbrances (committed use of funds) less expenditures (already expended)
Where is the statistical section of the CAFR reported?
Outside of the financial section of the report
Considered to be supplementary information
What does the statistical section of the CAFR provide?
Statistical tables that present comparative data for several periods of time that may contain nonaccounting data
How are property taxes recognized in the entity-wde statement of activities?
For governmental funds, revenue is recognized when available under the modified accrual basis
- they are recognized after deducting estimated uncollectibles or discounts
They are recognized at the net realizable value of the current year tax levy
- cy collections
- cy collections up to 60 days
- py collections after 60 days
- net of any uncollectible $ amount or % (or discount value)
If an internal service fund is used by a government as a central motor pool, how would the assets and liabilities that are not eliminated be recorded and reported in the government-wide statement of net position?
Governmental activities are the predominant users of internal service funds, and for the assets & liabilities not eliminated, will in most cases be governmental activities.
What fund accounting is required and used for government risk pools if the government’s own agencies are not the predominant participants?
Enterprise fund accounting
Depreciation is not recorded in what kind of fund?
Why not?
Any governmental fund
They do not account for any depreciable assets or expenses
Where are depreciable assets and related depreciation expenses accounted for?
Proprietary funds and fiduciary funds
What is the measurement focus of the general fund other governmental-type funds?
Flow of current financial resources
Focus allows to measure the change in current financial resources
What is the measurement focus of trust funds, including the fiduciary funds?
Economic resources
Focus is to measure the change in net position, as reported as additions and deductions.
The statement of activities of the government-wide financial statements is designed primarily to provided information that assesses what?
Operational accountability
The government-wide statement of activities reports the government’s operations using all economic resources.
A city’s electric utility, operates as an enterprise fund. It rendered billings for electricity supplies to the general fund. What is the journal entry in the general fund to based on the bill of the service provided?
Db
Expenditures
Cr
Due to Enterprise fund
How to calculate the remaining funds available in the adopted budget for governmental entities?
Adopted budget = Appropriations
Appropriations
less expenditures
less encumbrances
= funds available
In the government-wide financial statements, what is the correct revenue classification of fines and forfeitures?
Charges for services
They result from direct charges to those who are directly affected by a program or service, even though they receive no benefit
What characteristics of entities are considered governmental organizations under GASB?
- Bodies corporate and politic
- entities with power to enact and enforce a tax levy
What characteristics of entities that are not considered governmental organization under GASB, but are instead under FASB’s jurisdiction?
These are NFP organizations and they are exempt from federal taxation
How should allocated, indirect expenses for expenses that benefit other functions be reported on the statement of activities?
in column separate from the direct expenses
What type of financial reporting objectives does the adoption of a balanced budget achieve?
Interperiod equity
How should state appropriations to a state university choosing to report only in business-type activities be reported in the statement of revenues, expenses, and changes in net position?
As nonoperating revenues
grants and gifts are nonoperating revenues
capital grants and gifts are reporting in other nonoperating revenues or gifts
What are operating revenues for a state college or university?
- grants
- contracts
What are reciprocal interfund activities?
Activities that affect two funds resulting from loans or services provided and received
What are nonreciprocal activities?
Activities that consist of flows of assets without equivalent flows in return.
What is the measurement focus and accounting basis for the government-wide financial statements?
Measurement focus - economic resources
Basis of accounting - accrual
What affects that encumbrances balance?
When purchase orders/invoices are filled.
It has nothing to do with the amount of goods received or actually paid or the expenditures balance.
What reporting item would be referred to by using the word expenditures?
Governmental fund reporting and current financial resources reporting.
How would a municipality that uses modified accrual and encumbrance accounting record the transaction of an interfund billing in the internal service accounts?
What would the journal entry debit for this same transaction?
Credit interfund revenues
Debit interfund/intergovernmental receivables
What are the required financial statements for an investment trust fund?
statement of fiduciary net position
statement of changes in fiduciary net position
How would a bequest with instructions to keep the principal invested and use the earnings for salary for a particular department be reported at the fund level and in government-wide financial reporting
Fund level
- special revenue fund
- statement of revenues, expenditures and changes in fund balance
Government-wide
- program revenue
- statement of activities
The governmental fund measurement focus is on the determination of what?
Flow of financial resources
What must the government-wide statement of net position include?
A distinction between governmental and business-type activities.
Reported in separate columns
How are internal service funds affected by major fund reporting requirements?
They are not affected.
Internal service funds are not applicable to major fund reporting requirements.
They are usually combined for financial reporting and presented individually with combining statements.
What is the criteria that must be used for activities to be reported as enterprise funds?
- activity must be financed with debt that is secured solely by a pledge of the net revenues from fees of the activity
- laws required that the cost or providing services be recovered with fees and charges, rather than with taxes
- pricing policies of the activity establish fees and charges designed to recover costs
