Governmental Accounting Flashcards

1
Q

What is the primary objective of governmental accounting?

A

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

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2
Q

What are the three major types of funds in governmental accounting?

A

Governmental

Proprietary

Fiduciary

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3
Q

Which two accounting bases are used in governmental accounting?

A

Accrual basis - current economic resources focus (revenues recognized when earned)

Modified accrual basis - current financial resources focus (revenues recognized when available and measurable)

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4
Q

What is a budget appropriation?

A

The highest amount allowed for a particular expenditure under a budget.

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5
Q

What is an encumbrance?

A

Records purchase and reserves it for the encumbrance.

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6
Q

What is the opening budgetary entry?

A

Dr Estimated Revenues Control
Cr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)

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7
Q

What is the closing budgetary entry?

A

Dr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
Cr Estimated Revenues Control

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8
Q

What are the types of governmental funds?

A
General Fund
Special Revenue Fund
Permanent Fund
Capital Projects Fund
Debt Service Fund
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9
Q

What is a general fund?

A

The ‘operating’ fund of the governmental unit

Records Significant Revenues: Taxes, Tickets, Fines, Licenses

Records Significant Expenditures: Police, Education, Fire Dept

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10
Q

What is a special revenue fund?

A

Restricted for a specific purpose such as street repair.

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11
Q

What is a permanent fund?

A

Legally restricted fund, where only earnings can be used to fund programs.

Principal remains intact.

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12
Q

What is a capital projects fund?

A

Used to acquire and build facilities.

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13
Q

What is a debt service fund?

A

Handles repayment of long-term debt and related interest.

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14
Q

Which fund statements are issued in governmental accounting?

A

Balance Sheet

Statement of Revenues, Expenditures, and Changes in Fund Balance

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15
Q

When is revenue recorded in governmental accounting?

A

When it is BOTH available and measurable, regardless of when it is spent.

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16
Q

What is derived tax revenue?

A

Money collected from people ‘doing’ things:

Sales tax (buying cars) or income tax (people working)

17
Q

What is imposed tax revenue?

A

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.

18
Q

What are the types of proprietary funds?

A

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)

19
Q

What are the proprietary fund financial statements in governmental accounting?

A

Statement of Net Assets

Statement of Revenues, Expenses, and Changes in Net Assets

Statement of Cash Flows

20
Q

What are the types of fiduciary funds?

A

Agency Fund - government acts as an ‘agent’ or custodian

Pension Trust Fund - government is a trustee for a pension plan

Investment Trust Fund - government is a trustee over a series of investments

Private Purpose Trust - trust that benefits various individuals and entities

21
Q

How are assets and liabilities ordered in a governmental Statement of Net Assets?

A

Ordered by liquidity

Current and non-current

22
Q

How are capital assets shown on a governmental Statement of Net Assets?

A

They are shown net of debt

Asset Cost - Accumulated Depreciation - Asset liabilities = Net assets

23
Q

How is infrastructure reported on a governmental Statement of Net Assets?

A

Modified approach:

Reported at cost, no accumulated depreciation

24
Q

How is a Statement of Net Assets divided?

A

Into Governmental Activities and Business Activities

25
Q

How are activities presented in a Statement of Activities?

A

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.

26
Q

Committed funds

A

The most restrictive classification of governmental fund balances

Committed funds are internally limited by formal action of the government’s highest level of decision-making authority.

27
Q

Restricted fund

A

Represent resources whose use has been limited by external sources such as creditors (e.g., debt covenants), contributors, other governments, laws, constitutional provisions or enabling legislation.

28
Q

Non-spendable fund

A

Represent resources in a form that cannot be spent (e.g., inventories or prepaid expenditures) or are legally or contractually required to remain whole (e.g., permanent fund principal).

29
Q

Assigned fund

A

Constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed.

30
Q

Government Fund

A

Financial Resource Measurement Focus

Modified Accrual Basis of Accounting

31
Q

Propriety Fund

Fiduciary Fund

A

Economic Resource Measurement Focus

Accrual Basis of Accounting

32
Q

Restricted Fund

A

resource limited by external source, such as creditor( bond indentuure) , contributor, government, laws, constitutional provision