Governmental Accounting

Question 2

What is the primary objective of governmental accounting?

Answer 2

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

Question 3

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

Answer 3

Governmental

Proprietary

Fiduciary

Question 4

Which two accounting bases are used in governmental accounting?

Answer 4

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

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

Question 5

What is a budget appropriation?

Answer 5

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

Question 6

What is an encumbrance?

Answer 6

Records purchase and reserves it for the encumbrance.

Question 7

What is the opening budgetary entry?

Answer 7

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

Question 8

What is the closing budgetary entry?

Answer 8

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

Question 9

What are the types of governmental funds?

Answer 9

General Fund
Special Revenue Fund
Permanent Fund
Capital Projects Fund
Debt Service Fund

Question 10

What is a General Fund?

Answer 10

The operating fund of the governmental unit

Records Significant Revenues: Taxes; Tickets; Fines; Licenses

Records Significant Expenditures: Police; Education; Fire Dept

Question 11

What is a Special Revenue Fund?

Answer 11

Restricted for a specific purpose such as street repair.

Question 12

What is a Permanent Fund?

Answer 12

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

Principal remains intact.

Question 13

What is a Capital Projects Fund?

Answer 13

Used to acquire and build facilities.

Question 14

What is a Debt Service Fund?

Answer 14

Handles repayment of long-term debt and related interest.

Question 15

Which fund statements are issued in Governmental Accounting?

Answer 15

Balance Sheet

Statement of Revenues; Expenditures; and Changes in Fund Balance

Question 16

When is Revenue recorded in Governmental Accounting?

Answer 16

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

Question 17

What is Derived Tax Revenue?

Answer 17

Money collected from people doing things:

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

Question 18

What is Imposed Tax Revenue?

Answer 18

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.

Question 19

What are the types of Proprietary Funds?

Answer 19

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)

Question 20

What are the Fund Balance Types?

Answer 20

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

Question 21

What are the types of Fiduciary Funds?

Answer 21

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

Question 22

How are Assets & Liabilities presented on the Statement of Net Position?

Answer 22

Assets (Current & Non-Current)
Deferred Outflows of Resources
Liabilities (Current & Non-Current)
Deferred Inflows of Resources

Question 23

How are Capital Assets shown on a governmental Statement of Net Assets?

Answer 23

They are shown net of debt

Asset Cost - Accumulated Depreciation - Asset Liabilities = Net Assets

Question 24

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

Answer 24

Modified approach:

Reported at cost; no accumulated depreciation

Question 25

How is a Statement of Net Assets divided?

Answer 25

Into Governmental Activities and Business Activities

Question 26

How are activities presented in a Statement of Activities?

Answer 26

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.