Governmental Accounting COPY Flashcards

Question

# Chapter 19: Governmental Accounting -- Reporting What are the components in the Statement of Net Position in Government-Wide Reporting?

Answer 1

Assets + Deferred Outflows of Resources _(Liabilities + Deferred Inflows of Resources)_ Net Position

Answer 2

* Net investment in capital assets, includes unrestricted and restricted capital assets * Restricted Net Position * Unrestricted Net Position

Answer 3

Capital Assets that are net of * Accumulated depreciation * Related liabilities and deferred inflows and outflows of resources

Answer 4

* Restricted net position includes restricted assets minus related liabilities and deferred inflows of resources. * The restrictions are imposed by external entities (creditors, grantors, or other governments) or by law (constitutional provisions or enabling legislation). * Restricted net position is not always equal to restricted fund balance in the governmental funds financial statements.

Answer 5

Unrestricted net position includes items that may be internally committed or assigned (designated). These commitments and assignments are not reported on the face of the statements. Unrestricted net position is the net of * Assets * Deferred inflows and outflows of resources * Liabilities not included in the other components of net position.

Answer 6

Funds that meet the criteria for fiduciary activities are not reported as internal balances in the Government-Wide Statements. The activities are reclassified as a payable to, or receivables from, external parties.

Answer 7

* Service charges because the users benefit from using the service. (i.e. Building permits, garbage collection, and dog licenses). * Program-specific operating grants and contributions * Program-specific capital grants and contributions

Answer 8

* Depreciation specifically identifiable with a function is a direct expense. * Depreciation of capital assets shared by functions (i.e. a building that houses the tax assessor, inspector and election supervisor) is allocated as a direct expense. * Depreciation of capital assets that serve all functions (i.e. City Hall) is not required to be included in direct expenses of the functions. It may be displayed on a separate line in the statement of activities or as part of the general government function. It may or may not be allocated. * Depreciation of infrastructure assets is not allocated to other functions.

Answer 9

* General revenues are reported at the bottom of the statement of activities to determine the change in net position for the period. * General revenues are not required to be reported as program revenues. * They are reported separately after total net (expense) revenue for all functions. All taxes, including those levied for a special purpose, are general revenues.

Answer 10

_Governmental Activities Column:_ DR: The transfer (an other financing use) CR: Cash _Business-Activities Column:_ DR: Cash CR: Transfer

Answer 11

* Governmental Activities are accounted for under the modified accrual basis of account and it needs to be reconciled from modified accrual to full accrual * The conversion is performed at the total government summary fund level, not at the individual fund level. * Reconciled Governmental Activities * Governmental Fund Balance, excluding budgeted amounts * Add: Internal Service Fund Net Position * Add: Capital Assets Used in Governmental Activities * Add: Principal Payments Used in Governmental Activities * Subtract: Accumulated Depreciation on Capital Assets Used in Governmental Activities * Subtract: Long term debt obligations issued to finance governmental projects * Subtract: Book value of capital assets old during the year. * Ignore: Debt Service Expenditures – Interest because Since the interest is an expenditure under modified accrual, the amount was already deduction. * Ignore: Change in net position of fiduciary funds

Answer 12

The following are reported separately at the bottom of the statement of activities: * Contributions to endowments * Contributions to permanent fund principal * Transfers between governmental and business-type activities * Special and extraordinary items.

Answer 13

* Operating revenues, expenses, and income (loss) * Nonoperating revenues and expenses * Revenues from capital contributions and additions to endowments * Special and extraordinary items * Transfers * Change in net position * Ending net position

Answer 14

* The activity is financed with debt, and the only security is a pledge of the activity’s net revenues from fees and charges. * The activity's costs (including capital costs) of providing services are legally required to be recovered from fees and charges, not taxes or similar revenues. * The activity's pricing policies set fees and charges to recover its costs (including capital costs).

Answer 15

In a proprietary fund's statement of revenues, expenses and changes in net fund position, transfers should be reported separately after nonoperating revenues and expenses. Transfers are presented as the final item before the change in net position.

Answer 16

* Capital contributions * Additions to endowments * Special and extraordinary items.

Answer 17

Noncapital financing activities include borrowings for purposes other than acquiring, constructing, or improving capital assets and debt. * Grants and subsidies received or paid * Tax receipts * Debt proceeds * Cash received from or paid to other funds (excluding flows from interfund services provided or used).

Answer 18

* Borrowings and repayments of debt related to acquiring, constructing, or improving capital assets * Acquiring and disposing of capital assets used to provide goods or services * Paying for capital assets obtained on credit.

Answer 19

* Imposed nonexchange revenues other than from property taxes are recognized at the same time as the recognition of the asset. * If there is a time restriction, then the revenue is recognized when: 1. The resource is required to be used, or 2. The use is first allowed by the time requirements.

Answer 20

* Interfund transfers are not reported as a liability since a repayment is not required. * Transfers should be reported separately after nonoperating revenues and expenses. This component includes (1) capital contributions, (2) additions to endowments, and (3) special and extraordinary items.

Answer 21

All nonexchange transactions are classified as * Derived tax revenues (i.e. Payments from income tax and sales tax) * Imposed nonexchange revenues (i.e. Property taxes and fines) * Voluntary nonexchange transactions * Government-mandated nonexchange transactions.

Answer 22

Interfund transfers include (1) capital contributions (2) additions to endowments (3) special and extraordinary items.

Answer 23

In a nonexchange transaction, a government gives or receives value without directly receiving or giving something of equal value in exchange.

Answer 24

A reciprocal interfund activity occurs when an interfund loan or interfund service transaction takes place between a goverment fund and a proprietary fund. For example, an enterprise fund bills a governmental fund for services.

Answer 25

A non-reciprocal interfund activity occurs when an interfund loan or interfund service transaction takes place between a goverment fund to another government fund.

Answer 26

An interfund transfer is when an asset is given to another governmental fund, without the expectation of repayment.

Answer 27

An elimination occurs when there are activities between two governmental fund types (i.e. general fund and capital fund). Because transfers are not recognized in the government-wide financial statements, the transfers within the governmental activities section is eliminated.

Answer 28

“**_I**_ndiana _**F**_arms _**S_**oybeans” * **_I_**ntroductory Section * **_F_**inancial Section * **_S_**tatistical Section

Answer 29

“**_L**_ots _**O**_f _**N_**utrients” * **_L_**etter of Transmittal * **_O_**rganizational Chart * **_N_**ames of Principal Officers

Answer 30

“**_M**_any _**B**_arren _**F**_ields _**S**_hould _**N**_ever _**B**_e _**B_**rown” * **_M_**D&A and Auditor's Report * **_B_**asic Government-Wide Financial Statements * other **_S**_chedules and _**S_**tatements * **_N_**otes * **_B_**udgetary Schedules

Answer 31

“**_F**_armers _**R**_evenues _**D**_ecrease _**D**_uring _**O_**ctober” * **_F_**inancial Trends * **_R_**evenue Capacity * **_D_**ebt Capacity * **_D_**emographics * **_O_**perating Information

Answer 32

The Required Supplementary Information (RSI) is a sepearte section of the CAFR. It is reported after the Notes Section to the basic financial statements.

Answer 33

(1) schedules (2) statistical data (3) budgetary comparison schedules (4) other information that is an essential part of financial reporting

Answer 34

Budgetary comparison schedules must be reported for the general fund and each major special revenue fund with a legally adopted annual budget. The schedule includes (1) the original budgets, that is, the first complete appropriated budgets; (2) the final appropriated budgets (3) the actual inflows, outflows, and balances. This information treats the budgetary basis and the GAAP basis for the general fund (a governmental fund) the same (the modified accrual basis).

Answer 35

“**_G**_overnment is _**F**_or _**N_**erds” * **_G_**overnment-Wide Financial Statements * **_F_**und Financial Statements * **_N_**otes to the Financial Statements

Answer 36

* A component unit is blended into the primary government if * The board of directors is basically the same as the board of the primary government (i.e. school systems) * The component unit serves the primary government exclusively or almost exclusively * The debts of the component unit are to be repaid by the primary government * If the component unit is not a separate legal entity, then the component is blended with the primary government

Answer 37

“PEA” * **_P_**ublic Accountability * **_E_**valuating Operating Results * **_A_**ssessing Services Provided and Accomplishments

Answer 38

* Sources and uses of financial resources * How its activities were financed and its cash needs were met * Whether its financial condition improved or declined.

Answer 39

* Interperiod Equity * Accountability * Legally binding budget

Answer 40

“**_G**_overnment _**C**_an’t _**S**_eem to _**D**_ecide on _**P_**olicies.” * **_G_**eneral Fund * **_C_**apital Fund * **_S_**pecial Revenue Fund * **_D_**ebt Service Fund * **_P_**ermanent Fund

Answer 41

* Internal * Enterprise

Answer 42

“CPIP” * **_C_**ustodial * **_P_**rivate Purpose Trust Fund * **_I_**nvestment Fund * **_P_**ension Fund

Answer 43

* Unclaimed property sits until right ownership is proven * Other uses of a private purpose trust fund would be to where the government agrees to administer an amount of money owned privately.

Answer 44

* Balance Sheet (with reconciliation to the government-wide statement of net position) * Statement of revenues, expenditures and changes in fund balances (with reconciliation to the government-wide statement of activities)

Answer 45

* Statement of Net Position * Statement of Revenues, Expenses and Changes in Fund Net Position * Statement of Cash Flows

Answer 46

* Statement of Fiduciary Net Position * Statement of Changes in Fiduciary Net Position

Answer 47

U-NARC * Unassigned Fund Balance * Non-Spendable Fund Balance * Assigned Fund Balance * Restricted Fund Balance * Committed Fund Balance

Answer 48

* Unassigned fund balance resources associated with spendable assets that are not restricted, committed or assigned. * Unassigned fund balance is a residual equity classification of the general fund * Only the general fund should have a positive unassigned fund balance.

Answer 49

* Includes amounts that either * Inventory, Prepayments or long-term loans that is not spendable; or * Must be kept intact (i.e. principal of a permanent fund) * Assets owned by the special revenue fund are examples of a non-spendable fund balance.

Answer 50

* Represents the next monies to be committed but have not formally been committed yet. * The government intends to obligate those monies. * Outstanding encumbered amounts at year end are reclassified from unassigned fund balance to committed or assigned fund balance (as appropriate) * An example is when the government expects a deficit for the next fiscal year.

Answer 51

* Funds that may spent only for a specific purpose that is established by * A constitutional mandate * Enabling Legislation; or * An external provider (i.e. Those who have donated assets to the government.) * Examples of a restricted fund balance include * Debt Service Fund resources that are subject to the terms and conditions of a bond indenture * Bond Agreement where the proceeds are to be used for a specific expense or project. * Capital Service Fund

Answer 52

* Committed fund balance is the most restrictive classification of governmental funds. * The amounts may only be spent for specific purposes that are established by a formal act of the entity's highest decision maker (i.e county commissioner) * The decision make may redirect the resources by following the necessary due processing procedures. * Outstanding encumbered amounts at year end are reclassified from unassigned fund balance to committed or assigned fund balance (as appropriate) * Examples include * Committed Fund Balance or Encumbrances that have not lapsed as of year end. * Collecting insurance premiums from employees and paying the medical bills directly. * Outstanding encumbrance balances that have not lapsed at year end.

Answer 53

_Approval of purchase order_ DR: Encumbrances CR: Encumbrances Outstanding _When goods are delivered_ DR: Encumbrances Outstanding CR: Encumbrances DR: Expenditures CR: Vouchers Payable

Answer 54

DR: Encumbrances Outstanding CR: Encumbrances

Answer 55

* The encumbrance transaction shows an outstanding commitment by an organization. * Once the goods are delivered, or the services are performed, the encumbrance is reversed and the expenditure is recorded because it is the legal obligation to pay.

Answer 56

* Acquisition of assets by assuming directly related liabilities is a noncash investing, capital, and financing activity. * An example is purchasing a building by giving a mortgage to the seller.

Answer 57

Cash interest and dividends received as returns on nonprogram loans, equity securities, etc., are inflows from investing activities.

Answer 58

* General (U-NARC): Unassigned (Positive), Non-spendable; Assigned; Restricted and Committed * Special Revenue(U-NRC): Unassigned (Negative), Non-spendable; Restricted and Committed * Capital Projects Fund (U-ARC): Unassigned (Negative); Assigned; Restricted, and Committed * Debt Service Fund(U-ARC): Unassigned (Negative); Assigned; Restricted, and Committed * Permanent Fund Balance (U-R): Unassigned (Negative) and Restricted

Answer 59

* Statement of Net Position * Statement of Activities

Answer 60

* Receipts from customers or employers * Payments to suppliers * Payments to employees. * Loan activities not intended as investments but as program loans made to fulfill a governmental responsibility (e.g., student loans) * Interfund services provided and used * Selling goods or services.

Answer 61

* Purchase of investments * Proceeds from maturity and sale of investments * Earnings on investments. * Making and collecting loans (other than program loans) * Acquiring and disposing of debt and equity instruments * Cash interest and dividends received as returns on nonprogram loans and equity securities.

Answer 62

* Anything that has to do with bonds (i.e. Proceeds from, Retirement, etc.) * Payment to advance refund escrow agent * Interest paid * Proceeds from notes payable and commercial paper * Principal paid on notes payable and commercial paper. Financing cash flows are reported in separate categories.

Answer 63

Cash interest paid to lenders other than to acquire, construct, or improve capital assets is a cash outflow for noncapital financing activities Examples include * Borrowings (and repayments of debt, including interest) for purposes other than acquiring, constructing, or improving capital assets. * Cash in flows include debt proceeds, grants and subsidies, property and other taxes, and amounts received from other funds.

Answer 64

* Receipts of grants, contributions, and proceeds of sale of capital assets * Borrowings (and repayments of debt, including interest). * Activities that involve * Acquiring, constructing, or improving capital assets; * Acquiring and disposing of capital assets used to provide goods or services * Paying for capital assets obtained on credit.

Answer 65

DR: Fund Balance – Assigned CR: Fund Balance – Committed

Answer 66

A special revenue fund is used for proceeds that are committed for a specific purposes, but are not related to capital or debt service funds.

Answer 67

GASB measures focus is Outputs and Outcomes

Answer 68

GASB's role for improving communication is that the Board's independence supports the government's credibility and comparability among government financial statements.

Answer 69

The common denominator is resources.

Answer 70

Since the government financial statements are focused on current resources, assets are resources with present service capacity that the government presently controls.

Answer 71

The Statement of Revenue, Expenses and Changes in Fund Net Position Reports the following: * Operating Revenues, Expenses and Income (Loss) * Nonoperating revenue and expenses * Revenues from capital contributions and additions to endowments * Special and Extraordinary Items * Transfers * Changes in Net Position * Ending Net Position

Answer 72

* Net Investment in Capital Assets * Restricted Net Position * Unrestricted Net Position