Governmental Accounting Overview

Question 1

What is the accounting basis and measurement focus of governmental funds?

Answer 1

1) Modified accrual accounting
2) Current financial resources measurement focus = current assets and current liabilities are reported, no fixed assets, no long-term debt.

Question 2

What are included in governmental fund types?

GRaSPP

Answer 2

Governmental fund types:

General Funds
Special Revenue Funds
and
Debt Service Funds
Capital Projects Funds
Permanent Funds

Question 3

What is in balance sheet of governmental funds?

Answer 3

Balance Sheet:

Current assets and deferred outflows
Current liabilities + deferred inflows of resources
+ Fund Balance
= Total current liabilities, deferred inflows of resources, and fund balances.

Question 4

What is in statement of revenues, expenditures, and changes in fund balance of governmental funds?

Answer 4

Revenues
- Expenditures
Other financing sources (uses)
= Net change in fund assets

Question 5

What is the accounting basis and measurement focus of proprietary funds?

Answer 5

1) Full accrual accounting
2) Economic resources measurement focus
* Treat like a business, customers (not citizens)

Question 6

What are included in proprietary fund types?

SE

Answer 6

Proprietary Funds:

Internal Service Funds
Enterprise Funds

Question 7

What is in statement of net position of proprietary funds?

Answer 7

All assets and deferred outflows of resources
- All liabilities and deferred inflows of resources
= Net position

Question 8

What is in statement of revenues, expenses, and changes in fund net position of proprietary funds?

Answer 8

Operating revenue
- Operating expenses
Nonoperating revenue
= Change in net position

Question 9

What is the accounting basis and measurement focus of fiduciary (trust) funds?

Answer 9

1) Full accrual accounting

2) Economic resources measurement focus

Question 10

What are included in fiduciary (trust) fund types?

PAPI

Answer 10

Fiduciary (trust) funds:

Pension (and other Employee Benefit) Trust Funds
Agency Trust Funds
Private Purpose Trust Funds
Investment Trust Funds

Question 11

What is in statement of fiduciary net position of fiduciary (trust) funds?

Answer 11

All assets and deferred outflows of resources
- All liabilities and deferred inflows of resources
= Net position

Question 12

What is in statement of changes in fiduciary net position of fiduciary (trust) funds?

Answer 12

Additions
- Deductions
= Change in net position

Question 13

What is basis of accounting in balance sheet of governmental funds?

Current Financial Resources

Answer 13

• No fixed assets are reported
• No non-current liabilities are reported (Long Term Debt)

*Only current assets and liabilities are included in balance sheet

Question 14

What is basis of accounting in balance sheet of proprietary and fiduciary (trust) funds?

Economic Resources

Answer 14

• Fixed assets are reported
• Non-current liabilities are reported
• Net position of balance sheet is analyzed and reported in three components:

1) Net investment in capital assets
2) Restricted
3) Unrestricted

Question 15

What is basis of accounting in income statement of governmental funds?

Modified Accrual

Answer 15

1) Revenue is recognized when measurable and available*
2) Expenditures are recorded when the related fund liability is incurred with some exceptions*
* Available means collectible within the current period or soon enough to be used to pay liabilities in the current period (60 days after year-end)
* Exception means unmatured interest on long-term debt is not accrued, it is only recorded when legally due.

Question 16

What is basis of accounting in income statement of proprietary and fiduciary (trust) funds?

Full Accrual

Answer 16

1) Revenue is recognized when earned

2) Expenses are recognized when incurred

Question 17

What are the five categories to fund balances for GOVERNMENTAL as established by GASB 54?

AKA Constraints

NUCAR

Answer 17

1) Nonspendable Fund Balance
- Prepaid expenses, inventories

2) Restricted Fund Balance
- External: restricted by external authorities (legislation, creditors)

3) Committed Fund Balance
- Internal: resources associated with assets obligated by govt. Highest

4) Assigned Fund Balance
- govt decides to obligation but has not formally committed

5) Unassigned Fund Balance
- resources associated with spendable assets that are not restricted, not committed, and not assigned.

• Only the general fund should have a positive unassigned fund balance.