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Wiley CPA FAR 2014 > Governmental Acctg & Reporting > Flashcards

Governmental Acctg & Reporting Flashcards

1
Q

What is the authoritative body for state and local government?

A

Government Accounting Standards Board (GASB).

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2
Q

What are the differences between not-for-profit and for-profit organizations that necessitate a different accounting and reporting model for not-for-profit organizations?

A
  1. Principal mission is to provide goods and services; 2. Primary resources are exchanged through non-exchange transactions; 3. Restrictions on resources; 4. No individual ownership interests.
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3
Q

What is the authoritative body for not-for-profit organizations?

A

Financial Accounting Standards Board (FASB.)

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4
Q

What fund is used to account for business-type activities?

A

Proprietary Fund.

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5
Q

List the two types of proprietary funds.

A
  1. Enterprise Funds; 2. Internal Service Funds.
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6
Q

List the four types of fiduciary funds.

A
  1. Pension Trust Funds; 2. Private-Purpose Trust Funds; 3. Investment Trust Funds; 4. Agency Funds.
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7
Q

List the three categories of funds for state and local governmental entities.

A
  1. Governmental Funds; 2. Proprietary Funds; 3. Fiduciary Funds.
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8
Q

List the five types of governmental funds.

A
  1. General Fund; 2. Special Revenue Funds; 3. Capital Project Funds; 4. Debt Service Funds; 5. Permanent Funds.
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9
Q

Define “fund”.

A
  1. A fiscal entity; 2. An accounting entity.
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10
Q

What are the revenue recognition criteria under modified accrual accounting?

A

Measurable; Available.

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11
Q

What is the measurement focus basis of accounting for governmental fund types?

A

Modified accrual: Flow of current expendable financial resources.

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12
Q

What is the measurement focus basis of accounting for proprietary fund types?

A

Accrual accounting: Flow of economic resources.

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13
Q

Is the normal balance of estimated revenues account a credit or a debit?

A

It is a debit.

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14
Q

Is the normal balance of estimated other financing uses account a credit or debit?

A

It is a credit.

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15
Q

Describe the journal entry to record a budget at beginning of year.

A

DR: Estimated Revenues CR: Appropriations DR or CR* Budgetary Fund *As required to balance the entry

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16
Q

Is the normal balance of estimated other financing sources account a credit or a debit?

A

It is a debit.

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17
Q

What is the basis of accounting in which budgetary accounting is used?

A

Modified Accrual Basis.

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18
Q

Is the normal balance of appropriations account a credit or a debit?

A

This is a credit.

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19
Q

What budgetary account represents the legally mandated spending limit?

A

Appropriations account.

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20
Q

Describe the journal entry to close budgetary accounts at the end of the period.

A

DR: Appropriations CR: Estimated Revenues DR or CR* Budgetary Fund *As required to balance the entry

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21
Q

Is the normal balance of the encumbrances account a credit or a debit?

A

It is a debit.

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22
Q

What budgetary account represents the estimated dollar value of outstanding purchase orders?

A

Encumbrances account.

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23
Q

Where do you find Positive Unassigned Fund Balance?

A

This balance is found only in the General Fund

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24
Q

How are stabilization arrangements reported?

A

May be reported as restricted or committed net position if the criteria for either type of constraint are met. Otherwise, it will be reported as unassigned net position. Stabilization funds are usually reported in the general fund.

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25
Q

True or False: Restricted, committed, or assigned fund balance amounts should report only positive amounts.

A

True. These fund balances should not report negative amounts.

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26
Q

True or False: Financial reporting for reserve of encumbrances is displayed separately in the financial statements.

A

False. They are not displayed separately in the financial statements. Encumbrances that do not lapse are part of Committed or Assigned Fund Balance depending on the nature of the constraint on resources.

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27
Q

List the categories of net position in government-wide financial statements.

A
  1. Unrestricted; 2. Restricted; 3. Invested in capital assets, net of related debt.
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28
Q

List the fund balance categories.

A
  1. Non-spendable; 2. Restricted; 3. Committed; 4. Assigned; 5. Unassigned.
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29
Q

What account is credited when general fund revenues are received before they are legally due?

A

Deferred revenue.

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30
Q

What statement is developed in a functional format that highlights program revenues and cost?

A

Statement of Activities.

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31
Q

List the sections in the comprehensive annual financial report (CAFR).

A
  1. Introductory; 2. Financial; 3. Statistical.
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32
Q

List the three sections of the comprehensive annual financial report (CAFR).

A
  1. Introductory Section; 2. Financial Section; 3. Statistical Section.
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33
Q

What funds are included in the Governmental Activities column on the Government-wide Statements?

A

All Governmental Funds (General, Special Revenue, Debt Service, Capital Project, and Permanent Funds) plus the Internal Service Funds.

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34
Q

What are the required Government-wide Financial Statements?

A
  1. Statement of Net Assets; 2. Statement of Activities.
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35
Q

What funds are included in the Business-type Activities column on the Government-wide Statements?

A

Enterprise Funds.

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36
Q

What fund is always a major fund?

A

General Fund.

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37
Q

For what fund is major fund reporting not required?

A

Internal Service Funds.

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38
Q

What funds must report budget-to-actual comparisons?

A
  1. General Funds; 2. Major Special Revenue Funds.
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39
Q

What criteria are used to determine a major fund?

A

10% of total assets, liabilities, revenues, or expenditures/expenses of the total for all funds in that fund type and at least 5% for the same element for all governmental and enterprise funds combine.

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40
Q

What funds are reported in a separate column in the fund level financial statements for governmental fund types?

A

Major funds.

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41
Q

Describe the accounting treatment of gains on the sale of investments that are part of the endowment principal for government accounting.

A

The gain is added to the endowment principal; it is not expendable.

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42
Q

Describe the journal entry to record a short-term loan for $10,000 by the general fund to a Special Revenue Fund.

A

DR: Due from Special Revenue Fund CR: Cash

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43
Q

What is the basis of accounting used by the General Fund?

A

Modified accrual basis.

44
Q

Describe the journal entry to record receipt of the proceeds from issuance of long-term debt for a government entity.

A

DR: Cash CR: Other Financing Sources - Bond Proceeds

45
Q

Describe the journal entry to record purchase of a fixed asset for a government entity.

A

DR: Expenditures CR: Cash

46
Q

Describe the journal entry to record a long-term loan of $10,000 by the General Fund to a Special Revenue Fund.

A

DR: Advances to Special Revenue Fund CR: Cash

47
Q

Describe the year-end adjusting entry to Property Tax Revenue when property taxes collected during the year are less than Property Tax Revenue recognized when taxes were levied.

A

DR: Property Tax Revenues CR: Deferred Revenues

48
Q

Describe the journal entry to record levy of property taxes that are to be used to finance the current fiscal year.

A

DR: Property Taxes Receivable CR: Est. Uncollectible Property Taxes CR: Property Tax Revenues

49
Q

When is revenue related to expenditure-driven grants recognized for government accounting?

A

When the expenditure is made and reimbursement is requested.

50
Q

When is revenue related to grants, entitlements, shared revenues, etc., that are subject to time restrictions recognized for government accounting?

A

When the stated time has arrived or the stated event has occurred (until then, deferred revenue is recognized.)

51
Q

Describe the journal entry to record transfer of $10,000 to a Special Revenue Fund from the General Fund (the monies are not expected to be repaid).

A

DR: Cash CR: Other Financing Sources

52
Q

When is revenue related to grants, entitlements, shared revenues, etc., that are subject to purpose restrictions recognized for government accounting?

A

When the resources are measurable (that is, revenue recognition is not deferred solely because of a purpose restriction).

53
Q

Describe the journal entry to record an increase in estimated uncollectible property taxes.

A

DR: Property Tax Revenues CR: Est. Uncollectible Property Tax

54
Q

What is the basis of accounting used by Special Revenue Funds?

A

Modified accrual basis.

55
Q

When is revenue related to grants, entitlements, shared revenues, etc., that are subject to eligibility restrictions recognized for government accounting?

A

Revenue is recognized when the eligibility requirements are met (until then, deferred revenue is recognized).

56
Q

Describe the journal entry to record levy of property taxes that are to be used to finance the subsequent fiscal year.

A

DR: Property Taxes Receivable CR: Est. Uncollectible Property Taxes CR: Deferred Revenues

57
Q

When is interest expense on general long-term debt accrued in a debt service fund?

A

When the interest payment is due (i.e., on the due date).

58
Q

Describe the journal entry to record payment of matured debt principal in a debt service fund.

A

DR: Expenditures-Principal CR: Bonds Payable

59
Q

What fund generally receives any remaining resources when a Capital Projects Fund is closed?

A

Debt Service Fund.

60
Q

What fund is used to accumulate resources and manage expenditures related to major capital projects in government accounting?

A

Capital Projects Fund.

61
Q

Describe the journal entry to record receipt of resources transferred by the general fund to a debt service fund when repayment is not expected.

A

DR: Cash CR: Other Financing Sources - Transfers-In

62
Q

Describe the journal entry to record a transfer of $10,000 from the General Fund to a Special Revenue Fund (the amount is not expected to be repaid).

A

DR: Other Financing Uses - Transfers-Out CR: Cash

63
Q

What is the primary function of the debt service fund?

A

Payment of interest and principal on general long-term debt.

64
Q

What fund and entry is required to record receipt of an endowment where the earnings are to be expended on a public purpose? .

A

Permanent Fund: DR: Cash CR: Revenues - Endowment Principal

65
Q

Describe the journal entry to record receipt of grant monies that must be used to finance construction of a major capital project (no other eligibility restrictions apply).

A

DR: Cash CR: Revenues - Grants

66
Q

What account is credited when general fund revenues are received before they are legally due?

A

Deferred revenue.

67
Q

Describe the journal entry to record payment of interest expense now due in a debt service fund.

A

DR: Expenditures-Interest CR: Bonds Payable

68
Q

Describe the enterprise fund entry to record capital contributions from an external entity (i.e., developer, outside agency).

A

DR: Capital Assets (Land, Building, Equipment) CR: Contributions from xxx

69
Q

Describe the proprietary fund entry to record interfold sale of goods.

A

DR: Due from xxx CR: Revenues (or Billings to Depts.)

70
Q

What is the principal revenue of an Enterprise Fund?

A

Fees charged to external users.

71
Q

What is the principal revenue of an Internal Service Fund?

A

Fees charged to internal users.

72
Q

What accounts do agency funds use?

A

Agency funds accounts consist only of current assets and current liabilities; they do not recognize revenues, expenditures, or net position.

73
Q

Describe the Investment Trust Fund journal entry to record and/or report cash contribution received from an external entity.

A

DR: Cash CR: Net Position Held in Trust for xxx

74
Q

What equity account is used by Pension Trust Funds?

A

Net Position Held in Trust for Pension Benefits.

75
Q

Describe the Pension Trust Fund journal entry to record receipt of employer contributions to the employee pension plan.

A

DR: Cash CR: Additions-Employer Contributions

76
Q

What funds are used to account for any resources managed in trust by the governmental entity where the beneficiaries are outside of the governmental entity itself?

A

Private Purpose Trust Funds.

77
Q

Define “component units”.

A

Legally separate organizations: 1. Which are fiscally dependent on the primary government; OR 2. For which the primary government appoints a voting majority of the Component Unit’s governing board and either: (1) the primary government is financially accountable for the component unit; or (2) it would be misleading or incomplete to exclude the component unit from the primary government’s financial statements.

78
Q

When should component units be blended with primary government?

A

If the component unit is, in substance, a part of the primary government (e.g., the principal beneficiary of the component units services is the primary government), it should be blended.

79
Q

Define “financial reporting entity”.

A

A primary government and its component units.

80
Q

How is discrete presentation of component units accomplished in the government-wide statements?

A

A column of aggregated totals for the component units is added to the right of the primary government’s data.

81
Q

How is blended presentation of component units accomplished in the government-wide statements?

A

The component unit’s totals are included with the primary government’s data in the Governmental Activities and Business-type activities columns, as appropriate for each component unit.

82
Q

List the three requirements necessary to be considered a primary government.

A
  1. A separately elected governing body; 2. A legally separate entity; and 3. Fiscal independence.
83
Q

Under government accounting, what is the Modified Approach?

A

An alternative to depreciation of infrastructure assets based on maintaining the conduction of infrastructure assets.

84
Q

How are payments made to contractors of a major construction project reported?

A

Reported as an increase to long-term assets in government-wide financial statements and as an expenditure in the capital projects fund.

85
Q

How is the principal component of debt service payments on bonds payable reported?

A

Reported as a decrease in Bonds Payable in government-wide financial statements and as an expenditure in the debt service fund.

86
Q

What is the account name for short-term interfund receivables?

A

Due from xxx.

87
Q

What is the account name for long-term interfund receivables?

A

Advances to xxx.

88
Q

How are bonds payable used to finance major construction projects reported?

A

Reported as a liability in the government-wide financial statements and as a other financing sources - bond proceeds in the capital projects fund.

89
Q

How is the estimated loss from a claim affecting a governmental fund reported?

A

Reported in its entirety in the government-wide financial statements and recognized in the fund level statements to the extent that amounts are payable from expendable available financial resources.

90
Q

How are pension expenditures in governmental fund financial statements recognized?

A

Recognized on the modified accrual accounting basis of accounting and should be equal to the amount expected to be liquidated with expendable available financial resources.

91
Q

How are compensated absences in governmental funds reported?

A

Should report expenditures accrued that year for which there are expendable available financial resources.

92
Q

True or False: Sales tax is an example of a derived tax revenue that is based on an underlying exchange.

A

This is a true statement.

93
Q

What expenditure classification identifies the expenditure by the broad purpose of the expenditure?

A

Program or Function.

94
Q

True or False: Property taxes is an example of an imposed nonexchange transaction.

A

This is a true statement.

95
Q

True or False: A Federal grant for education is an example of a government mandated nonexchange transaction.

A

This is a true statement.

96
Q

List the two items that cause deferral of recognition of non-exchange revenue under Governmental Accounting Standards Board Statement (GASBS) 33.

A

Failure to meet: 1. Time restrictions; or 2. Eligibility requirements.

97
Q

List the categories of nonexchange transactions.

A
  1. Derived tax revenues; 2. Imposed exchange revenues; 3. Government-mandated nonexchange transactions; 4. Voluntary nonexchange transactions.
98
Q

What expenditure classification identifies the expenditure by the period of time benefited by the expenditure?

A

Character (Debt Service, Current, Capital Outlay.)

99
Q

Define “probability-weighted procedure”.

A

The approach used to calculate the liability for clean costs associated with a pollution remediation effort.

100
Q

True or False: Pension plan benefits paid are called deductions in the pension plan financial statements.

A

This is a true statement.

101
Q

During what stage of the internally generated software development process are costs capitalized?

A

Application development stage.

102
Q

When are pollution remediation obligations recognized for government reporting?

A

When the government knows that a site is polluted and one of the five obligating events has occurred.

103
Q

List the three stages for internally generated software development.

A
  1. Preliminary project stage; 2. Application development stage; 3. Post-implementation/operation stage.
104
Q

List the two financial statements required for defined pension benefit plans in government reporting.

A
  1. Statement of Plan Net Assets; 2. Statement of Changes in Plan Net Assets.
105
Q

True or False: Contributions to pension plans are called revenues in the Pension Plan financial statements.

A

False. They are called “Additions” in the Pension Plan financial statements (they are not called revenues).

Wiley CPA FAR 2014 (5 decks)

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