Governmental Fund accounting Flashcards
Measurement focus of governmental fund accounting is on which?
It focus on current financial resources. This means that cash or assets which are expected to be converted to cash within the accounting period. Or the current resources that are available to be used within the period.
Which of the following is not one of the 3 categories of funds used in governmental accounting?
1 Govt
2 Fiduciary
3 Propereitory fund
4 Encumberance fund
Encumberance.
The 3 categories of funds used in governmental accounting are governmental funds, proprietary funds, and fiduciary funds.
Governmental funds use the modified accrual basis of accounting, which focuses on the flow of current financial resources, and they are used primarily for non exchange revenues such as taxes, grants, and revenues between other funds. These funds are used for the primary functions of government such as health and safety, infrastructure such as roads, and general government administration.
Proprietary funds operate like for-profit businesses and engage in exchange transactions where users are charged for goods and services. These funds use accrual accounting, which focuses on the flow of economic resources. Proprietary fund is also named as enterprise fund.
Fiduciary funds are funds that are held for other entities or individuals, and these funds do not belong to the government entity. These funds also use accrual accounting.
There are no “encumbrance funds”; encumbrance accounting is the term for the way governments track and account for purchases against a budget.
Roy city received a gift, the principal. Of which is invested in perpectuity with the income to be used to support the local library. In which fund should this be recorded.
1. Permanent fund
2. Special revenue fund
3. Private purpose trust funds
4. Investment trust funds
Permanent fund. As the principal is invested forever, but the point of the investments income is to benefit the government. That is the benefit of a permanent fund.
In other words any govt trust funds are commingled from any other funds or external entities to be used for investment purposes.
Special revenue funds - are set aside to be used for a specific govt purpose. It is usually funded by money transferred from the general fund.
