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FAR > IV. Governmental and NFP Accounting > Flashcards

IV. Governmental and NFP Accounting Flashcards

1
Q
  1. Introduction to Governmental Organizations

What are the characteristics that drive government accounting and reporting?

A 
No profit motive
Lack of clear ownership
Non-exchange services
Compliance w laws and regulations
Formal budget process
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2
Q
  1. Introduction to Governmental Organizations

Know with GASB No. 76, what was the impact?

A

Changed from having categories A through D to just having Category A (GASB Statements and Interpretations) and Category B (Technical Bulletins, GASB Implementation Guides, and AICPA literature cleared by the GASB)

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3
Q
  1. Introduction to Governmental Organizations

What are the 3 accounting characteristics that affect financial reporting?

A
  • Fund Accounting leads to many sets of accounting books and fund level reporting
  • Some budgetary reporting is required
  • Government wide reporting is also required
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4
Q
  1. Introduction to Governmental Organizations

What is the Government-Wide Accounting equation?

A 
Assets
\+ Deferred Outflows of Resources
- Liabilities
- Deferred Inflows of Resources
= Net Position
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5
Q
  1. Introduction to Governmental Organizations

What funds make up the “General Government”?

A 
General Fund
Special revenue funds
Debt service funds
Capital project funds
Permanent fund
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6
Q
  1. Introduction to Governmental Organizations

What is included in the CAFR - Introductory Section?

A 
Table of contents
Letter of transmittal
Other information
- Organization chart
- List of principal officials
- Awards
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7
Q
  1. Introduction to Governmental Organizations

What is included in the CAFR - Financial Information Section?

A 
Auditor report
MD&A
Basic financial statements
Other required supplemental information
Major fund-level financial statements
Notes to financial statements
Nonmajor fund combining & individual fs and schedules
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8
Q
  1. Introduction to Governmental Organizations

What is included in the CAFR - Statistical Section?

A 
Past 10 years of data on:
Financial trends
Revenue capacity
Debt capacity
Demographic and economic
Operating information
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9
Q
  1. GASB Concept Statements

What are the 6 concept statements?

A
  1. Objectives of financial reporting
  2. Services efforts and accomplishments
  3. Financial reporting
  4. Elements of financial reports
  5. Service efforts and accomplishments (amendment to Concept statement 2)
  6. Measurement of elements in FS
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10
Q
  1. GASB Concept Statements

What are the two purposes of Financial Reporting:

A

Accountability

Interperiod equity - are current year resources sufficient to pay current year services?

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11
Q
  1. GASB Concept Statements

Service Efforts & Accomplishments are voluntary:

A 
Voluntary and measures:
- Service efforts (inputs)
- Service accomplishments
***Output
***Outcome
SEA information should be TRUCCR
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12
Q
  1. GASB Concept Statements

Financial Reports Hierarchy of reporting:

A
  1. Recognition in basic FS
  2. Note disclosure
  3. Required supplemental information (RSI)
  4. Other supplemental information (SI) - not required
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13
Q
  1. GASB Concept Statements

What are the Elements of Financial statements?

A
  1. Assets
  2. Liabilities
  3. Deferred Outflow of Resources
  4. Deferred Inflow of Resources
  5. Net Position
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14
Q
  1. GASB Concept Statements

What are the two measurement of elements in FS approaches?

A
  1. Initial amounts

2. Re-measured amounts

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15
Q
  1. GASB Concept Statements

What are the four measurement attributes?

A
  1. Historical cost (entry value)
  2. Fair value (exit value)
  3. Replacement cost
  4. Settlement amount
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16
Q
  1. GASB Concept Statements

Define Accountability - one of the purposes of Financial Reporting:

A

This is based on the belief that the taxpayer has a “right to know” and is accomplished by providing information to assist users in determining whether the government was operated within the legal constraints imposed by the citizenry.

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17
Q
  1. GASB Concept Statements

Define Interperiod equity - one of the purposes of Financial Reporting:

A

This is a significant part of accountability by showing whether current-year revenues are sufficient to pay for current-year services or whether future taxpayers will be required to assume burdens for services previously provided.

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18
Q
  1. GASB Concept Statements

What are the three categories of primary users of government financial reports?

A

The citizenry (to which the government is accountable to), legislative and oversight bodies (who represent the citizenry), and investors and creditors (those who lend or participate in the lending process). The citizenry group includes citizens, the media, advocate groups, and public finance researchers

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19
Q
  1. GASB Concept Statements

List the four financial reporting implications associated with the legally adopted annual budget.

A

(1) expression of public policy, (2) expression of financial intent, (3) form of control, and (4) it may provide a basis for evaluating performance (if the government established service efforts and accomplishment goals as part of its budget process)

Since budgets are usually prepared according to requirements of state and local laws, the budget is not required to be prepared on the GAAP basis. Many state and local governments prepare the budget on the cash basis. When this occurs, the budget-to-actual statement is presented on the budget basis (i.e., cash basis) and a reconciliation of the cash basis to the GAAP basis is included in the notes to the basic financial statements.

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20
Q
  1. GASB Concept Statements

What does outcome measure?

A

Outcome measures indicate the accomplishments or results that occur because of the services provided.

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21
Q
  1. Fund Accounting

What is the definition of a Fund?

A

It is both a fiscal entity and an accounting entity

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22
Q
  1. Fund Accounting

What are the three categories of funds?

A
  1. Governmental Funds
  2. Proprietary Funds
  3. Fiduciary Funds
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23
Q
  1. Fund Accounting

What are the five types of Governmental funds?

A
  1. General Fund
  2. Special Revenue Fund
  3. Capital Project Funds
  4. Debt Service Funds
  5. Permanent Funds
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24
Q
  1. Fund Accounting

What are the two types of Proprietary funds?

A
  1. Enterprise Funds

2. Internal Service Funds

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25
Q
  1. Fund Accounting

What are the four types of Fiduciary funds?

A
  1. Custodial Funds
  2. Pension Trust Funds
  3. Investment Trust Funds
  4. Private Purpose Trust Funds
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26
Q
  1. Measurement Focus Basis of Accounting

What are the two types of measurement focus and two types of basis of accounting?

A

Measurement Focus

  1. Flow of current expendable financial resources
  2. Change in economic resources

Basis of Accounting

  1. Modified accrual basis
  2. Accrual basis
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27
Q
  1. Measurement Focus Basis of Accounting

Revenues are recognized when?

A

Measurable (can be reasonably estimated)
Available (legal right to collect - 60 days)
“Susceptible to accrual” (when both measurable and available prior to cash receipt)

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28
Q
  1. Measurement Focus Basis of Accounting
    What are the typical revenue recognition approaches for the below?
  2. Property Taxes
  3. Licenses & Permits
  4. Intergovernmental grants
  5. Charges for services
  6. Fines & forfeits
A
  1. Measurable and Available (Accrual)
  2. Not Measurable and not available (cash)
  3. Measurable only (When grant provisions are met)
  4. Measurable and Available (Accrual)
  5. Not Measurable and not available (cash)
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29
Q
  1. Measurement Focus Basis of Accounting

When are expenditures recognized?

A

When incurred or due to be paid from currently available resources in the governmental fund

Note: the term “expenses” is NOT used in modified accrual accounting

30
Q
  1. Measurement Focus Basis of Accounting

What does earned revenue denote?

A

Full accrual basis of accounting

31
Q
  1. Measurement Focus Basis of Accounting
    What is the treatment on Interest on general long-term debt?

What is the treatment on Interest on specific long-term debt?

What is the treatment on Interest on short-term debt?

A

Interest on General Long Term Debt
Not recorded until actually due (on the due date)

Interest on Specific Long Term Debt
Is accrued

Interest on Short Term Debt
Is accrued

32
Q
  1. Measurement Focus Basis of Accounting

Are there any distinctions made between capital expenditures and period expenditures?

33
Q
  1. Budgetary Accounting
    Define Appropriations (Credit balance)
    Define Estimated revenues (Debit balance)
    Define Estimated other financing sources (Debit balance) and uses (Credit balance)
A

Define Appropriations: authorized spending (planned expenditures)
Define Estimated revenues: forecast of financial resource inflows from revenues (e.g. taxes, licenses, fees, permits, intergovernmental tx)
Define Estimated other financing sources and uses: e.g. interfund transfers, proceeds from bonds

34
Q 
252. Budgetary Accounting
Do the following funds use budgetary accounting?
1. General fund
2. Special revenue fund
3. Debt service fund
4. Capital project funds
A
  1. Yes
  2. Yes
  3. Sometimes
  4. Not usually
35
Q 
252. Budgetary Accounting
What are the following normal balances?
1. Expenditures
2. Revenues
3. Other Financing Uses
4. Other Financing Sources
A
  1. Debit
  2. Credit
  3. Debit
  4. Credit
36
Q
  1. Budgetary Accounting
    Entry to Record the Budget—The entry to record the budget is made at the beginning of the year when the budget is adopted:
A

DR: Estimated Revenues
CR: Appropriations

37
Q
  1. Budgetary Accounting
    Entry to Record the Budget—The entry to record the budget is made at the beginning of the year when the budget is adopted:
A

DR: Estimated Revenues Control
CR: Appropriations

38
Q
  1. Encumbrance Accounting

Entry to Record a purchase order issued:

A

DR: Encumbrances
CR: Budgetary Fund Balance

39
Q
  1. Encumbrance Accounting

Entry to Record a purchase order filled:

A

DR: Budgetary Fund Balance
CR: Encumbrances

40
Q
  1. Encumbrance Accounting

Entry to Record a invoice for goods received:

A

DR: Expenditures
CR: Vouchers Payable

41
Q
  1. Encumbrance Accounting

What is the formula for the uncommitted appropriations, available balance, unencumbered balance, and free balace?

A

Appropriations - Encumbrances - Expenditures

42
Q
  1. Net position and fund balance

Funds where its governing board sets aside for some purpose “board designated” funds are what type?

A

Unrestricted net position

43
Q
  1. Net position and fund balance

What are the three net position categories?

A
  1. Net investment in capital assets
  2. Restricted (must come from external parties, constitutional provisions or enabling legislation, or held in trust)
  3. Unrestricted
44
Q
  1. Net position and fund balance

What are the five fund balance classifications?

A 
Nonspendable
Restricted
Committed
Assigned
Unassigned
45
Q
  1. Net position and fund balance

What do Nonspendable Fund Balance include?

A
  1. Amounts that can’t be spend because they are not in spendable form
  2. Legally or contractually required to be maintained intact (example: permanent endowment)
46
Q
  1. Net position and fund balance

What is assigned fund balance?

A

It is the residual amount in governmental funds other than the general fund

Intent is expressed by:

  1. The governing body itself
  2. A body or official authorized by the governing body to assign amounts
47
Q
  1. Net position and fund balance
    Which fund balance Category?
    Inventory at end of the fiscal year
A

Nonspendable

48
Q
  1. Net position and fund balance
    Which fund balance Category?
    “Rainy Day” funds set aside to cover budget shortfalls
A

Unassigned

49
Q
  1. Net position and fund balance
    Which fund balance Category?
    Tax levy authorized by enabling legislation
A

Restricted

50
Q
  1. Net position and fund balance
    Which fund balance Category?
    Negative residual amount
A

Unassigned

51
Q
  1. Net position and fund balance
    Which fund balance Category?
    Use of sales taxes constrained by city council resolution
52
Q
  1. Net position and fund balance
    Which fund balance Category?
    Use of city bus fees constrained by budget committee
53
Q
  1. Net position and fund balance
    Which fund balance Category?
    Encumbrances at YE that do not lapse
A

Committed or assigned

54
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Property tax revenues
55
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Fines and forfeits
56
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Licenses and permits
57
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Bond proceeds
A

Other Financing sources

58
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Transfer in from Debt Service Fund
A

Other Financing Sources

59
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Transfer out to Debt Service Fund
A

Other Financing Uses

60
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Grants
61
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Capital asset sale proceeds (equal to book value less than 10%)
A

Other Financing Sources

62
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    General government expendisures
A

Expenditures

63
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Highway and street expenditures
A

Expenditures

64
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Highway and street expenditures
A

Expenditures

65
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Public safety expenditures
A

Expenditures

66
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Health and sanitation expenditures
A

Expenditures

67
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Capital assets purchased
A

Expenditures

68
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Retirement of short term note
A

Expenditures

69
Q
  1. Governmental Funds
    Indicate what the proper section for this account to appear in the Statement of Revenues, Expenditures, and Changes in Fund Balance for the general fund.
    Interest payment on short term note
A

Expenditures

70
Q

A government has an investment derivative instrument that is considered effective. The fair value of this derivative instrument has increased by $100,000 in the current period. The change in fair value should be reported as:

a. Investment Revenue in the Statement of Activities.
b. Deferred Credit in the Statement of Net Position.
c. Holding Gain in Fund Balance.
d. Should not be reported.

A

Investment Revenue in the Statement of Activities

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