Recognitions in Gov accounting ch 8

Question 1

What assets and liabilities does modified accrual not generally recognize?

Answer 1

Long-term assets (capital assets) and depreciation, and long term liabilities.

Internal service funds are also added through worksheet journal entries

Question 2

What entries are always left out on the government-wide statements?

Answer 2

Fiduciary funds, because their resources are not available for general use. the governments merely have custody, not ownership, of fiduciary resources.

Question 3

What are the six things to consider when converting from fund based financial statements to government wide statements?

Answer 3

1. Capital assets
   - ——Recording capital assets, removing expenditures for capital outlays, recording depreciation, and converting sales of capital assets to the accrual basis.
2. long term debt
   - ——-Changing “proceeds of bonds” to debt liabilities, changing expenditures for debt service principal to reduction of liabilities, amortizing bond premiums, and adjusting for interest accruals.
3. Converting Revenue recognition to the accrual basis
4. Adjusting expenses to the accrual basis.
5. Adding internal service funds to governmental activities
6. Eliminating Inter-fund activities and balances within governmental activities.

Question 4

How do you incorporate internal service funds into the governmental fund category? Why weren’t they there in the first place?

Answer 4

Internal service funds are proprietary funds.

There are four steps to incorporate internal service funds into the governmental fund category starting from the governmental fund statements.

1. bring in the balance sheet accounts from the statement of net position from the internal service fund column of the proprietary funds statement of net assets.
2. Changes in net assets are reflected in the statement of Revenues, Expenses, and Changes in Fund Net Assets. It is important to identify the sources of those changes, including exchange transactions with external parties, exchange transactions with other government departments, and inter-fund transfers.
3. Eliminate the effect of exchange transactions between the internal service fund and other departments accounted for within the general fund.
4. entry is made to incorporate the internal service fund’s transfer in from the general fund in the amount of 596,000.

Question 5

What happens when an internal service fund has positive operating income?

Answer 5

The expenditures reported in the general fund overstate the true cost of running the government. There is likely greater taxes.

Question 6

What are the government wide financial statements

Answer 6

Statement of Net position
Statement of Activities

THESE ARE ON THE ACCRUAL BASIS

Question 7

What sections is net position divided into for proprietary funds and government wide statement of Net position?

Answer 7

1. Invested in Capital Assets, net of related debt
2. Restricted (must be externally imposed by creditors via debt covenants, grantors, contributors, or laws of other governments or imposed by law through constitutional provision or enabling legislation)
3. Unrestricted (plug figure)

Question 8

What are the proprietary fund financial statements?

Answer 8

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

Question 9

What are the fiduciary financial funds and statements statements?

Answer 9

Funds: Private-purpose trust, investment trust, pension trust, agency.

Statements:

1. Statement of Fiduciary Net Position
2. Statement of Changes in Net Fiduciary Net assets

Question 10

What are the governmental Funds and the fund basis financial statements for the government?

Answer 10

Funds: Permanent, Debt service, Capital project, Special Revenue, General

Fund-basis financial statements:

1. Balance sheet
2. Statement of Revenues, Expenditures, and changes in Fund Balances.

Required schedules (required supplementary information)

1. Schedule of funding progress (actuarial status of the plan from an ongoing long-term perspective)
2. Schedule of Employer Contribution (historical trend information about the annual ARC, or annual required contributions), and the actual contributions made by employers