Reconciliation for Income Statement

Question 1

Where do you start from to reconcile the Income statement

Answer 1

You start from Change in Fund Balance
+ Add Capital Expenditures
- Subtract Depreciation
+ Add the Principle Payment Expenditures
- Subtract the Other Financing Sources
+ Add Net Revenues from Internal Service Fund
= Change in Net Position Governmental Activities

CPAS CAN RIDES or SIT

Question 2

in GWFS, What does the Statement of Activities (Income Statement) signifies?

Answer 2

We have been operating effectively

Question 3

in GWFS, What does the Statement of Net Position (Balance Sheet) signifies?

Answer 3

We are financially sound

Question 4

How do you treat Interfund Receivables and Payables?

Answer 4

They are not shown on GWFS.
Interfund Receivables
Interfund Payables
S(IT)

Question 5

100,000 was transferred from General Fund to Capital Project Fund, how would it appear on GWFS

Answer 5

It will not be shown, and would be eliminated on worksheet entries.

Question 6

100,000 was transferred from General Fund to Capital Project Fund, how would it appear on Fund-based Financial Statements?

Answer 6

It will be shown as Other Financing Sources - Transfer ins and Other Financing Uses - Transfer outs on Fund-based Financial Statements.

Question 7

100,000 was transferred as short-term financing for city bus line from General Fund to Enterprise Fund. On its GWFS how this transfer will be reported

Answer 7

As Transfer-in and Transfer-out. This transfer is between a governmental activity (general fund) and business-type activity (enterprise fund) and referred to as an interactivity transaction.

Question 8

On GWFS would “Yearly operating subsidies from the general fund to the enterprise fund” type of interfund transaction be included in amounts of reported for transfer?

Answer 8

Yes, Subsidies involve transferring money to cover the failure

Question 9

On GWFS would “Billings from an enterprise fund to a general fund for services rendered” type of interfund transaction be included in amounts of reported for transfer?

Answer 9

No. This revenue not the transfer.

Question 10

Sales Tax is a

Answer 10

Derived Revenue

Question 11

Income tax is a

Answer 11

Derived Revenue

Question 12

Gasoline Tax is a

Answer 12

Derived Revenue

Question 13

Property tax is a

Answer 13

Imposed Non-exchange Revenue

Question 14

Fines and Forfeits are

Answer 14

Imposed Non-exchange Revenue

Question 15

What is Derived Tax Revenue

Answer 15

It is Revenue where an underlying transaction or event is being taxed. For example Sales is taxed in Sales tax revenue.

Question 16

What is Deferred Inflows

Answer 16

Deferred Inflows would be where governmental entity receives cash in one period but earns that cash in a future period, such as grant money received this period, but can't be used until next period because of time restriction:
This period:
Cash   500
      Deferred Inflows 500
Next Period:
Deferred Inflows  500
      Grant Revenue 500

Question 17

What are unearned Revenue?

Answer 17

Unearned Revenue (and not Deferred Inflows) would result where the governmental entity receives a grant in one period but needs to meet ALL ELIGIBILITY REQUIREMENT (not just a time restriction) in order to earn the grant.
Cash 500
Unearned Revenue 500

Question 18

The city of Toronto was awarded 300 federal operating grant in year 18 for use in year 19, all eligibility requirement have been met. On November 1, year 18 300 was received by Toronto. The Journal Entry for the receipt of the grant funds on November 1 would include a ?

Answer 18

Credit to Deferred Inflows since all the eligibility requirement have been met and it is not a liability anymore. We do not credit Grant Revenue since it is received in year 18 FOR year 19.

Question 19

The city of Toronto was awarded 300 federal operating grant in year 18 for use in year 19, all eligibility requirement have NOT been met. On November 1, year 18 300 was received by Toronto. The Journal Entry for the receipt of the grant funds on November 1 would include a ?

Answer 19

Since key eligibility requirements have NOT been met, the 3– received in year 18 may have to be returned therefore not just a time restriction but eligibility requirement result in unearned revenue being recorded in Year 18 for 300 rather than deferred inflow. Deferred inflow would imply no Liability.

Question 20

City of Toronto was awarded a 300 federal operating grant in year year 18 for use in year 19. All eligibility requirements have been met. On November 1, year 18 200 was received by Toronto city. The journal entry for the receipt of the grant funds on November 1, year 18 would be?

Answer 20

Credit to Deferred Inflows for 200.

Question 21

What is service concession Arrangement?

Answer 21

Another situation where deferred inflows come up when a service concession arrangement. Payment by a private vendor to a government for excusive rights to operate the city theater and books acts and entertainment. Vendor pays upfront fee for the exclusive right. This upfront fee is Deferred Inflow to be recognize as revenue over a period of time. The asset remains on the GWFS even though the private vendor has the right to operate it.

Question 22

According to GASB, uses of Deferred Inflows and Deferred Outflows include?

Answer 22

1. Gain and Losses from changes in Fair Value on Derivative Instruments.
2. Upfront Fees received from Private Vendors in connection with Service Concession Arrangement involving multi-year contracts.
3. Grants for one year to be used in future year where all eligibility requirement have been met.
4. Losses on Debt refunding
5. Prepayment received for Property taxes in advance.
6. Use or time specific grant

Question 23

According to GASB, Deferred Outflows include?

Answer 23

1. Losses on Debt Refunding
2. Losses on Fair Value of
   Derivatives used in hedging

Question 24

According to GASB, Deferred Inflows include?

Answer 24

1. Gain on Fair Value Derivatives used in hedging.
2. Payments received from private vendor in a service concession arrangement.
3. Tax Receipts collected by the government in advance before they are legally due.
4. When the city government receive a grant but use the money only for specific purpose or in specific time period.

Question 25

If homeowners prepay their property taxes, and money is not legally due to the government yet, the prepayment used be considered as?

Answer 25

It will be Deferred Inflow, not the unearned Revenue since there is no liability to return the money.

Question 26

State pass recycling law and mandates that all restaurants install new dumpsters in parking lot, the state sends the city 1,000 grant to help the restaurants cover the costs. When the city received the money how would record it?

Answer 26

Deferred inflow for specific purpose and time as Government mandated Non-Exchange Transaction.

Question 27

On GWFS of net position, Deferred Outflows of resources appear after and before?

Answer 27

After Assets and Before Liabilities.
Deferred Outflows are like assets.
Deferred Inflows are like liabilities where you receive the money than as you earn it, you recognize as revenue.

Question 28

On GWFS of net position, Deferred Inflows of resources appear after and before?

Answer 28

After Liabilities and before Net Position.

Question 29

What is basic governmental equation?

Answer 29

Assets + Deferred Outflows 
               - 
Labilities + Deferred Inflows
                =
Net Position