State and Local Government Flashcards
What are the key accounting systems and measurement focuses used by different state and local government funds?
How are government entities’ funds categorized and what basis of accounting do they use?
Which funds fall under Fiduciary Funds?
Which funds fall under Proprietary Funds?
Which funds fall under Governmental Funds?
Which governmental funds record depreciation?
Only Proprietary Funds (Enterprise and Internal Service Funds) and Fiduciary Funds record depreciation, as they use the accrual basis of accounting.
Governmental Funds (like the General Fund) do not record depreciation because they use the modified accrual basis.
What is the basic criterion for determining a governmental unit’s inclusion in a financial reporting entity
The basic criterion is financial accountability. A government is financially accountable if it controls the entity’s finances or is responsible for its obligations. If a government is financially accountable, the entity must be included in the government’s financial reports
Why do governmental organizations use fund accounting
Governmental organizations use fund accounting due to:
Financial control: To ensure proper management and allocation of resources.
Legal restrictions: To comply with specific laws governing how funds are spent.
Both financial control and legal restrictions lead to the use of fund accounting in governmental entities.
Do encumbrances appear in proprietary and fiduciary funds?
No, encumbrances do not appear in proprietary or fiduciary funds.
Encumbrances are used in governmental funds (such as the General Fund, Special Revenue Fund, and Capital Projects Fund) to ensure budgetary control by reserving funds for future expenditures.
What is the Modified Accrual basis of accounting and when is revenue recognized?
Modified Accrual focuses on current financial resources. It is used by governmental funds.
Revenue is recognized when it is both measurable and available (typically collectible within 60 days after the fiscal year-end).
Expenditures are recognized when liabilities are incurred, except for long-term obligations, which are recognized when due.
What are Governmental Funds vs. Proprietary/Fiduciary Funds Treatment of Transfers
What is the orientation of accounting for each type of governmental fund?
What does full accrual accounting in GASB 34 help users assess?
