State and Local Governments Flashcards
What is Encumbrance accounting?
It is a feature of the accounting practices used by municipalities for governmental funds. Accounting for governmental funds is done on the modified accrual basis. Annual budgets of estimated inflows and estimated outflows are prepared for the general fund and most other governmental funds.
If estimated inflows exceed estimated outflows?
Budgetary fund balance is credited for the difference. (Note: This budgetary entry is reversed at the end of the period as the first closing entry.)
What are the three standard sections of a governmental annual comprehensive financial report?
Introductory, Financial, and Statistical.
What are judgment outstanding?
Judgments are only included in the governmental fund financial statements when due and payable.
By definition, what is a fund:
it is composed of a self-balancing set of accounts.
A fund can be one of three categories: (1) governmental, (2) proprietary, or (3) fiduciary.
Landfills using proprietary fund accounting?
A portion of the estimated total current cost of landfill closure and postclosure care should be recognized as an expense and liability in each period that the landfill accepts solid waste.
What is the general fund?
the fund that should be used to account for all financial resources except those that are required to be accounted for in another fund.
Where are major construction activities accounted for?
in Capital Projects Funds
Where are principal on tax-supported debt normally accounted for?
in a Debt Service Fund
where are revenues from earmarked sources to finance designated activities accounted for?
in a Special Revenue Fund
A municipality that uses modified accrual and encumbrance accounting would use the general fund to account for?
Property tax revenues.
The General Fund is normally used to account for many of a city’s general government activities. In most jurisdictions, property tax revenues are considered “general revenues” and so should be accounted for in the General Fund.
Budgetary comparisons
they must be presented on the same basis of accounting as the adopted budget.
GASB standards
Only recognize two categories (A and B) of GAAP for governmental entities, with Category A being more authoritative than Category B. GASB Statements are in Category A of the governmental GAAP hierarchy.
Qualifying expenditures
If the amount of qualifying expenditures exceeded the amount of the advance, there would be no deferred revenues reported at year-end.
Special-purpose governments engaged only in business-type activities are required
to report by presenting the financial statements required for proprietary funds (enterprise funds and internal service funds) including notes, MD&A, and RSI.
