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0

GASB Qualitative characteristics

1 understandability
2 reliability
3 relevance
4 timeliness
5 consistency
6 comparability

1

GASB Qualitative characteristic:

Understandability

Information can be interpreted by the user

2

GASB Qualitative characteristic:

Reliability

Information is reasonably free from error or bias

3

GASB Qualitative characteristic:

Relevance

Information has capacity to make a difference in a decision
By a user

4

GASB Qualitative characteristic:

Timeliness

Information is available before it loses its capacity to affect
The decision

5

GASB Qualitative characteristic:

Consistency

Information is consistently presented over time

6

GASB Qualitative characteristic:

Comparability

Users can identify similarities and differences between 2 entities

7

GASB elements of statement of financial position 5

1 assets
2 liabilities
3 deferred outflow of resources
4 deferred inflow of resources
5 net position

8

2 elements of GASB resource flow statements

1 Outflow of resources

2 inflow of resources

9

GASB definition of element:

Assets

Resources with present service capacity that the government
Presently controls

10

GASB definition of element:

Liabilities

Present obligations to sacrifice resources that the government
Has little or no discretion to avoid

11

GASB definition of element:

Deferred outflow of resources

Consumption of net assets by government that is applicable
To future reporting period

Similar to an asset (prepaid asset)

12

GASB definition of element:

Deferred inflow of resources

Acquisition of net assets by the government that is applicable
To a future reporting period

Similar to a liability (unearned revenue)

13

GASB definition of element:

Net position

Residual of all other elements presented in a statement of
Financial position

14

GASB definition of element:

Outflow of resources

Consumption of net assets by the government that is applicable
To the reporting period

15

GASB definition of element:

Inflow of resources

Acquisition of net assets by the government that is applicable to
The reporting period

16

What is the required supplementary GASB information in compliance with GAAP? (Minimum required info other than financial statements) 3

1 management's discussion and analysis (MD&A)

2 notes to financial statements

3 required supplementary info (RSI)

17

Which government statements use accrual accounting and which use modified accrual accounting?

Accrual: government wide, proprietary funds, fiduciary funds

Modified accrual: fund financial statements (governmental funds)

18

What are the required financial statements for government wide financial statements?

1 statement of net position

2 statement of activities

19

What are the required financial statements for fund financial statements (AKA Governmental funds)?

1 balance sheet

2 statement of revenues, expenditures and changes in fund
balances

20

What are the required financial statements for proprietary funds?

1 statement of net positon

2 statement of revenues, expenses and changes in fund net position

3 statement of cashflows

21

What are the required financial statements for fiduciary funds?

1 statement of fiduciary net position

2 statement of changes in fiduciary net position

22

3 Examples of deferred outflows of resources

1 grant expenditures paid in advance of meeting timing requirements

2 deferred amounts from refunding of debt (debits)

3 cost to acquire rights to future revenue

23

2 examples of deferred outflows of resources

1 deferred loss from sale and leaseback

2 negative fair value of government hedge of a future transaction

24

3 examples of items that continue to be reported as assets

1 prepayments

2 net pension plan position in excess of employer's total liability

3 capitalized incurred costs for regulated activities

25

3 examples of items reported as current outflows

1 debt issuance costs

2 initial direct cost incurred by lessor for operating leases

3 fees related to purchased loans

26

3 examples of deferred inflows of resources

1 grant amounts received in advance of meeting timing requirements

2 deferred amounts from refunding debt (credits)

3 proceeds from sale of future revenues

27

3 examples of deferred inflows of resources

1 deferred gain from sale leaseback transaction

2 positive fair value of government hedge of future transaction

3 advance of revenue from imposed nonexchange transactions

28

5 examples of items that continue to be reported as liabilities

1 advances of derived tax revenues
2 grant amounts received in advance of meeting requirements
Other than timing
3 receipt of prepayment
4 loan commitment fees
5 refunds imposed by a regulator

29

3 examples of items reported as current inflows

1 loan origination fees related to lending activities

2 commitment fees charged to make a loan

3 loan origination fees for mortgage loans held for investment

30

Single employer defined benefit plan:

The state or local government should report in the statement of net position...

A net pension liability

31

Single employer defined benefit plan:

Net pension liability equation

Net pension liability =

(Actuarial present value of projected benefit pmts attributable to
Past employee service) - (pension plan's fiduciary net position)

32

Name the 5 types of governmental funds

1 general
2 special revenue
3 debt service
4 capital projects
5 permanent

33

Name the 2 types of proprietary funds

1 internal service

2 enterprise

34

Name the 4 types of fiduciary funds

1 agency
2 pension and other employee benefit trust funds
3 investment trust funds
4 private purpose trust funds

35

Stabilization fund what is it also called?

Rainy day fund

Disclose info about when it can be used, and balance,
Legal authority, minimum amount, when you have to increase them

36

Stabilization fund 5 disclosures

1 Disclose info about when it can be used
2 balance
3 Legal authority
4 minimum amount
5 when you have to increase the fund

37

4 categories of GASB nonexchange transactions

1 derived tax revenues
2 imposed nonexchange revenues
3 government mandated non exchange transactions
4 voluntary nonexchange transactions

38

General Fund Account Structure:

Real Accounts 5

1 current assets (dr.)
2 current liabilities (cr.)
3 fund balance (fund equity) (cr.)
4 deferred outflow of resources
5 deferred inflow of resources

39

2 types of fund balance AKA Fund equity

Give 2 examples for first

1 reserved (encumbrances, inventory)

2 unreserved

40

General Fund Account Structure:

4 nominal accounts

1 revenues (control account) (cr.)
2 other financing sources (control account) (cr.)
3 expenditures (control account) (dr.)
4 other financing uses (control account) (dr.)

41

What are 3 examples of other financing sources?

1 transfers in

2 bond issue proceeds

3 sale of capital assets

42

What is an example of other financing uses?

Transfers out

43

General Fund Account Structure:

6 budgetary accounts

1 estimated revenues (control account) (dr.)
2 estimated other financing sources (control account) (dr.)
3 appropriations (control account) (cr.)
4 encumbrances (control account) (dr.)
5 estimated other financing uses (control account) (cr.)
6 budgetary fund balance (dr or cr.)

44

Adoption of budget where estimated revenues exceed appropriations and estimated other financing uses by $10,000

What is the journal entry for the following transaction? What fund is it recorded in?

General fund

Estimated revenues. Xxx
Appropriations. Xxx
Estimated other financing uses. Xxx
Budgetary fund balance. Xxx

45

Transfers to debt service fund (for general long term debt payments)

What is the journal entry for this transaction? What fund is it recorded in?

General fund

Other financing uses- transfers out. Xxx
Due to debt service fund. Xxx

46

Transfers out is not an expenditure account but is an...

Transfers in is an...

Other financing use

Other financing source

47

Property tax levy is recorded as revenues, under the modified accrual basis, in the year for which the tax levy is enacted by the governmental unit, if collections will be in time to finance expenditures of the current period. The tax bills amount to $250,000 and $20,000 is estimated to be uncollectible.

What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in?

General fund

Property taxes receivable - current. Xxx
Allowance for uncollectible taxes - current. Xxx
Revenues. Xxx

48

Revenues from fines, licenses and permits

What is the journal entry to record this transaction? What fund is it recorded in?

General fund

Cash. Xxx
Revenues (detail posted). Xxx

49

The state owes the city $25,000 for the city's share of the state sales tax. The amount has not been received at year end, but is expected in time to pay liabilities as of the current fiscal year.

What is the journal entry to record this transaction? Record $ amounts.
What fund is it recorded in?

General fund

Sales tax receivable. 25,000
Revenues (detail posted). 25,000

50

Incurred liabilities for salaries, repairs, utilities, rent, and other regularly occurring items for $200,000.

What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?

General fund

Expenditures (detail posted). 200,000
Vouchers payable. 200,000

51

Ordered one police car; estimated cost is $17,000. One month later, ordered second police car; estimated cost is $16,500.

What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?

General fund

Encumbrances. 17,000
Reserved for encumbrances. 17,000

Encumbrances. 16,500
Reserved for encumbrances. 16,500

52

Police car ordered for $17,000 was received; actual cost is $16,800.

What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?

General fund

Reserved for encumbrances. 17,000
Encumbrances. 17,000

Expenditures. 16,800
Vouchers Payable. 16,800

53

Property tax collections amounted to $233,000, payments to other debt funds amounted to $50,000, payments to vouchers where $190,000. Allowance for uncollectible taxes-current is overstated by $3,000.

What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?

General fund

Cash. 233,000
Property Taxes Receivable- current. 233,000
Due to Debt Service Fund. 50,000
Cash. 50,000
Vouchers Payable. 190,000
Cash. 190,000
Allowance for Uncollectible taxes-current. 3,000
Revenues. 3,000

54

Recorded $5,000 inventory of materials and supplies.

What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?

General fund

Materials and supplies inventory. 5,000
Reserved for inventory of materials and supplies 5,000

55

Allowance for uncollectible property taxes is reduced from $17,000 to $10,000, and reclassified uncollected property taxes to delinquent accounts.

What is the journal entry to record this transaction? Use $ amounts.
What fund is it recorded in?

General fund

Allowance for uncollectible taxes- current. 7,000
Revenues. 7,000
Property taxes receivable- delinquent. 17,000
Allowance for uncollectible taxes- current. 10,000
Allowance for uncollectible taxes- delinquent. 10,000
Property Taxes Receivable- current. 17,000

56

Interest and penalty charges accrue on unpaid taxes for the date they become delinquent.

What is the journal entry to record this transaction? What fund is it recorded in?

General fund

Interest and penalties receivable on delinquent taxes. Xxx
Allowance for uncollectible interest and penalties. Xxx
Revenues. Xxx

57

What closing entry reverses the entry to record the budget? What fund is it recorded in?

General fund

Budgetary fund balance. Xxx
Appropriations. Xxx
Estimated other financing uses. Xxx
Estimated revenues. Xxx

58

What closing entry would indicate that the unreserved fund balance increased by $21,700 since actual revenues exceeded expenditures, encumbrances and other financing uses.

Only use dollar amount for account given. What fund is it recorded in?

General Fund

Revenues. Xxx
Expenditures. Xxx
Encumbrances. Xxx
Other financing uses- transfers out. Xxx
Fund balance- unreserved. 21,700

59

A government receives a grant award for $30,000, no entry is recorded until...

The expenditure takes place

60

On November 1, 2012, a government received a grant award of $30,000. Assume the expenditure takes place on March 1st, 2013 and the cash is received on April 1st 2013.

What is the journal entry to record this transaction? Record $ amounts for each date. What fund is it recorded in?

Special revenue fund

3/1/13
Expenditures. 30,000
Cash. 30,000
Grants Receivable. 30,000
Revenues-gains. 30,000

4/1/13
Cash. 30,000
Grants receivable. 30,000

61

City council approved the construction of a new city hall at an estimated cost of $10,000,000. General obligation long term serial bonds were authorized for issuance in the face amount of $10,000,000.

What is the journal entry to record this transaction?

No entry recorded

62

City council has already approved the construction of a new city hall at an estimated cost of $10,000,000. $10,000,000 in 8% general obligation serial bonds were issued for $10,100,000. Assume the premium is transferred to the debt service fund for eventual payment of debt.

What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in?

Capital projects fund

Cash. 10,100,000
Other financing sources-proceeds of bonds. 10,100,000
Other financing uses-transfers out. 100,000
Cash. 100,000

63

How do you recorded the transfer of the $100,000 cash premium to the debt service fund?

Debt service fund
Cash. 100,000
Other financing sources-transfers in. 100,000

64

The $10,000,000 proceeds (to build city hall) are temporarily invested in a certificate of deposit and earn $50,000. The earnings are authorized to be sent to the debt service fund for payment of bonds.

Use $ amounts.
Record the entries for the capital projects fund and debt service fund

Capital projects fund
Investment in CD. 10,000,000
Cash. 10,000,000
Cash. 50,000
Revenues interest. 50,000

Other financing uses- transfers out. 50,000
Cash. 50,000

Debt Service Fund
Cash. 50,000
Other financing sources- transfers in. 50,000

65

The lowest bid accepted from a general contractor to build city hall is $9,800,000.

What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in?

Capital projects fund
Encumbrances. 9,800,000
Reserved for encumbrances. 9,800,000

66

$2,000,000 of temporary investments are liquidated.

What is the journal entry to record this transaction? Use $ amounts.

Cash. 2,000,000
Investment in CD. 2,000,000

67

Progress billings due to the general contractor for work performed amount to $2,000,000. The contract allows 10% of the billings to be retained until final inspection and approval of the building. The contractor was paid $1,800,000.

What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in.

Capital projects fund
Reserved for encumbrances. 2,000,000
Encumbrances. 2,000,000
Expenditures-Construction. 2,000,000
Contracts Payable. 2,000,000
Contracts Payable. 2,000,000
Cash. 1,800,000
Contracts Payable-Retained Percentage. 200,000

68

Interest accrued on the CD was $40,000. This was authorized to be sent to the debt service fund.

What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in. (Record for capital projects and debt service fund)

Capital projects fund
Interest Receivable. 40,000
Revenues- interest. 40,000

Other financing uses- transfers out. 40,000
Due to other funds. 40,000

Debt service fund
Due from other funds. 40,000
Other financing sources- transfers in. 40,000

69

Record the closing entries for the capital projects fund for revenues interest of $90,000 and other financing sources-proceeds of bonds $10,100,000. Use dollar amounts.

Revenues- interest. 90,000
Other financing sources- proceeds of bonds. 10,100,000
Fund balance-unreserved. 10,190,000

70

Record the closing entry in the capital projects fund of encumbrances $7,800,000 and expenditures on construction of $2,000,000.

Fund balance unreserved. 9,800,000
Encumbrances. 7,800,000
Expenditures- construction. 2,000,000

71

Record the closing entries in the capital projects fund for other financing uses- transfers out for $190,000.

Fund balance- unreserved. 190,000
Other financing uses- transfers out. 190,000

72

At the beginning of the second year in the capital projects fund, what entry would be made to reestablish the encumbrances balance?

Encumbrances. 7,800,000
Fund balance- unreserved. 7,800,000

73

A donor gives $500,000 to a city with instructions that the principal be invested permanently and that the income be used to provide scholarships for low-income children to attend a private, not for profit day care program.

What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in.

Private Purpose trust fund
Cash. 500,000
Additions-non expendable donation. 500,000
Investments. 500,000
Cash. 500,000

74

In a private purpose trust fund what are the journal entries to receive and expend $30,000 in investment income for awarding scholarships?

Cash. 30,000
Additions- investment income. 30,000
Deductions- awarding of scholarships. 30,000
Cash. 30,000

75

In the debt service fund, how do you record the journal entry for semi annual interest paid of $400,000 on December 31

What is the journal entry to record this transaction? Use $ amounts.

Expenditures- interest. 400,000
Matured interest payable. 400,000
Matured interest payable. 400,000
Cash. 400,000

76

On June 30, the first $250,000 principal payment became due and $200,000 was made.

What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in.

Debt service fund
Expenditures-principal. 250,000
Matured bonds payable. 250,000
Matured bonds payable. 200,000
Cash. 200,000

77

What are the closing entries for the debt service fund when revenues- property taxes is $850,000, expenditures- interest is $800,000, other financing sources- transfers in is $240,000 and expenditures principal is $250,000?

Revenues- property taxes. 850,000
Other financing sources-transfers in. 240,000
Expenditures- interest. 800,000
Expenditures- principal. 250,000
Fund balance- reserved for debt service. 40,000

78

A local citizen contributed $500,000 with the stipulation that the funds be invested and held; income is to be used for the purpose of maintaining the city cemetery. On January 2, the cash is received and invested.

What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in.

Permanent Fund
Cash. 500,000
Revenues- additions to permanent endowments. 500,000
Investments. 500,000
Cash. 500,000

79

A local citizen contributed $500,000 with the stipulation that the funds be invested and held; income is to be used for the purpose of maintaining the city cemetery. During 2012, $30,000 was earned on the investment and $25,000 was expended.

What is the journal entry to record this transaction? Use $ amounts. What fund is it recorded in.

Permanent fund
Cash (or interest receivable). 30,000
Revenues-investment income. 30,000
Expenditures. 25,000
Cash (or vouchers payable). 25,000

80

When proprietary funds are initially established, a contribution or advance is usually received from the general fund. A contribution is a transfer and would be recorded by the internal service fund or enterprise fund as follows

Cash. Xxx
Transfer from the general fund. Xxx

81

An advance from the general fund is a long term loan and would be recorded by an internal service fund or enterprise fund as follows

Cash. Xxx
Advance from general fund. Xxx

82

Conversion from fund financial statements to government wide financial statements:

What is the worksheet adjustment entry that needs to be made to reduce capital outlay expenditures to 0 and capitalize the costs in appropriate capital asset accounts, these capital assets will increase the net position of governmental activities by $10,000,000?

Fixed assets (land, buildings, equipment). 10,000,000
Expenditures. 10,000,000

83

Conversion from fund financial statements to government wide financial statements:

The worksheet entry to convert the sale of bonds from governmental fund accounting to government wide statements, assuming a sale of $5,000,000 bods at par?

Other financing sources-proceeds of bonds. 5,000,000
Bonds Payable. 5,000,000

84

Conversion from fund financial statements to government wide financial statements:

Assuming that a payment of $100,000 was made for the retirement of bond principal, then the worksheet entry to convert the $100,000 principal payment from governmental fund accounting to government wide statements is?

Bonds payable. 100,000
Expenditures- bond principal retirement. 100,000

85

Conversion from fund financial statements to government wide financial statements:

How do you recognize $200,000 more revenue from property taxes?

Deferred inflow-property taxes. 200,000
Revenues-taxes. 200,000