Government Accounting

Question 1

What is the PRIMARY objective of Gov’t Acct?

Answer 1

Wide range of Useful and Beneficial information:

• Costs of services provided
• Sufficiency of revenues to cover costs
• Financial position of entity

Question 2

What are the 3 MAJOR TYPE of funds in Gov’t Acct?

Answer 2

• Governmental
• Proprietary
• Fiduciary

Question 3

Which 2 accounting BASES are used in Gov’t Acct?

Answer 3

• Accrual Basis - current economic resources focus (revenues recognized when earned)
• Modified Accrual Basis - current financial resources focus (revenues recognized when available & measurable)

Question 4

What is a BUDGET APPROPRIATION?

Answer 4

The highest amount allowed for a particular expenditure under a budget.

Question 5

What is an ENCUMBRANCE?

Answer 5

Records purchase & reserves it for the encumbrance

Question 6

What is the OPENING budgetary entry?

Answer 6

Dr. Estimated Revenues Control
Cr. Appropriations Control
Plug whichever side to balance:
Dr./Cr Budgetary Fund Balance

Question 7

What is the CLOSING budgetary entry?

Answer 7

Dr. Appropriations Control
Cr. Estimated Revenues Control
Plug whichever side to balance:
Dr/Cr Budgetary Fund Balance

Question 8

What are the types of governmental FUNDS

Answer 8

General Fund 
Special Revenue Fund 
Permanent Fund 
Capital Projects Fund 
Debt Service Fund

Question 9

What is a General Fund?

Answer 9

The operating fund of the gov’t unit which:
Records significant revenues: taxes, tickets, fines, licenses and
Records significant expenditures: police, education, fire dept.

Question 10

What is a Special Revenue Fund

Answer 10

Restricted for a specific purpose such as street repair

Question 11

What is a Permanent Fund?

Answer 11

Legally restricted fund where only earnings can be used to fund programs. Principal remains intact

Question 12

What is a Capital Projects Fund?

Answer 12

Used to acquire and build facilities

Question 13

What is a Debt Service Fund?

Answer 13

Handles repayment of long-term debt and related interest.

Question 14

Which fund statements are issued in Gov’t Acct?

Answer 14

Balance Sheet
Statement of Revenues
Expenditures
Changes in Fund Balance

Question 15

When is Revenue recorded in Gov’t Acct?

Answer 15

When it is BOTH available & measurable; regardless of when it is spent

Question 16

What is Derived Tax Revenue?

Answer 16

Money collected from people doing things: sales tax (buying car) or income tax (people working)

Question 17

What is Imposed Tax Revenue?

Answer 17

Tax assessed just because things exist. Ex: property tax on a car; real estate tax. Recorded as a revenue when BUDGETED. Estimated uncollectible property tax revenues don’t offset revenues, so DON’T NET THEM.

Question 18

What are the TYPES of Proprietary Funds?

Answer 18

Internal Service Funds - to serve the needs of other gov’t unit (motor pool)
Enterprise Funds - provide goods or services to external users (post office)

Question 19

What are the Fund Balance TYPES?

Answer 19

Restricted - restricted by Contributor
Committed - restricted by Gov’t Assigned (intended for a purpose)
Unassigned - available to be spent
Non-Spendable - not in a spendable state

Question 20

What are the TYPES of Fiduciary Funds?

Answer 20

Agency Fund - gov’t acts as an agent or custodian
Pension Trust Fund - gov’t is a trustee for a pension plan
Investment Trust Fund - gov’t is a trustee over a series of investment
Private Purpose Trust - trust that benefits various individuals & entities

Question 21

How are Assets & Liabilities presented on the Statement of Net Position?

Answer 21

Assets: Current & Non Current
Deferred Outflows or Resources Liabilities: Current & Non Current
Deferred Inflows of Resources

Question 22

How are Capital Assets shown on a gov’t Statement of Net Assets?

Answer 22

As Net of Debt. Asset Cost - Acc. Dep. - Asset Liabilities = Net Assets

Question 23

How is the infrastructure reported on a gov’t Statement of Net Assets?

Answer 23

Modified approach: Reported at cost; no accumulated depreciation.

Question 24

How is a Statement of Net Assets divided?

Answer 24

Into Governmental Activities & Business Activities

Question 25

How are activities presented in a Statement of Activities?

Answer 25

Divided by Function: If the activities of a component are distinguishable from the rest of the gov’t entity, then discreet presentation is required. If the activities cannot be identified & separated - then blended presentation is warranted.
Component units are reported in the Entity-Wide Financial Statements and NOT the Fund Financial Statements.

Question 26

What is GASB

Answer 26

The authority for establishing standards within the state & local gov’t.

Question 27

What is FASB

Answer 27

The authority for establishing standards for non-gov’t and NFP

Question 28

What is GASB Statement 55 about?

Answer 28

The hierarchy of sources for GAAP for state & local gov’t.

Question 29

What is the hierarchy of GASB Statement 55?

Answer 29

1. Officially established accounting principles - GASB Statements & Interpretations.
2. GASB Technical Bulletins & AICPA Industry Audit & Accounting Guides & Statement of Position clears by the GASB.
3. AICPA Practice Bulletins cleared by the GASB and consensus positions of groups of accountants organized by GASB.
4. Implementation guides published by the GASB staff & practices that are widely recognized & prevalent.

Question 30

3 Primary users of external gov’t financial reports are?

Answer 30

1. Citizens
2. Legislative & oversight bodies
3. Investors/Creditors

Question 31

Gov’t financial reports are primarily used to?

Answer 31

1. Compare actuals to budgets
2. assess financial conditions & results of operation
3. assist in determining compliance w/financial laws
4. assist in evaluating effectiveness & efficiency

Question 32

Reports should possess these characteristics (module 9)

Answer 32

1. Understandability
2. Reliability
3. Relevance
4. Timeliness
5. Consistency
6. Comparability

Question 33

What is SEA?

Answer 33

Service Efforts & Accomplishments Reporting