Module 21: Governmental (State and Local) Accounting

Question 1

Enterprise Funds

Answer 1

Accounts for activities for which the government provides goods and services which are (1) rendered primarily to the general public, (2) financed substantially or entirely through user charges, and (3) intended to be self supporting. Enterprise funds are usually established for public utilities, airports, toll roads and bridges, transit systems, golf courses, solid waste landfills, etc.

Question 2

Agency Funds

Answer 2

Agency funds are used to account for activities where the government is acting as an agent for others. Agency funds have only assets and liabilities; no fund equity, revenue, or expenditure accounts are used. The GASB requires the use of agency funds for special assessments where the government is not liable in any way for the debt.

Question 3

Imposed non exchange transactions

Answer 3

Taxes and other assessments by governments that are not derived from underlying transactions. Examples include property taxes, special assessments, and fines and forfeits.

Question 4

Permanent Fund

Answer 4

Permanent funds report resources that are legally restricted in that the earnings, not principal, may be expended, and for purposes that benefit the government and its citizens.

Question 5

Derived Tax Revenue

Answer 5

Results from taxes assessed by governments on exchanged transactions. Examples include sales taxes, income taxes, and motor fuel taxes.

Question 6

Internal Service Funds

Answer 6

Are established to account for the provision of good and services by one department of the government to other departments within the government, generally on a cost-reimbursement basis. Internal services funds are usually established for he following types of activities: central garages, motor pools, central printing and duplicating, store departments, self-insurance, etc.

Question 7

Component Unit

Answer 7

A component unit is a legally separate organization for which the elected officials of a primary government are financially accountable.

Question 8

Governmental Funds

Answer 8

focus on the current financial resources raised and expended to carry out general government purposes. Governmental funds include the general, special revenue, debt service, capital projects, and permanent funds.

Question 9

General Fund

Answer 9

Accounts for all financial resources except those required to be accounted for in another fund. The general fund includes expenditures for general government, public safety, culture and recreation, public works, and engineering, and other activities not set aside in other funds.

Question 10

Special Revenue Funds

Answer 10

account for specific revenue sources that are legally restricted to expenditure for specific current purposes. An example would include a motor fuel tax limited by law to highway and street construction and repair.

Question 11

Debt Service Funds

Answer 11

account for the accumulation of resources for, and the payment of, general long-term debt principal and interest.

Question 12

Capital Projects Funds

Answer 12

account for financial resources to be used for the acquisition or construction of major capital facilities, other than those finances by proprietary funds or trust funds.

Question 13

GASB Concept Statements

Answer 13

Much like the FASB concepts statements, they set forth fundamentals on which governmental accounting and reporting standards will be based.

Question 14

Reserved for encumbrances

Answer 14

a budgetary account. When goods or services are ordered (purchase order approved), appropriations are encumbered, or restricted from use, in the amount of the estimated purchase cost.

Question 15

Internal Service Funds

Answer 15

provide services on a cost basis to other governmental funds (e.g. central data processing, motor pools, etc.). Account for the provision of goods and services by one department of the government to the other departments within the government, generally a cost reimbursement basis.

Question 16

Service Concession Arrangements

Answer 16

A service concession arrangement is an agreement between a government unit and an operator in which

a. the government unit conveys to the operator the right and obligation to provide public services through the operation of a facility (capital asset) in exchange for consideration;
b. the operator collects and is compensated by fees from third parities;
c. The government unit has the ability to modify or approve the services to be provide, to whom the operator is required to provide the services, and the price of the services; and
d. the government unit is entitled to significant residential interest in the facility at the end of the arrangement.

Question 17

Modified Accrual Basis of accounting

Answer 17

used by governmental funds, revenues are recognized in the period in which they are both measurable and available.

Question 18

Full Accrual Basis of accounting

Answer 18

used by proprietary funds, revenue is recognized when measurable and earned.