GOV- Fund Accounting Concepts and applications Flashcards
Lake County received the following proceeds that are legally restricted to expenditure for specified purposes:
•Levies on affected property owners to install sidewalks: $500,000
•Gasoline taxes to finance road repairs: $900,000
What amount should be accounted for in Lake’s special revenue funds?
Special revenue funds are used to account for resources raised from revenues that are either restricted or committed for expenditure for specific general government purposes other than capital outlay or debt service.
Capital projects funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays.
The sidewalks are capital in nature and would not be part of a special revenue fund but of a capital fund, whereas the road repairs are not capital but maintenance.
A capital projects fund for a new city courthouse recorded a receivable of $300,000 for a state grant for which all eligibility requirements have been met and a $450,000 transfer from the general fund. What amount should be reported as revenue by the capital projects fund?
Transfers are other financing sources and are never recognized as revenues. If the receivable is associated with an unrestricted grant or with a restricted grant for which all eligibility requirements have been met, the state grant should be reported as revenues.
How is bad debt expense treated on the GOV funds
It is applied against revenue
The revenues control account of a governmental unit is increased when:
A.
the encumbrance account is decreased.
B.
appropriations are recorded.
C.
property taxes are recorded.
D.
the budget is recorded.
Budget Entry is:
DR Revenue
CR Appropriations
Property tax rev is
DR RECEIVABLE
CR REVENUE
Budget entry lowers revenue and property tax billings increase revenue
Cal City maintains several major fund types. The following were among Cal’s cash:
•Unrestricted state grant: $1,000,000
•Interest on bank accounts held for employees’ pension plan: $200,000
What amount of these cash receipts should be accounted for in Cal’s general fund?
The general fund is the primary fund in governmental accounting and reports items that do not meet specific restrictions for the other type of funds. The unrestricted state grant of $1,000,000 in cash would meet the criteria for the general fund.
Fiduciary funds are used to report assets and liabilities held in trust for the benefit of another. A common example of a fiduciary fund would be employees’ pensions, thereby eliminating the bank account interest of $200,000 from being accounted for in the general fund. As a result, $1,000,000 is the proper answer.
What is the General fund use for?
The general fund is defined as the fund that should be used to account for all financial resources except those that are required to be accounted for in another fund. While at first this may seem like the General Fund is “residual” in nature, actually, as its name implies, the General Fund typically is the dominant fund within a city’s financial structure. 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.
What is the capital projects fund used for?
(In contrast, major construction activities would be accounted for in Capital Projects Funds,
What is the debt service fund used for?
payment of interest and principal on tax-supported debt would normally be accounted for in a Debt Service Fund,
What is the special revenue fund used for?
and revenues from earmarked sources to finance designated activities would be accounted for in a Special Revenue Fund.)
Which of the following does not affect an internal service fund’s net income?
A.
Depreciation expense on its fixed assets
B.
Operating transfer sources
C.
Residual equity transfers
D.
Temporary transfers
Internal service funds are used to account for in-house business enterprise activities (i.e., to account for the financing of goods or services provided by one government department or agency to other departments or agencies of the government and perhaps to other governments also) on a cost-reimbursement basis. By the very nature of “temporary,” the implication is to undo the transfer at some point in time, and it should not impact the net income of the fund.
In which of the following funds should the debt service transactions of a special assessment issue for which the government is not obligated in any manner be reported?
A.
Agency fund
B.
Trust fund
C.
Internal service fund
D.
General fund
GASB S40.119 states: “The debt service transactions of a special assessment [debt] issue for which the government is not obligated in any manner should be reported in an agency fund…rather than [in] a debt service fund, to reflect the fact the government’s duties are limited to acting as an agent for the assessed property owners and the bondholders.”
Financing for the renovation of Fir City’s municipal park, begun and completed during 20X1, came from the following sources:
Grant from state government $400,000
Proceeds from general obligation
bond issue 500,000
Transfer from Fir’s general fund 100,000
In its 20X1 capital projects fund operating statement, Fir should report these amounts as:
The financing of the renovation of Fir City’s municipal park is accounted for in the capital projects fund of the city. The resources from the state grant would be recorded as revenue. However, the proceeds from the bond issue and the interfund transfer would be classified as “other financing sources.” If the grant funds had not yet been used according to the grant guidelines, they would be recognized as deferred revenues, a liability, but not as other financing sources. Revenues are defined as inflows of financial resources from other than issuance of debt, interfund reimbursement and interfund transfers.
