Chapter 1 - General Introduction

Question 1

Accounting system must be on a ___ ___ basis, with a ____ ____.

Answer 1

Double Entry

General Ledger

Question 2

Each fund should have a complete ___ ____ group of accounts

Answer 2

Self-balancing

Question 3

Accounts must show a ____ financial position at all times and be able to demonstrate _____ to the public.

Answer 3

Current

Accountability

Question 4

An annual audit of accounts is required to be conducted by a ____ ____ ____.

Answer 4

Registered Municipal Accountant (RMA)

Question 5

Adherence to budgets is required by ____

Answer 5

Statute

Question 6

Accounts should be centralized under the direction of __ ___

Answer 6

One officer

Question 7

An independent fiscal and accounting entity with a self balancing set of accounts, segregated for the purpose of carrying out specific activities or attaining certain objectives

Answer 7

Fund

Question 8

List 5 most common funds:

Answer 8

1. Current Fund (Operating)
2. Utility Fund
3. Public Assistance
4. Capital Fund
5. Trust Funds (Dedicated, Revolving)

Question 9

A ___ is an accounting term that means the left side of an account

Answer 9

Debit

Question 10

A ___ is an accounting term that means the right side of an account

Answer 10

Credit

Question 11

For every debit entry made there must be a ________.

Answer 11

Corresponding credit entry

Question 12

List the 5 basic accounts that make up a general ledger:

Answer 12

1. Assets
2. Liabilities
3. Fund Balance (Surplus)
4. Expenditures (Appropriations)
5. Revenues

Question 13

What three things make up the Balance Sheet accounts?

Answer 13

Assets, Liabilities, Fund Balance

Question 14

___+___= ____

Answer 14

Assets + Liabilities = Fund Balance

Question 15

Assets, Liabilities, and Fund Balance are considered what type of accounts?

Answer 15

Permanent accounts

Question 16

Revenues and Expenses make up the ___ and ___ accounts

Answer 16

Profit and Loss

Question 17

Revenues and Expenses are considered what type of accounts?

Answer 17

Temporary Accounts

Question 18

In a cash basis account, when are revenues realized?

Answer 18

When received

Question 19

In a cash basis account, when are expenses realized?

Answer 19

When paid

Question 20

In an accrual basis account, when are revenues realized?

Answer 20

When earned or levied, regardless of when collected

Question 21

In an accrual basis account, when are expenditures realized?

Answer 21

When incurred or liability becomes known

Question 22

What do you do when receiving $200 in cash for Fees?

Answer 22

Debit cash, credit fees

Question 23

NJ municipalities utilizes what type of hybrid method of accounting?

Answer 23

Other Comprehensive Basis of Accounting (OCBOA), which is Modified Accrual

Question 24

Revenues are realized when ____ in a modified accrual basis of accounting

Answer 24

Collected

Question 25

Expenditures are recorded when ____ in a modified accrual basis of accounting

Answer 25

Incurred

Question 26

Since we do not realize revenue until it is received, all receivable balances are offset with a _________.

Answer 26

Reserve for receivables

Question 27

The extra entries created by CFOs when preparing the journal entries necessary to realize the current month's revenue are called ____ _____.

Answer 27

Collateral Entries

Question 28

Revenues = ____

Answer 28

Appropriations

Question 29

Give examples of Revenues -

Answer 29

``` Fund Balance Misc. Revenue Not Anticipated (MRNA) Misc. Revenue Anticipated Receipt from Delinquent Taxes Amount to be Raised by Taxation ```

Question 30

Give examples of Appropriations -

Answer 30

``` Operations Capital Improvements Debt Service Deferred Charges & Statutory Expenditures Reserve for Uncollected Taxes ```

Question 31

``` NJ Statutes Commonly Referenced: NSJA 40A:2 - NJSA 40A:4 - NJSA 40A:5 - NJSA 40A:11 - ```

Answer 31

NSJA 40A:2 - Bond Law NJSA 40A:4 - Budget Law NJSA 40A:5 - Fiscal Affairs Law NJSA 40A:11 - Local Public Contract Law

Question 32

Financial Document Date - Filing of Annual Debt Statement

Answer 32

Jan 31

Question 33

Financial Document Date - Filing of Annual Financial Statement

Answer 33

Jan 26 | Feb 10

Question 34

Financial Document Date - Introduction of Budget

Answer 34

Feb 10

Question 35

Financial Document Date - Adoption of Budget

Answer 35

March 20

Question 36

Who is responsible for preparing and filing the annual financial statement?

Answer 36

CMFO

Question 37

Who is responsible for preparing the Financial Statements presented in the Audit?

Answer 37

CMFO (not the auditor)

Question 38

What is the fine for failure to file the AFS on time?

Answer 38

$5 for each day of non filing

Question 39

Governmental units have the following common characteristics that are different than those of private business enterprises, such as:

Answer 39

1. Greater permanency 2. Ability to levy taxes 3. Greater borrowing power 4. Greater legal restrictions 5. Fund accounting 6. Lack of profit motive 7. Purpose of establishment

Question 40

Name these Technical Accounting Directives T.A.D. 85-1 T.A.D. 85-2 T.A.D. 85-3

Answer 40

1 - Encumbrance System 2 - Fixed Assets 3 - General Ledger

Question 41

The official permanent financial record of the local unit which summarizes all account balances

Answer 41

General Ledger

Question 42

A record used to accumulate the detailed information that supports and supplements the information contained in the general ledger

Answer 42

Subsidiary Ledger

Question 43

An account maintained in the general ledger that agrees with the detailed subsidiary accounts contained in the subsidiary ledger

Answer 43

Control Account

Question 44

An obligation of funds by a local unit arising from the issuance of a numerically controlled purchase order or contract. Such commitment of funds reduces the amount which remains available for spending

Answer 44

Encumbrance

Question 45

An account used to offset the recording of an encumbrance in a double entry accounting system. It is classified as a cash liability under NJ municipal accounting practices in order to reflect encumbrances which are still outstanding

Answer 45

Reserve for Encumbrances

Question 46

The amount paid for goods received or services rendered which is supported by a vendor's invoice and approved payment authorizations

Answer 46

Expenditure