F6 - NFP Acct & Govt Acct

Question 1

DUAL OBJECTIVES

Answer 1

Operational Accountability - for a govt as a whole
Fiscal Accountability - for specific funding

Question 2

Operational Accountability

Answer 2

FS - timeliness, consistency, comparability
Govt Wide FS - FULL ACCRUAL

Question 3

Fiscal Accountability

Answer 3

Govt shows that they used the money in the current period for the purpose that they were supposed to use the money for
AND
The Resources were not diverted to other needs

Fund based financial stmts - Modified Accrual Accounting

Question 4

What kind of governmental entities?

Use of GASB - Governmental Accounting Standards Board

Answer 4

State and Local Governments

Question 5

For Profits and NFP

Answer 5

Use FASB

Question 6

When a Govt Entity gets audited

Answer 6

Then the use of GAO - Govt Auditing Standards AKA The Yellow Book Standards

Question 7

All funds of a State or Local Govt has 3 separate Classifications

Answer 7

Proprietary
Fiduciary
Basic Govt Fund

Question 8

Proprietary Fund

These Funds are the only ones required to report a STMT of Cash Flows - Direct Method Only

Answer 8

Business
Water Utility Full Accrual Acct

Enterprise Fund - Svc open to public - actual profit motive

Internal Service Fund - Svc NOT available to General Public - for profit BUT only Govt Agencies can benefit

Question 9

Fiduciary Funds

Answer 9

Govt Pension Funds - Full Accrual

Safeguard Assets that belong to a 3rd party

Excluded from Govt Wide FS
Govt is NOT the Owner of these Funds

Additions - Employer Contributions & Employee Contribution along with income
Deductions - Refunded employee contributions, payout to an employee

Private Purpose Trust Funds - unclaimed prop

Investment Trust Fund -

Custodial Fund- Asset custody of prop collecting, holding, and disbursing monies ex TAX or Child Support

Question 10

Basic Govt Funds

Answer 10

All others
Modified Accrual Accounting in the Fund Financial Stmt

5 Funds
General Fund
Capital Project Fund
Debt Service Fund
Special Revenue Fund
Permanent Fund

Question 11

Basic Govt Fund
General Fund

Answer 11

Used for any purpose
Money comes from General Tax Collections

Usually has a POSITIVE Unassigned Fund Balance - spendable assets neither, restricted, committed or assigned

Question 12

Basic Govt Fund
Capital Projects Fund

Answer 12

Get money from General Fund or borrow money by issuing municipal bonds

“Build City Hall”

Question 13

Basic Govt Fund
Debt Service Fund

Answer 13

If bonds are issued, the debt service fund must begin saving for payment of principal and interest

Money comes from General Fund UNLESS money is leftover after paying the contractors to build stuff

Question 14

Basic Govt Fund
Special Rev Fund

Answer 14

ex
Charge 1 cent gas tax to help fix roads

Question 15

Basic Govt Fund
Perm Fund

Answer 15

Assets Donated to the Govt where the principal must remain
ONLY the income can be spent

Question 16

Basic Govt Fund
Do not use Expenses

Answer 16

Use Expenditures
Only CA & CL

Each of Basic Govt Fund prepare their own Fund Based Financial Stmt using Modified Accrual Accounting

Question 17

Basic Govt Fund
Fund Balance Represents the excess of CA over CL on BS

Answer 17

For A Government Type Fund
CA = CL + Fund Balance
BUT
Some funds balances have constraints - so must show the restriction

Question 18

Restricted

Restricted designation comes from outside the Govrn Entity, like a creditor, or grantor or state legislators

Non-Spendable - CA that cannot be spent like PP Exp, Inventories

Answer 18

Committed
Assigned

Committed and Assigned are designations placed on cash from within the government, city council commits and assigns money to be spent at their discretion

Question 19

Proprietary Fund

These Funds are the only ones required to report a STMT of Cash Flows - Direct Method Only

Answer 19

4 Sections
1 - Operating - inflows from customers, outflows to suppliers
2 - Capital & Related Financing
3 - Non-Capital Financing
4 - Investing Activities - loans, acquiring debt or equity investments

Note that Financing and Investing is reverse order for GOVT (Enterprise Fund)

Question 20

Proprietary Fund

These Funds are the only ones required to report a STMT of Cash Flows - Direct Method Only

Answer 20

Enterprise Fund - Int received is Investing

Enterprise Fund - Int paid is Capital Financing or Non-Capital Financing

Capital Assets Purch are reported as Financing

Question 21

Most difficult to report for a governmental entity

Answer 21

Relevance means the information must bear a logical relationship with the needs for its purpose

Must be reliable

Difficult to establish than it is to demonstrate consistency or comparability

Timeliness is easy to demonstrate

Question 22

The fund structure of a governmental entity and the number of funds used is a matter of judgment.

Answer 22

The city accountant would set up the number of funds consistent with the legal requirements of the government to properly segregate funds and to ensure sound financial administration to properly safeguard assets.

Question 23

Rule: Separate fund financial statements should be presented for governmental and proprietary funds to report additional and

Answer 23

detailed information about the primary government.

Question 24

FOR PROPRIETARY FUNDS LIKE

Internal Service Funds -
Enterprise Funds -
bc of full economic picture
includes Assets and Liabilities Current & LT

Answer 24

Fund financial statement would be prepared using an
Economic Resources Measurement focus
AND
Accrual basis of accounting

Question 25

The governmental funds, General Fund Permanent Fund, and Capital Projects fund,

Answer 25

Prepared using the Current Financial resources measurement focus and the modified accrual basis of accounting.

Question 26

Measurement focus for a governmental fund contemplates measurement of the flow of current financial resources and resulting financial position.

Answer 26

Income determination is a focus of the proprietary and fiduciary funds. A fund's measurement focus identifies what transactions should be recorded and how they should be reported.

Question 27

The general fund uses the modified accrual basis of accounting which recognizes revenues in the accounting period in which they become available and measurable.

Answer 27

The enterprise fund uses the full accrual basis of accounting, which recognizes revenues in the accounting period in which they are earned.