F8 Flashcards
(54 cards)
What are the three accounting themes addressed by governmental accounting?
Fund structure, fund accounting, and external reporting
Name the primary authoritative body for GAAP for governmental entities
Governmental Accounting Standards Board
Identify the major categories of funds used by state and local governmental units
Governmental, Proprietary, Fiduciary
What terms define the manner and timing of transaction recognition in governmental fund accounting?
Fund accounting principles are defined by: Measurement focus (how transactions are recognized) Basis of accounting (when transactions are recognized)
What are the objectives of external reporting?
Operational accountability / Fiscal accountability
What types of external reports meet the accountability objectives of government?
Operational accountability: Government-wide financial statements.
Fiscal accountability: Fund financial statements
Name each governmental fund type
General Fund, Special Revenue Fund, Debt Service Fund, Capital Project Fund, Permenant
What are the fund accounting principles applicable to governmental funds?
Current financial resources measurement focus
Modified Accrual basis of accounting
What specialized accounting practices are followed by governmental funds?
Budgetary Accounting
Activity (Actual) Accounting encumbrance accounting
Name and define the five classifications of fund balances used by governmental fund types
Nonspendable - inventory
Unassigned - available to be spent
Committed - internally limited as to use by highest
Assigned - Intended to be used for a purpose
Restricted - Legally restricted
Name each proprietary fund type
Internal Service Fund, Enterprise fund
What are the fund accounting principles applicable to proprietary funds?
Economic resources measurement focus
Full accrual basis of accounting
Name each type of fiduciary fund type
Pension trust fund, Agency trust fund, Private purpose, and Investment trust fund
What are the fund accounting principles applicable to fiduciary funds?
Economic resources measurement focus
Full accrual basis of accounting
Distinguish between alternative measurement focuses
Current financial resources (GRSPP) - No FA are recorded, capital outlays displayed as expenditure, no depreciation, no noncurrent liabilities recorded, debt proceeds displayed as resources inflows. Principal payments displayed as expenditure. Premium & Discount on debt not amortized they are included as an increase or decrease of debt proceeds. Economic Resources (SE PAPI) FA recorded & noncurrent liabilities recorded.
Define modified accrual and list the funds that use it as a basis of accounting.
Modified Accrual : Revenues should be recognized when measurable and available; expenditures are generally (with the exception of interest expenditure) recognized when fund liability is incurred. Modified Accrual is used by GRSSP
What do the terms “measurable” and “available” mean in the context of the modified accrual basis of revenue accounting?
Measurable means reasonably estimable or of a known determined amount. Available means collectible within (generally) 60 days of YE
When are revenues recorded in governmental funds?
Measurable and available. This concept applies to accrual of diff types of revenue depending on character. Accrue when: billed/recorded(imposed nonexchange transactions) / real estate taxes (due) / Receieved(Derived non-exchange transactions) / Income & sales tax / Earned govt mandated and voluntary non exchange transactions) Restricted grants and RE taxes paid in advance
Define the different classifications of expenditures
Expenditure classification include: Function (public safety), Organizational unit (police dept, fire dept) Activity (drug enforcement, highway safety patrol), Character (current capital outlay, debt service, intergovernmental), Object (personal services, building occupancy, insurance)
What is the journal entry to record the annual budget?
Dr. Estimated Revenues / Cr. Appropriations / Dr./Cr. Budgetary Control
Define encumbrances and give the journal entry to recognize a purchase order on supplies.
Encumbrance - A commitment related to an unperformed contract for goods or services (generally an open purchase order) Dr. Encumbrances Cr. Budgetary Control Encumbrances have a natural debit balance Appropriations to which those encumbrances are compared have a natural credit balance.
What journal entries are made to record the liabilities incurred associated with previously encumbered fund?
Expenditure of previously encumbered funds results in the following entry. Dr. Expenditure / Cr. AP / Dr. Budgetary Control Cr. Encumbrances
The entries serve to reverse the full effect of the encumbrances entry and record the full amount of the expenditure (BAE - BAE)
When are budgetary, actual, or encumbrance entries combined?
NEVER. Budgetary, actual, and encumbrance transactions are always segregated on the books. Do NOT net BAE BAE. At the beginning of the year: Book budget, Throughout the year: Book actuals, book encumbrances. At YE: Close the budget, close the actuals, close the encumbrances.
What are the closing budget, activity, and encumbrance journal entries?
At the Begining of the next year the above encumbrance entry is reversed. the entry will keep the budgetary control intact in order to account for resources spent in the next year that would have been budgeted in the current year.
