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CPA: FAR > F8: Governmental Accounting > Flashcards

F8: Governmental Accounting Flashcards

1
Q

What are the dual objectives?

A

You must show the operational objectivity = financial statements,
And the Fiscal accountability - making sure that we are using the funds in the right way.

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2
Q

What are the three fund categories and describe each.

A

Governmental funds
Proprietary funds
Fiduciary funds

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3
Q

What are the types of governmental funds?

A 
GRaSSP funds are governmental funds. 
G - general funds 
R- special revenue funds 
a - is nothing just a filler
S - debt service funds
P - capital projects fund
P - permanent funds. 
They only deal with current assets and liabilities, and the balance sheet would have fund balances, and income statement would be net change in fund assets.
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4
Q

What is included under the proprietary funds?

A

They would include the SE
S - Internal service funds
E - Enterprise funds
They would have all assets and liabilities, carry everything using the economic resources re measurement focus.
Income statement would be change in net position and the balance sheet would be net position.

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5
Q

Governmental funds are MAC GRaSPP what does that mean?

A

They will have modified accounting, accrual accounting, and current financial resources measurement focus

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6
Q

Fiduciary and property funds have the SPACE what does that mean?

A 
SE - proprietary funds
P= PAPI = fiduciary funds
A - accrual accounting
C - carry fixed asset and long term debt
E = economic resources measurement focus.
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7
Q

What does GRaSPP funds if you want a NU CAR mean?

Or constraints that are associated with the fund categories?

A 
These apply to the subcategories within the governmental funds.  That are under the category of general fund!
N = Non spendable fund balance
U = Unassigned fund balance
C = Committed fund balance
A = assigned fund balance
R = Restricted fund balance .
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8
Q

What is the journal entry for the budgets? At the beginning of the year? How about the end?

A
  • Beg of the year
    DR: Estimated revenue
    DR: Estimated other financing sources (transfer from funds (transfers in))
    DR: Budgetary control (negative/deficit)
    CR: Appropriations control
    CR: Estimated other financing uses (Transfers to other funds (transfers out))
    CR: Budgetary control (positive/surplus)

At the end of the year when it is closed out there will be the same amounts just reversed, plus and minus any amendments.

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9
Q

Which standard setting body sets the standards for Government accounting and reporting?
How about not for profit entities?
And what about the single audit act?

A

The standard setting body for the government is the GASB.
The non for profit standard setting entity is the FASB.
And the single audit act is governed by the GAO, also known as the yellow book.

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10
Q

When resources are limited for their use by constraints imposed through law constitution or legislation what type of thing would this be in NU CAR?

A

This would be a restricted fund, since it was restricted or constrained through external sources, such as creditors, contributors, other governments, laws, and legislation.

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11
Q

What are examples of inventories that are being used for a specific purpose? In NU CAR?

A

Inventories are considered to be Non-Spendable.

Non-Spendable resources are in a form that cannot be spent, or are legally or contractually required to remain whole.

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12
Q

What is the most restrictive classification of governmental funds? In terms of NU CAR?

A

These would be the committed funds.

They are internally limited by the highest decision making authority in the government.

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13
Q

What is unique about the B in bae bae?

A

This is the budget, and the T accounts are reported opposite of their regular balances. Revenues are debited, and apportions (expenditures) are credited.

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14
Q

What are the items that are classified as revenue and accrued as a receivable?

A
  • Billed recorded = revenue (real estate taxes due, fines and penalties)
  • Received - revenue (income taxes, and sales taxes)
  • Earned = revenue ( rev collected in advance, real estate paid in adv, restricted grants (earned when spent), and deferred inflows of resources)
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15
Q

What is the journal entry for property taxes?

A 
(DR) Property taxes receivable
(CR)     Allowance for uncollectible amounts
(CR)     Revenue control 
For a budget
(DR) Revenue control
CR     Budget control
CR     Apportions.
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16
Q 
What are the classifications for the following accounts?
Taxes
Debt proceeds
Taxes - property licenses
Fines and penalties
Interfund transfers
A
  1. Taxes would be considered revenue
  2. debt proceeds - estimated other financing sources.
  3. taxes - revenue
  4. fines and penalties - revenue
  5. Interfund transfers - other financing sources.
    These all relate to budgetary accounting.
17
Q

Whats the difference between derivatives used as investments versus derivatives used as hedging activities?
When it comes to changes in value?

A

The derivatives used as investments that have changes in values are included in the earnings,
While the changes in value for the derivatives that are used for hedging will be either deferred inflow or outflow.

-Its a deferred inflow (CR) if the fair value increases, and its a deferred outflow (DR) if the value decreases.

18
Q

What is the format for a fiduciary and proprietary funds statement of financial position?

A

It would be assets + deferred outflows - (liabilities + deferred inflows) = net position.

19
Q

What is the format for the governmental fund statement of financial position?

A

This would be assets + deferred outflows = Liabilities + deferred inflows + fund balance.

20
Q

What is a special revenue fund?

A

They are the R in GRaSPP
Funds that are there for a particular purpose/
They are restricted or committed.
They can have things such as grant funds, sales tax fund, gasoline tax fund, etc.
Expendable trust activities should be accounted for in this fund.

21
Q

What are debt service funds?

A

They are the S in GRaSPP.
They pay for principal and interest related to general obligation debt. Only related to GRaSSP.
Important to note that encumbrances are not applicable.

22
Q

What are capital projects funds?

A

The P in GRaSPP
They are established for the construction or purchase or leasing of significant fixed assed used only by GRaSPP.
The grants that you get will be recognized as earned when they are expended only.
If they are restricted they can be recognized as revenue when earned (spent) or unrestricted (recognize as revenue right away).
- if the gov until is not liable then it will be an agency fund.

23
Q

When a grant is received what determines if it goes in special revenue or agency?

A

It will go into special revenue if it is monitoring grant,

- it will go into agency if it is a non monitoring grant.

24
Q

What are permanent funds?

A

This is the last P in GRaSPP

  • they also do not have any encumbrances.
  • They are legally restricted, that only earnings and not principal can be used.
25
Q 
What should
1. purchases
2. construction
3. capital leases
4. donated
5. forfeiture 
all be recorded at?
A
  1. cost to buy
  2. cost to construct
  3. P.V of lease payments.
  4. FMV
  5. lower of cost of market.
26
Q

What are internal service funds?

A
  • They are funds that are made to finance and account for other serves and supplies provided to other departments within a government unit. Usually on a cost reimbursement basis.
27
Q

What are enterprise funds?

What is the criteria that must be met in order to record activity in the enterprise fund?

A
  • They are similar to private business enterprise.
  • They criteria is the activity is financed with debt that is secured solely by a pledge of net revenue from fees/charges.
  • laws and regs require that the cost of providing services be recovered through fees.s
  • the pricing policies of the activity establishes fees that will recover the cost.
28
Q

What do the government wide F/S include out of the GRaSPP SE PAPI?

A

The government wide financial statements use the GRaSPP +S and a separate item for the E, and the PAPI is not included.

29
Q

How should the cost of a municipal solid waste landfill be accounted for?

A

The total cost of post closure and closure should be reported as current cost only regardless of the capital or or operating nature.
- Purchases of the equipment will be recognized as deduction to the liability, and will not be resulting in an increase in the capital assets.
-

30
Q

What are Pension trust funds?

A

This would be the P in Papi.

  • They account for government sponsored pension plans.
  • There are additions and subtractions instead of revenue and expenses.
  • There is no required statement of cash flows.
  • There are no budgets or encumbrances
  • SIR expense, AGE - other outflows and inflows.
  • Assets are reported at fair value.
31
Q

What is an agency trust fund?

A
  • this is the A in PAPI.
  • No income statement or cash flow statement.
  • No fund balance reported its just assets = current liabilities.
  • Temporarily holds cash until it can later be disbursed.
  • EX. tax collection fund, clearance funds, special assessments.
  • if they monitor the use the special revenue fund, if they have liability they use the capital projects or debt service fund. (if they are not liable they will use the agency fund).
32
Q

What is a private purpose trust?

A
  • No statement of cash flow is required.
  • They contain resources (the principal and interest) for the benefit of other parties.
  • Ex. escheat property fund
  • the use of this fund is mostly for private purposes.
33
Q

What is the investment trust funds?

A

They are the I in PAPI
- They represent investments held for others, and the assets that it has is held at fair value.
-There are no cash flow statement.
-

CPA: FAR (12 decks)

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