FAR 67 - Intro to Gvmt Org. and Fund Acct Flashcards Preview

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Flashcards in FAR 67 - Intro to Gvmt Org. and Fund Acct Deck (25):
1

Which of the following sources of financial resources is unique to governmental entities?
A. Proceeds from bonds
B. Grant proceeds from the federal government
C. Charges for services
D. Proceeds from taxation

D. One of the unique characteristics of government is its power to force involuntary financial resource contributions through taxation. No other form of organization has this power.

2

Which of the following has the highest level of authority for setting GAAP for nongovernmental not-for-profit organizations?
A. GASB
B. FASB
C. FASAB
D. AICPA

B. The Financial Accounting Standards Board (FASB) is the highest level of GAAP for all nongovernmental entities, which includes nongovernmental not-for-profit organizations.

3

T/F: GASB governs the accounting and reporting of non-profit organizations such as independent school districts.

TRUE

4

T/F: FASB governs the accounting and reporting of non-profit organizations such as the County Community College.

False. GASB does

5

GASB Concepts Statement No. 4 identifies the following five elements of the Statement of Financial Position: (1) assets, (2) liabilities, (3) deferred inflows of resources, (4) deferred outflows of resources, and __________.

Net position

6

According to GASB's conceptual framework, the legally adopted annual budget has significant financial reporting implications. Which of the following is not one of the significant financial reporting implications?
A. Expression of public policy
B. To demonstrate that the budget is prepared on the GAAP basis
C. Expression of financial intent
D. Is a form of control

B. GASB Concepts Statement No. 1 lists the following four financial reporting implications associated with the legally adopted annual budget: (1) expression of public policy, (2) expression of financial intent, (3) form of control, and (4) it may provide a basis for evaluating performance (if the government established service efforts and accomplishment goals as part of its budget process). Since budgets are usually prepared according to requirements of state and local laws, the budget is not required to be prepared on the GAAP basis. Many state and local governments prepare the budget on the cash basis. When this occurs, the budget-to-actual statement is presented on the budget basis (i.e., cash basis) and a reconciliation of the cash basis to the GAAP basis is included in the notes to the basic financial statements.

7

What are the two paramount objectives for financial reporting in government?

GASB Concept Statement No. 1 defines two paramount objectives for financial reporting in government: (1) Accountability and (2) interperiod equity.
Concept Statement No. 1 describes six characteristics of effective financial reporting: (1) understandability, (2) reliability, (3) relevance, (4) timeliness, (5) consistency, and (6) comparability (TRUCCR).

8

According to GASB's conceptual framework, the primary users of the general purpose external financial report include:

GASB Concepts Statement No. 1 defines the primary users of the general purpose external financial report as the citizenry (e.g., taxpayers), legislative and oversight bodies (e.g., school boards), and investors and creditors (e.g., bond insurers).

9

The City of Palo Alto's Service Efforts and Accomplishments Report for Fiscal Year 2010 reported that the average response to fire calls within 8 minutes occurred on 90% of the fire calls in 2010. This rate met the benchmark target goal of 90%. According to GASB's conceptual framework, this information is classified as a measure of
A. Effort
B. Output
C. Outcome
D. Efficiency

C. The example in the question is an outcome measure. Outcome measures indicate the accomplishments or results that occur because of the services provided.

10

Which event(s) is(are) supportive of interperiod equity as a financial reporting objective of a governmental unit?
I. A balanced budget is adopted.
II. Residual equity transfers out equal residual equity transfers in.

I Only. The adoption of a balanced budget supports interperiod equity because it is an attempt to ensure that the current generation of citizens does not shift the burden of paying for current-year services to future-years' taxpayers (GASB Concepts Statement 1).
Residual equity transfers are nonrecurring or nonroutine transfers of equity between funds (GASB Codification 1800.102). These transfers occur within one accounting period and do not support interperiod equity as an objective of financial reporting.

11

T/F: GASB Concepts Statement No. 1 states that interperiod equity is a basic component of accountability and fundamental to public administration.

TRUE

12

T/F: A deferred inflow is one of the five elements of the statement of financial position and can only be recognized when identified by the GASB in authoritative pronouncements.

TRUE

13

T/F: Service efforts and accomplishment reports are required by GASB.

False.

14

T/F: According to GASB's conceptual framework, other supplemental information is deemed to be essential information for placing basic financial statements and notes to basic financial statements in an appropriate context.

False.
Unless it is required, supplemental info is not necessary to be added to the FS

15

T/F: GASB Concepts Statements are not GAAP.

TRUE

16

Kenn City obtained a municipal landfill and passed a local ordinance that required the city to operate the landfill so that the costs of operating the landfill, as well as the capital costs, are to be recovered with charges to customers. Which of the following funds should Kenn City use to report the activities of the landfill?
A. Enterprise
B. Permanent
C. Special Revenue
D. Internal service

A. An Enterprise Fund is commonly used in situations where user fees are the primarily source of revenue and the fee charged is based on an amount sufficient to cover the costs of operations and to provide for capital maintenance, which is the case here. Note that the fee for a service provided and that most of the users are external to the government.

17

Which of the following local government funds uses the accrual basis of accounting?
A. Enterprise
B. Debt service
C. Capital projects
D. Special Revenue

A. Recall the acronym "DRIP-CEG-PIPPA" where the vowels in "DRIP-CEG" represent fund types that use accrual accounting and the consonants use modified accrual accounting. The "I" stands for Internal Service Fund and "E" for Enterprise Funds. This answer is correct.

18

Which of the following funds is not a fiduciary fund type?
A. Police and fire pension trust fund
B. Motor pool fund
C. Historical society private-purpose trust fund
D. County and city tax collection fund

B. A motor pool fund is a type of internal service fund that charges other parts of the government for services provided on a cost-reimbursement basis. An internal service fund is one of the two types of proprietary service funds. Recall the mnemonic "PIPPA" for fiduciary funds - pension trust funds, investment trust funds, private-purpose trust funds, and agency funds.

19

What are the four types of fiduciary funds for governmental NPOs?

Recall the acronym "PIPPA" for fiduciary funds. Fiduciary funds include the following 4 types of funds: P ension trust funds, I nvestment trust funds, P rivate- P urpose trust funds, and A gency funds.

20

T/F: Funds are used to provide management accountability and control.

TRUE

21

T/F: The City of Pomeko operates a municipal library and accounts for it in a separate fund. The library charges city residents $5 to issue a library card, $1 per item to check out videos and CDs, and $0.25 per day for overdue books. The library fund should be classified as an Enterprise Fund since it serves the general public.

False
Should be classified a s a General Fund.
*Revenues typically come from taxes, licenses, fines, fees, etc.

22

T/F: Interperiod equity cannot occur if a government entity issues or repays debt.

False

23

T/F: When a fixed asset is purchased by a governmental fund, it is recorded in that fund.

False
The General Fixed Asset Account Group is used to recorded fixed (LT) assets purchased by any of the gvmt funds, as well as items donated to the gvmt unit.

24

T/F: A fund is a separate accounting entity but not a separate fiscal entity.

False
A fund is a separate fiscal and accounting entity with a self-balancing set of accounts.

25

T/F: When a capital project receives bonded debt financing, the bonds are accounted for in the Capital Projects Fund until they are fully repaid.

False
The Capital Project Funds are short-lived, existing only long enough to accumulate resources to acquire or construct an asset and to account for the expenditures related to the asset. After acquisition or construction, the account is closed and any monies remaining in the fund are usually transferred to a Debt Service Fund or the General Fund if no debt was issued to finance the project.

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