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Flashcards in Fund Accounting Deck (49):
1

List the three broad categories of funds for state and local governmental entities.

  1. Governmental Funds;
  2. Proprietary Funds;
  3. Fiduciary Funds.

2

List the four types of fiduciary funds.

Tip:fiduciary funds are "PIPPA" in DRIP CEG PIPPA

DRIP CEG PIPPA

  1. Pension Trust Funds;
  2. Investment Funds
  3. Private-Purpose Trust Funds;
  4. Agency Funds.

3

What are two important characteristics of a

Fund?

  1. A fiscal entity
  2. An accounting entity (i.e., debits=credits).
  • A fund is "fiscal" because it has assets, liabilities, revenue, expenditure or expense, and fund balance or other equity accounts.
  • A fund is "accounting" because it has its own ledgers and contains a self-balancing set of accounts. A fund is not a separate legal entity.

4

What fund is used to account for business-type activities that primarily provides services to parties external to the government?

Proprietary Fund.

In contrast, an internal service fund is used to account for business-type activities that provides services to other departments within the government.

5

List the five types of governmental funds.

Tip: consonants in DRIP CEG

Consonants in DRP CG

(DRP CG)

  1. Debit Service Funds
  2. Special Revenue Funds
  3. Permanent Funds
  4. Capital Project Funds
  5. General Fund

Consonants use Modified Accrual Accounting

6

List the two types of proprietary funds.

Tip: vowels in DRIP CEG

Vowels in DRIP CEG

I and E

  1. Internal Service Funds.
  2. Enterprise Funds

 

Vowels use Accrual Accounting

7

What are the Three Categories of Funds?

  1. Governmental Funds
    • Resources of the general government
    • Sources, uses, and balances of general government financial resources
    • Ex: Taxes
  2. Propietary Funds
    • ​​Accounts for business-type activities
  3. Fiduciary Funds
    • ​​Accounts for resources held by a government in its capacity as trustee or agent for the benefit of others.

8

What is the accounting equation for a fund?

Assets

+ Deferred Outflows of Resources

+ Deferred Inflows of Resources

+ Fund Balance

9

What is the purpose of a fund?

  1. To improve management accountability and control
  2. Meet legal requirements

10

What is the acronym for Governmental Funds?

DRIP

  1. Debt Service Fund
  2. Special Revenue Fund
  3. Internal Service Fund
  4. Permanent Fund

11

What is the acronym for Government and Proprietary Funds?

DRIP

  1. Debt Service Fund
  2. Special Revenue Fund
  3. Internal Service Fund
  4. Permanent Fund

CEG

  1. Capital Project Fund
  2. Enterprise Fund
  3. General Fund

Proprietary funds are the "I" and "E"

12

What is the purpose of a fund?

  1. To improve management accountability and control.
  2. To meet legal requirements

13

What is a governmental fund?

Non-exchange revenues such as:

  • Taxes
  • Intergovernmental revenues
  • Grants

Governmental funds provide resources for general governmental expenditures.

14

What are Proprietary Funds?

Part of DRIP CEG PIPPA under Governmental Funds...

Account for governmental unit activities that charge fees in exchange for goods or services.

  • Public Utilities
  • Convention Centers
  • Motor Pools
  • Airports

 

15

What are Fiduciary Funds?

PIPPA in DRIP CEG PIPPA

These funds account for monies and other resources held by the governmental unit in a trustee or agent capacity. 

16

What is the purpose of

Budgetary Accounting?

Budgetary accounting permits organizations to demonstrate compliance with legislatively prescribed spending limits and purposes

17

What is Encumbrance Accounting?

To ensure that the entity does not order more goods than it has the authority to purchase, an estimate of expenditures is recorded at the time an order is placed rather than waiting until the goods are received. 

18

What are the 3 types of fund statements?

  1. Governmental funds  
    • Modified accrual basis
  2. Proprietary funds  
    • Full accrual basis;
  3. Fiduciary funds 
    • Full accrual basis.

19

What is the objective of Governmental Accounting?

  1. Assess the availability of current period resources to finance current period expenditures (interperiod equity).

  2. Assess the service efforts and accomplishments of the governmental entity.

  3. Demonstrate compliance with the legal authorization to expend.

20

What are the 3 Fund Categories and 11 Fund Types in Governmental Accounting? 

DRIP CEG PIPPA

  1. Government Funds = Consonants (DRPCG)
  2. Proprietary = Vowels (IE)
  3. Fiduciary = PIPPA

21

What is the General Fund?

Part of DRIP CEG PIPPA under Governmental Funds...

  • Accounts for ordinary operations of the government.
  • The ONLY required fund
  • There is only ONE general fund

Revenues are from licenses, fees, fines, and taxes

22

What are Special Revenue Funds?

Part of DRIP CEG PIPPA under Governmental Funds...

Account for the proceeds of specific revenues from taxes, grants, entitlements, or other earmarked sources that are restricted or committed to expenditures for specified purposes.

23

What are Capital Project Funds?

Part of DRIP CEG PIPPA under Governmental Funds...

Short-lived funds that account for monies designated for:

  • acquisition
  • construction of significant capital items (land, buildings, and equipment)

Any extra or leftover funds are moved to Debt Service Funds.

24

What is a Debt Service Fund?

Part of DRIP CEG PIPPA under Governmental Funds...

  • Account for monies set aside to pay interest and principal on the governmental unit's long-term general obligation debt.
  • Note that the Debt Service Fund does not account for the liability itself, only for the monies that are set aside to pay the principal and interest.

25

What are Permanent Funds?

Part of DRIP CEG PIPPA under Governmental Funds...

These types of funds are more generally known as endowments.

26

What is an Enterprise Fund?

Part of DRIP CEG PIPPA under Governmental Funds...

  • Account for activities that provide goods and services to the general public as well as to the governmental entity itself
    • Utilities
    • Transit services 
    • Golf courses, etc. 
  • A service fee commensurate with the benefits received is generally charged.

27

What is an Internal Service Fund?

Part of DRIP CEG PIPPA under Governmental Funds...

  • Account for activities that provide goods and services only to other government agencies and departments (i.e. motor pools, printing services, data processing services, central supplies, etc.).
  • Fees for these services are generally paid through inter-departmental charges.

28

What is an Pension Trust Fund?

Part of DRIP CEG PIPPA under Governmental Funds...

  • Pension Trust Funds account for contributions made by or on behalf of government employees to provide them with retirement income and post-retirement benefits and for the actual expenditures made to retirees and terminated employees.
  • Related transactions such as pension investment earnings and investment management expenses are recorded here as well.

29

What is an Agency Fund?

Part of DRIP CEG PIPPA under Governmental Funds...

  • Account for monies for which the governmental unit serves as merely an agent in the process of distributing/delivering the monies to their rightful recipient.
  • These funds have only current assets and current liabilities - they do not recognize revenues or expenses.

30

What is an Investment Trust Fund?

Part of DRIP CEG PIPPA under Governmental Funds...

  • Account for monies received from other governmental agencies to be included in the governmental entity's Investment Pool.
  • Note that resources belonging to the governmental entity itself that are included in the Investment Pool are not reported in the Investment Trust Fund: only resources from external entities are reported here.

31

Define 

General Fixed Asset Account Group

(GFAAG)

  • Used to record fixed (long-term) assets purchased by any of the governmental funds (principally the General Fund, Special Revenue Fund, and the Capital Projects Fund), as well as items donated to the governmental unit

32

Define 

General Long-Term Debt Account Group

(GLTDAG)

  • Used to record general obligation long-term debt of the governmental unit, including bonds, notes, and capital leases.
  • As the debt matures (becomes current) the liability is removed from the GLTDAG and placed in a Debt Service fund for repayment.

33

What are examples of Fiduciary Fund Types?

  1. Police and Fire Pension Trust Fund
  2. Historical Society Private-Purpose Trust Fund
  3. County and City tax collection fund

34

In state and local government accounting and financial reporting what is a characteristic of fixed assets?

Often are not expected to contribute to the generation of revenues.

35

Fund accounting is used by governmental units with resources that must be...

  • Segregated for the purpose of carrying on specific activities or attaining certain objectives.
  • Governmental accounting systems are organized and operated on a fund basis.

36

King City Council will be establishing a library fund. Library fees are expected to cover 55% of the library's annual resource requirements.

King has decided that an annual determination of net income is desirable in order to maintain management control and accountability over the library.

What type of fund should King establish in order to meet their measurement objectives?

Enterprise Funds

An enterprise fund is used when services are provided primarily to the public for a charge. Since enterprise funds use accrual accounting, it will provide the determination of net income and other control and accountability that management desires.

37

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.

What fund should Kenn City use to report the activities of the landfill?

Enterprise Fund

  • 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.

38

Which government fund uses the

Accrual Basis of Accounting?

Enterprise

 

39

Identify the Fund Type used:

  • Purchase of a new fire truck

General Fund

40

Identify the fund-type to use:

New filtration equipment was purchased for the waste water treatment facility.

Enterprise Fund

41

Identify the fund type to use:

Sales taxes dedicated to mosquito abatement were collected.

Special Revenue Fund

42

Identify the fund type to use:

A local philanthorpist donated funds for a permanent endowment to generate earnings to use to maintain a city park named in her honor.

Permanent Fund

43

Identify the fund type to use: 

Bonds are sold to finance street improvement projects approved in a recent bond election.

Capital Projects Fund

44

Identify the fund type to use:

Interest payments are made on outstanding bonds payable.

Debt Service Fund

45

Identify the fund type to use:

The city collects taxes for the city, Blake ISD, and Blake County.

Agency Fund

46

Identify the fund type to use:

Claims are paid from the Blake City Self-Insurance Fund.

Internal Service Fund

47

Identify the fund type to use:

Contributions are made to the employee pension plan

Pension Trust Fund

48

49

Identify the fund type to use:

Federal grant monies are received for an alcohol and drug abuse treatment center.

Special Revenue Fund