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Flashcards in GASB Shit Deck (23):
1

GASB Statement No. 54 eliminated the use of "reserve" and "unreserved" fund balances. The appropriate fund balance classifications are Nonspendable, Restricted, Committed, Assigned, and Unassigned.

GASB Statement No. 54 eliminated the use of "reserve" and "unreserved" fund balances. The appropriate fund balance classifications are Nonspendable, Restricted, Committed, Assigned, and Unassigned.

2

There are 3 types of funds:
1. Governmental Funds - Accounts for sources, uses, and balances of general government financial resources (ex - Taxes)
2. Proprietary Funds - Accounts for Business Type Activities
3. Fiduciary Funds - Accounts for resources held by government in its capacity as trustee or agent for the benefit of others

There are 3 types of funds:
1. Governmental Funds - Accounts for sources, uses, and balances of general government financial resources (ex - Taxes)
2. Proprietary Funds - Accounts for Business Type Activities
3. Fiduciary Funds - Accounts for resources held by government in its capacity as trustee or agent for the benefit of others

3

Types of Governmental Funds (the consonants in the acronym DRIP CEG) (uses "expenditures" instead of "expenses" and uses the modified accrual basis):
1. General Fund - Accounts for everything that is not required to be accounted for by a different type of fund (its the "catch-all" fund).
2. Special Revenue Funds - Accounts for specific revenue sources that are restricted or committed to expenditure for specific purposes other than debt service or capital projects
3. Capital Project Funds - Accounts or resources that are restricted, committed, or assigned for construction or acquisition of capital facilities and other capital assets.
4. Debt Service Funds - Accounts or resources that are restricted, committed, or assigned to debt service principal and interest expenditures
5. Permanent Funds - Accounts for endowments in which its earnings are restricted to support government programs that are dedicated for a public purpose

Types of Governmental Funds (the consonants in the acronym DRIP CEG) (uses "expenditures" instead of "expenses" and uses the modified accrual basis):
1. General Fund - Accounts for everything that is not required to be accounted for by a different type of fund (its the "catch-all" fund).
2. Special Revenue Funds - Accounts for specific revenue sources that are restricted or committed to expenditure for specific purposes other than debt service or capital projects
3. Capital Project Funds - Accounts or resources that are restricted, committed, or assigned for construction or acquisition of capital facilities and other capital assets.
4. Debt Service Funds - Accounts or resources that are restricted, committed, or assigned to debt service principal and interest expenditures
5. Permanent Funds - Accounts for endowments in which its earnings are restricted to support government programs that are dedicated for a public purpose

4

Types of Proprietary Funds (the vowels in the acronym DRIP CEG) (uses "expenses" terminology and accrual accounting):
1. Enterprise Funds - Accounts for business type activities in which the public is the primary user (ex - external user)
2. Internal Service Funds - Accounts for business type activities in which governmental departments are the primary user (ex - internal user)

Types of Proprietary Funds (the vowels in the acronym DRIP CEG) (uses "expenses" terminology and accrual accounting):
1. Enterprise Funds - Accounts for business type activities in which the public is the primary user (ex - external user)
2. Internal Service Funds - Accounts for business type activities in which governmental departments are the primary user (ex - internal user)

5

Types of Fiduciary Funds (acronym PIPPA):
1. Pension Trust Funds - Accounts for assets held in trust to provide employee retirement benefits (uses accrual basis of accounting)
2. Private Purpose Trust Funds - Accounts for assets held in trust created to benefit individuals (non-governmental funds and uses accrual basis of accounting)
3. Investment Trust Funds - Accounts for assets held in trust for other participants, usually other governments
4. Agency Funds - Accounts for assets held in a custodial fashion

Types of Fiduciary Funds (acronym PIPPA):
1. Pension Trust Funds - Accounts for assets held in trust to provide employee retirement benefits (uses accrual basis of accounting)
2. Private Purpose Trust Funds - Accounts for assets held in trust created to benefit individuals (non-governmental funds and uses accrual basis of accounting)
3. Investment Trust Funds - Accounts for assets held in trust for other participants, usually other governments
4. Agency Funds - Accounts for assets held in a custodial fashion

6

Transfers between funds are classified as Other Financing Sources and Uses.

Transfers between funds are classified as Other Financing Sources and Uses.

7

When is an Enterprise Fund required?

1. Revenue Bonds
2. Laws and regulations establish fees
3. Pricing policies based on capital maintenance

8

Statement of Cash Flows for Govt is different from the private sector:
1. It has 4 sections instead of 3 (Operating, Noncapital Financing, Capital and Related Financing, Investing)
2. Direct method is required
3. Noncash sections are reported on the face of the statement

Statement of Cash Flows for Govt is different from the private sector:
1. It has 4 sections instead of 3 (Operating, Noncapital Financing, Capital and Related Financing, Investing)
2. Direct method is required
3. Noncash sections are reported on the face of the statement

9

There are two ways to present a component unit gov't:
1. Blended - Essentially treated similar to fund of the primary gov't (used when Component Units governing body and Primary Gov'ts governing body are SUBSTANTIALLY THE SAME and the services that the Component Unit provides are only for the Primary Gov't).
2. Discretely presented - a separate column in the financial statements of the primary gov't

There are two ways to present a component unit gov't:
1. Blended - Essentially treated similar to fund of the primary gov't (used when Component Units governing body and Primary Gov'ts governing body are SUBSTANTIALLY THE SAME and the services that the Component Unit provides are only for the Primary Gov't).
2. Discretely presented - a separate column in the financial statements of the primary gov't

10

Financial Accountability occurs if any one of these 3 combos are met (a Component Unit exists as part of a Primary Gov't):
1. Appointment Authority + Financial Benefit or Burden
2. Appointment Authority + Ability to Impose Will
3. Fiscal Dependence + Financial Benefit or Burden

Financial Accountability occurs if any one of these 3 combos are met (a Component Unit exists as part of a Primary Gov't):
1. Appointment Authority + Financial Benefit or Burden
2. Appointment Authority + Ability to Impose Will
3. Fiscal Dependence + Financial Benefit or Burden

11

Elements of GASB Financial Statements:
1. Assets (plus)
2. Deferred Outflow of Resources (minus)
3. Liabilities (minus)
4. Deferred Inflow of Resources (equals)
5. Net Position (replaced Net Assets)

Elements of GASB Financial Statements:
1. Assets (plus)
2. Deferred Outflow of Resources (minus)
3. Liabilities (minus)
4. Deferred Inflow of Resources (equals)
5. Net Position (replaced Net Assets)

12

GASB Concept Statements provide GASB guidance in its standard-setting activities but are NOT GAAP

GASB Concept Statements provide GASB guidance in its standard-setting activities but are NOT GAAP

13

Purpose of financial reporting:
1. Accountability—This is based on the belief that the taxpayer has a “right to know” is accomplished by providing information to assist users in determining whether the government was operated within the legal constraints imposed by the citizenry.
2. Interperiod equity—This is a significant part of accountability by showing whether current-year revenues are sufficient to pay for current-year services or whether future taxpayers will be required to assume burdens for services previously provided.

Purpose of financial reporting:
1. Accountability—This is based on the belief that the taxpayer has a “right to know” is accomplished by providing information to assist users in determining whether the government was operated within the legal constraints imposed by the citizenry.
2. Interperiod equity—This is a significant part of accountability by showing whether current-year revenues are sufficient to pay for current-year services or whether future taxpayers will be required to assume burdens for services previously provided.

14

Of the 11 types of funds, only Governmental Funds and Enterprise Funds actually make it into the gov't wide financial statements

Of the 11 types of funds, only Governmental Funds and Enterprise Funds actually make it into the gov't wide financial statements

15

Typical Adjustments you'd make to the Statement of Net Position when converting from funds to gov't wide statements (most of the adjustments are the first two):
1. Add capital assets and accumulated depreciation
2. Add long-term liabilities
3. "Dissolve" Internal Service Funds
4. Internal balances
5. Year-end accruals

Typical Adjustments you'd make to the Statement of Net Position when converting from funds to gov't wide statements (most of the adjustments are the first two):
1. Add capital assets and accumulated depreciation
2. Add long-term liabilities
3. "Dissolve" Internal Service Funds
4. Internal balances
5. Year-end accruals

16

Statement of Activities is the equivalent to an Income Statement except you don't see expense categories like rent and wages. In gov't they report by function or program.
The rows are setup:
1. Gov't Activities (then stuff below it)
2. Business Type (then stuff below it)
3. Components
The gov't also reports on expenses in the first column in the Statement of Activities (not expenditures as its full accrual accounting is used in the Statement of Activities), followed by program revenues in the second column

Statement of Activities is the equivalent to an Income Statement except you don't see expense categories like rent and wages. In gov't they report by function or program.
The rows are setup:
1. Gov't Activities (then stuff below it)
2. Business Type (then stuff below it)
3. Components
The gov't also reports on expenses in the first column in the Statement of Activities (not expenditures as its full accrual accounting is used in the Statement of Activities), followed by program revenues in the second column

17

Statement of Net Position is like a Balance Sheet. Net position is approximately the equivalent of equity in accrual accounting. There are 3 categories to Net Position:
1. Capital Assets (Fixed assets, less any related debt)
2. Restricted (typically restrictions from outside sources, or law)
3. Unrestricted (everything left over)

Statement of Net Position is like a Balance Sheet. Net position is approximately the equivalent of equity in accrual accounting. There are 3 categories to Net Position:
1. Capital Assets (Fixed assets, less any related debt)
2. Restricted (typically restrictions from outside sources, or law)
3. Unrestricted (everything left over)

18

Statement of Net Position has 3 columns in its most basic format:
1. Governmental
2. Business Type
3. Total
There is a final column for component units. Component units are legally separated units that the government controls

Statement of Net Position has 3 columns in its most basic format:
1. Governmental
2. Business Type
3. Total
There is a final column for component units. Component units are legally separated units that the government controls

19

There are 3 standard sections to the comprehensive annual financial report (CAFR):
1. Introductory
2. Financial
3. Statistical

Note - A government can issue its basic financial statements, management's discussion and analysis, and other required supplementary information without its CAFR.

There are 3 standard sections to the comprehensive annual financial report (CAFR):
1. Introductory
2. Financial
3. Statistical

Note - A government can issue its basic financial statements, management's discussion and analysis, and other required supplementary information without its CAFR.

20

The statement of revenues, expenditures, and changes in fund balances is the GOVERNMENTAL FUNDS' income statement, tracking the flow of resources in and out.

The statement of revenues, expenditures, and changes in fund balances is the GOVERNMENTAL FUNDS' income statement, tracking the flow of resources in and out.

21

A government entity is required to include a statement of cash flows in which of the following financial statements?
A. Governmental fund financial statements
B. Government-wide financial statements.
C. Proprietary fund financial statements.
D. Fiduciary fund financial statements.

C. Proprietary fund financial statements.

Governments are required to prepare a statement of cash flows for proprietary funds, but not
for governmental funds.

22

NonExchange Revenue:
1. Derived Tax Revenue - Nonexchange Revenues that are based on (or derived from) Exchange Transactions. Examples of derived non-Exchange Transactions include sales taxes, income taxes and imposed hotel taxes.
2. Imposed Nonexchange Revenues - amounts that are assessed against and billed to taxpayers by the government entity. The most common example of an Imposed Nonexchange Revenue is Property Tax Revenue.
3. Government Mandated Nonexchange Transactions - legally mandated transfers of resources among governmental entities. Use of these resources is restricted to the purposes defined in the legislation. Revenue sharing monies and entitlements are examples of Government-Mandated Nonexchange Transactions.
4. Voluntary NonExchange Transactions - transfers of resources resulting from a contractual agreement willingly entered into by two or more entities. These resources must be used for purposes specified in the contract. Grants are the primary examples of this type of transaction.

NonExchange Revenue:
1. Derived Tax Revenue - Nonexchange Revenues that are based on (or derived from) Exchange Transactions. Examples of derived non-Exchange Transactions include sales taxes, income taxes and imposed hotel taxes.
2. Imposed Nonexchange Revenues - amounts that are assessed against and billed to taxpayers by the government entity. The most common example of an Imposed Nonexchange Revenue is Property Tax Revenue.
3. Government Mandated Nonexchange Transactions - legally mandated transfers of resources among governmental entities. Use of these resources is restricted to the purposes defined in the legislation. Revenue sharing monies and entitlements are examples of Government-Mandated Nonexchange Transactions.
4. Voluntary NonExchange Transactions - transfers of resources resulting from a contractual agreement willingly entered into by two or more entities. These resources must be used for purposes specified in the contract. Grants are the primary examples of this type of transaction.

23

Classifications of Governmental Funds:
1. Restricted -restricted fund balance category includes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation.
2. Committed - committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority.
3. Assigned - assigned fund balance classification are intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed
4. Unassigned - Unassigned fund balance is the residual classification for the government’s general fund and includes all spendable amounts not contained in the other classifications.
5. Nonspendable - nonspendable, such as fund balance associated with inventories

Classifications of Governmental Funds:
1. Restricted -restricted fund balance category includes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation.
2. Committed - committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority.
3. Assigned - assigned fund balance classification are intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed
4. Unassigned - Unassigned fund balance is the residual classification for the government’s general fund and includes all spendable amounts not contained in the other classifications.
5. Nonspendable - nonspendable, such as fund balance associated with inventories