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Flashcards in Governmental Accounting Deck (25):

What is the primary objective of governmental accounting?

To provide information that is useful and benefits a wide range of users including:

Costs of services provided

Sufficiency of revenues to cover costs

Financial position of entity


What are the three major types of funds in governmental accounting?





Which two accounting bases are used in governmental accounting?

Accrual basis - current economic resources focus (revenues recognized when earned)

Modified accrual basis - current financial resources focus (revenues recognized when available and measurable)


What is a budget appropriation?

The highest amount allowed for a particular expenditure under a budget.


What is an encumbrance?

Records purchase and reserves it for the encumbrance.


What is the opening budgetary entry?

Dr Estimated Revenues Control
Cr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)


What is the closing budgetary entry?

Dr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
Cr Estimated Revenues Control


What are the types of governmental funds?

General Fund
Special Revenue Fund
Permanent Fund
Capital Projects Fund
Debt Service Fund


What is a general fund?

The 'operating' fund of the governmental unit

Records Significant Revenues: Taxes, Tickets, Fines, Licenses

Records Significant Expenditures: Police, Education, Fire Dept


What is a special revenue fund?

Restricted for a specific purpose such as street repair.


What is a permanent fund?

Legally restricted fund, where only earnings can be used to fund programs.

Principal remains intact.


What is a capital projects fund?

Used to acquire and build facilities.


What is a debt service fund?

Handles repayment of long-term debt and related interest.


Which fund statements are issued in governmental accounting?

Balance Sheet

Statement of Revenues, Expenditures, and Changes in Fund Balance


When is revenue recorded in governmental accounting?

When it is BOTH available and measurable, regardless of when it is spent.


What is derived tax revenue?

Money collected from people 'doing' things:

Sales tax (buying cars) or income tax (people working)


What is imposed tax revenue?

Tax assessed just because things 'exist'

Example: property tax on a car (even if it's never driven), real estate tax

Recorded as a revenue when BUDGETED.

Estimated uncollectible property tax revenues don't offset revenues, so don't net them.


What are the types of proprietary funds?

Internal Service Funds - to serve the needs of other governmental units (i.e. motor pool)

Enterprise Funds - provide goods or services to external users (i.e. post office)


What are the proprietary fund financial statements in governmental accounting?

Statement of Net Assets

Statement of Revenues, Expenses, and Changes in Net Assets

Statement of Cash Flows


What are the types of fiduciary funds?

Agency Fund - government acts as an 'agent' or custodian

Pension Trust Fund - government is a trustee for a pension plan

Investment Trust Fund - government is a trustee over a series of investments

Private Purpose Trust - trust that benefits various individuals and entities


How are assets and liabilities ordered in a governmental Statement of Net Assets?

Ordered by liquidity

Current and non-current


How are capital assets shown on a governmental Statement of Net Assets?

They are shown net of debt

Asset Cost - Accumulated Depreciation - Asset liabilities = Net assets


How is infrastructure reported on a governmental Statement of Net Assets?

Modified approach:

Reported at cost, no accumulated depreciation


How is a Statement of Net Assets divided?

Into Governmental Activities and Business Activities


How are activities presented in a Statement of Activities?

They are divided by function

If the activities of a component are distinguishable from the rest of the governmental entity- then discreet presentation is required

If the activities of the component cannot be identified and separated from the rest of the governmental activities- then blended presentation is warranted.

Component units are reported in the Entity-Wide Financial Statements and not the Fund Financial Statements.