Governmental Accounting

Question 1

<p>What is the primary objective of governmental accounting?</p>

Answer 1

<p>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</p>

Question 3

<p class=”large” style=”text-align:center”;>What are the three major types of funds in governmental accounting?</p>

Answer 3

<p class=”large” style=”text-align:center”;>Governmental

Proprietary

Fiduciary</p>

Question 3

<p>Which two accounting bases are used in governmental accounting?</p>

Answer 3

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

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

Question 4

<p>What is a budget appropriation?</p>

Answer 4

<p>The highest amount allowed for a particular expenditure under a budget.</p>

Question 6

<p class=”large” style=”text-align:center”;>What is an encumbrance?</p>

Answer 6

<p class=”large” style=”text-align:center”;>Records purchase and reserves it for the encumbrance.</p>

Question 6

<p>What is the opening budgetary entry?</p>

Answer 6

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

Question 7

<p>What is the closing budgetary entry?</p>

Answer 7

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

Question 8

<p>What are the types of governmental funds?</p>

Answer 8

<p class="large" style="text-align: center;">General Fund
Special Revenue Fund
Permanent Fund
Capital Projects Fund
Debt Service Fund

</p>

Question 10

<p class=”large” style=”text-align:center”;>What is a general fund?</p>

Answer 10

<p class=”large” style=”text-align:center”;>The ‘operating’ fund of the governmental unit

Records Significant Revenues: Taxes, Tickets, Fines, Licenses

Records Significant Expenditures: Police, Education, Fire Dept
</p>

Question 10

<p>What is a special revenue fund?</p>

Answer 10

<p>Restricted for a specific purpose such as street repair.</p>

Question 11

<p>What is a permanent fund?</p>

Answer 11

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

Principal remains intact.</p>

Question 12

<p>What is a capital projects fund?</p>

Answer 12

<p>Used to acquire and build facilities.</p>

Question 14

<p class=”large” style=”text-align:center”;>What is a debt service fund?</p>

Answer 14

<p class=”large” style=”text-align:center”;>Handles repayment of long-term debt and related interest.</p>

Question 14

<p>Which fund statements are issued in governmental accounting?</p>

Answer 14

<p>Balance Sheet

Statement of Revenues, Expenditures, and Changes in Fund Balance</p>

Question 15

<p>When is revenue recorded in governmental accounting?</p>

Answer 15

<p>When it is BOTH available and measurable, regardless of when it is spent.</p>

Question 16

<p>What is derived tax revenue?</p>

Answer 16

<p>Money collected from people 'doing' things:

Sales tax (buying cars) or income tax (people working)</p>

Question 17

<p>What is imposed tax revenue?</p>

Answer 17

<p>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.</p>

Question 18

<p>What are the types of proprietary funds?</p>

Answer 18

<p>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)

</p>

Question 20

<p class=”large” style=”text-align:center”;>What are the proprietary fund financial statements in governmental accounting?</p>

Answer 20

<p class=”large” style=”text-align:center”;>Statement of Net Assets

Statement of Revenues, Expenses, and Changes in Net Assets

Statement of Cash Flows</p>

Question 20

<p>What are the types of fiduciary funds?</p>

Answer 20

<p>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</p>

Question 21

<p>How are assets and liabilities ordered in a governmental Statement of Net Assets?</p>

Answer 21

<p>Ordered by liquidity

Current and non-current</p>

Question 22

<p>How are capital assets shown on a governmental Statement of Net Assets?</p>

Answer 22

<p>They are shown net of debt

Asset Cost - Accumulated Depreciation - Asset liabilities = Net assets</p>

Question 23

<p>How is infrastructure reported on a governmental Statement of Net Assets?</p>

Answer 23

<p>Modified approach:

Reported at cost, no accumulated depreciation</p>

Question 24

<p>How is a Statement of Net Assets divided?</p>

Answer 24

<p>Into Governmental Activities and Business Activities</p>

Question 25

<p>How are activities presented in a Statement of Activities?</p>

Answer 25

<p>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.</p>