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FAR > Governmental Accounting > Flashcards

Governmental Accounting Flashcards

2
Q

What is the primary objective of governmental accounting?

A

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

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3
Q

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

A

Governmental

Proprietary

Fiduciary

Defined by GASB 34

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4
Q

Which two accounting bases are used in governmental accounting?

A

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

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

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5
Q

What is a budget appropriation?

A

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

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6
Q

What is an encumbrance?

A

Records purchase and reserves it for the encumbrance.

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7
Q

What is the opening budgetary entry?

A

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

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8
Q

What is the closing budgetary entry?

A

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

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9
Q

What are the types of governmental funds?

A

GRaSPP/GSP-CD

```
General Fund
Special Revenue Fund
And
Debt Service Fund
Capital Projects Fund
Permanent Fund
~~~

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10
Q

What is a General Fund?

A

The operating fund of the governmental unit

5 star general - most powerful fund & can do anything

Records Significant Revenues: Taxes; Tickets; Fines; Licenses

Records Significant Expenditures: Police; Education; Fire Dept

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11
Q

What is a Special Revenue Fund?

A

Legally Restricted or committed for a specific purpose such as street repair, parking fees, gas tax

Resources are expendable

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12
Q

What is a Permanent Fund?

A

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

Principal remains intact.
** PRINCIPAL is PERMANENTLY restricted

Used for benefit of the public

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13
Q

What is a Capital Projects Fund?

A

**facilities require CAPITAL

Used to acquire and build facilities.
Used for construction, purchase, or lease of significant FA (used by GRaSPP only)

Fund has short life (limited to construction of 1-3 yrs)

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14
Q

What is a Debt Service Fund?

A

Handles repayment of long-term debt and related interest.

Pays off debt of GRaSPP funds (not SE PAPI funds)

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15
Q

Which fund statements are issued in Governmental Accounting?

A

Balance Sheet

Statement of Revenues; Expenditures; and Changes in Fund Balance

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16
Q

When is Revenue recorded in Governmental Accounting?

A

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

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17
Q

What is Derived Tax Revenue?

A

Money collected from people DOING things:
Derived = doing

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

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18
Q

What is Imposed Tax Revenue?

A

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.

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19
Q

What are the types of Proprietary Funds?

A

SE (PAPI) = IE

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)

    • requires SCF
    • records dep exp
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20
Q

What are the Fund Balance Types?

A 
Restricted - Restricted by Contributor 
 Committed - Restricted by Government
 Assigned - Intended for a purpose
 Unassigned - Available to be spent
 Non-spendable - Not in a spendable state
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21
Q

What are the types of Fiduciary Funds?

A

(SE) PAPI = APIP

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

Agency Trust Fund - government acts as an agent or custodian

Private Purpose Trust - Trust that benefits various individuals and entities

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

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22
Q

How are Assets & Liabilities presented on the Statement of Net Position?

A

Assets (Current & Non-Current)
Deferred Outflows of Resources
Liabilities (Current & Non-Current)
Deferred Inflows of Resources

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23
Q

How are Capital Assets shown on a governmental Statement of Net Assets?

A

They are shown net of debt

Asset Cost - Accumulated Depreciation - Asset Liabilities = Net Assets

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24
Q

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

A

Modified approach:

Reported at cost; no accumulated depreciation

25
Q

How is a Statement of Net Assets divided?

A

Into Governmental Activities and Business Activities

26
Q

How are activities presented in a Statement of Activities?

A

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.

27
Q

Standards that governmental and NFP use

A 
Govt = GASB
NFP = FASB
28
Q

Differences in focus and accounting for governmental and proprietary/fiduciary funds

A

Governmental = MAC GRaSPP
Modified
Accrual
Current fin resources measurement focus

Proprietary/fiduciary = SE PAPI ACE
Accrual
Carry FA & LTD
Economic resources measurement focus

29
Q

Degrees of constraint for govt fund balances

A

NU CAR

Non spendable
Unassigned
Committed
Assigned
Restricted
30
Q

Nature of govt fund constraints

A 
N = practical
U = none
C = internal
A = internal
R = external
31
Q

Differences b/w modified accrual acctg & commercial GAAP

A

Commercial:
IS –> RE –> BS –> next yr

Modified:
BAE-BAE –> BS –> next yr

32
Q

Budgetary accounting (BAE-BAE)

A

General fund

Book on opposite side of control

33
Q

Activity accounting (BAE-BAE)

A

(G)RaSP(P)

Revenue - measurable and available
Expend - all spending
Assets - expend
Debts - other fin sources (not LTD)

34
Q

Encumbrance accounting

A

(GRaSP)P

Commit funds for PO

35
Q

How to determine where public-restricted funds are recorded

A

Special rev fund = principal and interest available for spending

Permanent fund = only interest available for spending

36
Q

What is an internal service fund?

A

S of SE PAPI

**INTERNAL = serves INTERNALLY (other govt units)
Finance and count for services & supplies provided exclusively to other depts within a govt unit to other govt units

Full accrual

Ex. Central (janitorial, garages, printing, repair)

37
Q

What is an enterprise fund?

A

E of SE PAPI

**ENTERPRISE = EXTERNAL = serves the ENTERPRISE

Provides g/s to external users

account for operations financed and operated in a manner similar to a private business; recovers cost through fees assessed to public

Full accrual

Ex. Public utilities, hospitals, univ, transportation

38
Q

Order of presentation of line items on proprietary fund Statement of Revenues, Expenses, and Changes in Fund net Position

A

INCASET

Income (op)
Non operating inc & exp
Capital contrib and
Additions to endowments
Special items (unusual/infrequent)
Extraordinary items
Transfers
39
Q

What is the difference between expenses and expenditures?

A 
Expenses = full accrual
Expenditures = modified accrual
40
Q

What is a pension trust

A

1st P of SE PAPI

Full accrual
NO statement of CF

41
Q

Significant difference b/w fiduciary & proprietary funds

A 
Fiduciary = CF statement not req'd (PAPI)
Proprietary = CF statement req'd (SE)
42
Q

What is an agency trust?

A

A of SE PAPI

**acts as AGENT and holds assets
Collects cash to be help temporarily for an authorized recipient to whom it will be later disbursed

“Govt is not obligated in any manner”

Ex. Tax fund

Full accrual
NO IS or SCF req’d - change in fiduciary net position req’d

43
Q

What is a private purpose trust?

A

2nd P of SE PAPI

Designated fund for reporting all other trust arrangement a under which principal and income are for the benefit of:
Specific individual
Private org
Other govts

Full accrual
SCF not reqd

44
Q

What is an investment trust?

A

I of SE PAPI

**govt is TRUSTEE over series of INVESTMENTS

A govt entity that sponsors 1+ external investment pools should report the external portion of each pool as a separate investment fund

Full accrual
SCF not req’d

45
Q

What is required for reporting for general purpose govt units

A 
MD&A
Govt wide FS
Fund FS
Notes to FS
Req'd supplementary information other than MD&A
Other supplementary info
46
Q

What is optional for reporting for general purpose govt units

A

Comprehensive annual financial report
Intro
Basic FS & req’d supplementary info
Statistical section

47
Q

How does primary government report?

A

By itSELF
Separately elected governing body
Legally separate
Fiscally independent

48
Q

How to calculate govt wide statement of net position

A 
Assets
Deferred outflows of resources
-
Liab
Deferred inflows if resources
= net position (not fund balance)
49
Q

How to calculate governmental fund BS

A 
Assets 
Deferred outflows of resources
=
Liab
Deferred inflows of resouces
\+
Fund balance
50
Q

How funds relate to BS

A 
1. GRaSPP = BS
    CA, CL, fund balance
2. SE = statement of net position
    A, L, net position
3. PAPI = statement if fiduciary net position
    A, L, net position
51
Q

How funds relate to IS

A
  1. GRaSPP = statement of rev, exp, and changes in fund net position
    Rev, expenditures, other financing sources (uses)
  2. SE = same
    Op rev & exp, nonop rev & exp
  3. PAPI = statement if changes in fiduciary net position (not “A”)
    Additions, deductions
52
Q

How funds relate to SCF

A
  1. SE

Op, invest, capital, noncapital

53
Q

Method of accounting for SE PAPI

A
  • Full accrual
  • Economic resource focus
    • rev & exp model
  • income determination
  • transfer = reported separately after nonop rev
  • expense
54
Q

Method of accounting for GRaSPP

A
  • Modified accrual
    Budget = GRaSPP
    Activity = GRaSPP
    Encumbrances = GR(aS)S(P)
  • Current financial resources/position focus
  • transfer = other fin source/use (not rev)
    *exoenditure
55
Q

Categories for equity

A

Invested
Restricted
Unrestricted

56
Q

Government-wide FS focus

A

ECON resources
Accrual
(This is opposite of govt fund method)

57
Q

What is req’d for entity to be considered primary govt?

A
  1. Legally elected governing body
  2. Legally separate
  3. Fiscally independent
    (All 3)
58
Q

How is an entity that is NOT primary govt reported?

A
  • component unit

- discrete presentation

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