Indtroduction Flashcards
Why does the question ‘Does non-profit mean money doesn’t matter?’ matter in the context of governmental accounting?
Because while non-profits or government entities don’t operate with profit as the main objective, financial resources and accountability still play a critical role in ensuring sustainability and transparency.
What is the purpose of governmental accounting?
To provide a framework for recording, reporting, and interpreting financial information about governments to ensure accountability and transparency in the management of public funds.
How does governmental accounting differ from commercial accounting?
Governmental accounting focuses on accountability to citizens and stakeholders, rather than generating profits, and adheres to standards set by the GASB.
Who are the primary users of governmental financial statements?
Citizens, elected officials, and other stakeholders who require financial information to make informed decisions regarding public services and governance.
What are some examples of entities that governmental accounting covers?
- Local governments (e.g., cities, counties)
- State governments
- Federal agencies
What is the cornerstone of governmental financial reporting according to GASB?
Accountability.
What are the primary objectives of governmental accounting?
- To provide financial information that enables transparency and accountability.
- To demonstrate compliance with laws, regulations, and budgetary constraints.
- To assess the financial health and performance of the government entity.
How does GASB define accountability in governmental accounting?
Being able to demonstrate that government entities have used public resources efficiently, effectively, and legally to meet the needs of citizens.
What is the government-wide financial report?
A consolidated financial report for the U.S. government that includes a Citizen’s Guide, MD&A, performance information, financial statements, and supplemental information.
What does the Citizen’s Guide provide in a government-wide financial report?
A plain language explanation of the government’s finances, designed to make the financial information accessible to the general public.
What are the main components of a Performance and Accountability Report (PAR) for federal agencies?
- Annual Performance Report (APR)
- Annual Financial Statements
- Management Reports on internal controls and accountability issues.
What does MD&A (Management’s Discussion and Analysis) include in governmental financial reporting?
A narrative that provides an overview of the government’s financial activities, including its financial position, results of operations, and other significant factors influencing its performance.
Why do governments need to comply with GASB reporting standards?
GASB standards ensure consistency, transparency, and comparability in financial reporting.
What is the purpose of governmental fund accounting?
To ensure that governments manage and account for public funds in a way that meets budgetary and legal requirements.
What are the fund types used in governmental accounting?
- General Fund
- Special Revenue Funds
- Capital Projects Funds
- Debt Service Funds
- Enterprise Funds
- Fiduciary Funds
How do special purpose governments differ from general-purpose governments?
Special purpose governments focus on delivering specific services and typically use specific revenue sources, while general purpose governments provide a broad range of services.
What is the importance of understanding the funding sources for governmental entities in financial reporting?
It helps clarify how governments allocate and manage resources.
What is the primary focus of accountability in governmental accounting?
Demonstrating how effectively and efficiently public resources are used to serve the needs of citizens.
What role does budgetary accounting play in governmental accounting?
It ensures that governments track and report expenditures in accordance with legal limits.
What does GASB stand for?
Governmental Accounting Standards Board.
Define accrual accounting in the context of governmental accounting.
Accrual accounting recognizes revenues when earned and expenses when incurred.
What is the modified accrual accounting method?
Recognizes revenues when they are available and measurable, and expenditures when the liability is incurred.
What is the public sector’s primary reporting goal?
To ensure transparency, accountability, and proper stewardship of public resources.
What is a General Fund?
The primary operating fund of the government.
