M2 - Fund Structure and Fund Accounting Flashcards Preview

FAR 9 - State and Local Governments: Part 1 > M2 - Fund Structure and Fund Accounting > Flashcards

Flashcards in M2 - Fund Structure and Fund Accounting Deck (16):

Measurement focus for a governmental fund contemplates measurement of the flow of current financial resources and resulting financial position. (true or false)


A fund's measurement focus identifies what transactions should be recorded and how they should be reported. For governmental funds, the statement of revenues and expenditures should report resources received and consumed during the current period (current financial resources focus). The balance sheet shows available resources and current obligations (financial position focus).


Modified Accrual Basis of Accounting and Current Financial Resources Measurement Focus are used in connection with the governmental funds (GRaSPP).

G General fund (Governmental)
R special Revenue fund (Governmental)
a and
S debt Service fund (Governmental)
P capital Projects fund (Governmental)
P Permanent fund (Governmental)
M Modified
A Accrual Accounting
C Current financial resources measurement focus (current only- no current assets or LTDebt)


The Full Accrual Basis of Accounting and Economic Resources Measurement Focus are used for both the governmental-wide financial statements as well as the fund presentations of the Fiduciary and Proprietary Funds (SE-PAPI).

S internal Service fund - (Proprietary)
E Enterprise fund- (Proprietary)
P Pension (and other employee benefit) trust fund (Fiduciary)
A Agency fund (Fiduciary)
P Private purpose trust funds (Fiduciary)
I Investment trust funds (Fiduciary)
A Accrual Accounting
C Carry fixed asset and long-term debt
E Economic resources measurement focus


General Fund

The general fund is set up to account for the ordinary operations of a governmental unit that is is financed from taxes and other general revenues. All transactions not accounted for in other funds are accounted for here. All accounts are of a "current" nature; thus this fund contains no fixed asset or long-term debt accounts.


Special Revenue Fund

Special Revenue funds are set up to account for revenues from specific taxes or other earmarked sources that (by law) are restricted or committed to finance particular activities of government.


Debt Service Fund

Debt service funds are set up to account for the accumulation of resources and the payment of interest and principal on all "general obligation debt," other than that serviced by enterprise funds or by special assessments in another fund. Resources of the fund are restricted, committed, or assigned to debt service expenditures.


Capital Projects Funds

Capital projects funds are set up to account for resources restricted, committed or assigned for the acquisition or construction of major capital assets by a governmental unit, except those projects financed by an enterprise fund.


Permanent Fund

Permanent funds are used to report resources that are legally restricted to the extent that income, and not principal, may be used for purposes supporting the reporting government's programs (i.e, for the benefit of the public.)

Ex: Roy city received a gift, the principal of which is to be invested in perpetuity with the income to be used to support the local library.


Funds are generally classified into 3 generic categories, what are they?

- Governmental funds (GRaSPP)
-Proprietary funds (SE)
-Fiduciary funds (PAPI)


Internal Service Funds

Internal service funds are set up to account for goods and services provided by designated departments on a cost-reimbursement fee basis to other departments and agencies within a single governmental unit or to other governmental units. Customers of the internal service fund are primarily internal.

Example: A central pool or building maintenance department may be accounted for with an internal service fund.


Enterprise Funds

Enterprise funds are set up to account for the acquisition and operation of governmental facilities and services that are intended to be primarily (more than 50 percent) self-supported by user charges. Customers of the enterprise fund are primarily external.

Example: Enterprise funds are often used for utilities (water and sewer), airports, and transit systems.

Enterprise funds are required when any one of three criteria are met:
-the activity of the fund is financed by debt secured by a pledge of fee revenue
-laws require collection fees adequate to recover costs; or
-pricing policies are established to produce fees to recover costs


Pension (and other employee benefit) Trust Funds

Pension trust funds account for resources of defined benefit plans, defined contributions plans, post-employment benefit plans, and other long term employee benefit plans.


Agency Trust Funds

Agency trust funds account for resources in the temporary custody of a governmental unit (e.g., taxes collected for another entity).


Private Purpose Trust Funds

Private purpose trust funds are the designated funds for all other trust fund arrangements under which principal and income are for the benefit of specific individuals, private organizations, or other governments. Often the government will need to recored escheat property (i.e., property that has been forfeited as a result of the passage of time or process of law) in a private purpose trust fund.


Investment Trust Funds

Investment trust funds account for external investment pools


What a difference between modified accrual and full accrual on how they recognize revenues?

Modified Accrual
-Recognize revenues in accounting period in which they are AVAILABLE and MEASURABLE

Full Accrual
-Recognize revenues in the accounting period in which they are EARNED.