1
Q
What are the objectives of Fund Accounting?
A
- In compliance with legal restrictions
- In compliance with spending limits/budgetary control
2
Q
Not-for-profit organizations not run by governments do not use?
A
Governmental Accounting
3
Q
Governmental accounting is tested within what 3 themes?
A
- Fund Structure
- Fund Accounting
- External Reporting
4
Q
To hold you must…GRaSPP
What are the different governmental accounting funds?
A
GRaSPP
- General Fund
- Special Revenue Fund
AND
- Debt Service Fund
- Capital Projects Fund
- Permanent Fund
5
Q
What is the Balance sheet format for the Funds?
A
Current Assets and Deferred Outflows (Prepaids)
——————————
Current Liabilities + Deferred Inflows of Resources (Deferred Revenue)
Plus: Fund Balance
———————————-
Equals: Total Current Liabilities, deferred inflows of resources, and fund balance (Like R/E)
6
Q
I/S = The Statement of Revenues, Expenditures, and Changes in Fund Balance
What is the Income Statement format for the governmental funds?
A
The Statement of Revenues, Expenditures, and Changes in Fund Balance
Revenues
- *Less:** Expenditures
- *Equals:** Net Change in Fund Assets.
7
Q
SE of SE PAPI
What are the Proprietary Funds?
A
SE
- Internal Service Fund
- Enterprise Fund
8
Q
What is are the Financial Statements for the Proprietary Funds?
A
- The Statement of Net Position
- The Statement of Revenues, Expense, and changes in Fund Net position.
9
Q
What is the format for the Statement of Net position (Proprietary Funds)?
A
All assets and deferred outflow of resources
- *Less:** All liabilities and deferred inflows of resources
- *Equals:** Net Position
10
Q
What is the format for the Statement of Revenues, expenses, and Changes in fund net position?
A
Operating Revenue
- *Less:** Operating expenses
- *Plus:** nonoperating revenue or Less: expenses
- *Equals:** Change in Net position
11
Q
PAPI of SE PAPI
What are the Fiduciary (Trust) Funds?
A
PAPI
- Pension (and other employee benefit) Trust Funds
- Agency Trust Funds
- Private Purpose Trust Funds
- Investment Trust Funds
12
Q
What are the Statements from the Fiduciary Funds?
A
Statement of Fiduciary Net position
Statement of Changes in Fiduciary Net Position
13
Q
MAC GRaSPP / SPACE SE PAPI
Difference between Governmental and Properietary & Fiduciary Funds?
A
Governmental funds are MAC-GRaSPP
- Modified
- Accrual accounting
- Current financial resources measurement focus
- GRaSPP
Proprietary & Fiduciary Funds have SPACE
- SE
- PAPI
- Accrual accounting
- Carry fixed asset and long-term debt
- Economic resources measurement focus
14
Q
Modified Accrual Recognizes Revenue when?
A
When it is Measurable & Available.
- **Available - **collectible within 60 days
- Measurable - Quantifiable in Monetary Terms
15
Q
Modified Accrual is used for which funds?
A
GRaSPP.
Remember the MAC GRasPPs his Hoes.
16
Q
Which Funds use Full Accrual?
A
- SE
- PAPI
- ACE (Accrual, Current fixed asset and Long-term Debt, Economic Resources Focus)
17
Q
NU CAR
What are the 5 degrees of Constraints?
A
- Non-spendable Fund Balance (Practical) - Monies have been spent assets are either naturing or expiring
- Unassigned Fund Balance - no constraints to use so General Fund = positive
- Committed Fund Balance (Internal) - Highest governming authoritity establishes limits
- Assigned Fund Balance - (Intention) without formal committment
- Restricted Fund Balance (External) - Legistlation, grantor or creditor requirement must be satisfied
18
Q
What are the likely classifications of fund balance in governmental funds?
A
- General (Positive) NCAR
- Special Revenue (Negative) NC_R
- Debt Service (Negative) _CAR
- Capital Projects (Negative) _CAR
- Permanent (Negative) ____R
19
Q
What is Budgetary Accounting?
A
A balance Budget supports interperiod equity as an objective of public administration and Fiscal Responsibility
20
Q
What’s the Journal Entry that records the budgeted amounts for estimated revenue and approved expenditures (appropriations)?
A
- Dr: Estimated Revenue Control
- Dr: Estimated other financiing sources (transfers from other funds [transfer in])
- Dr: Budgetary control (negative/deficit)
- Cr: Appropriations control
- Cr: Estimated other financing uses (transfers to other funds [transfer out])
- Cr: Budgetary control (positive/surplus)
Remember that it is the opposite of the T account compared to the actual amounts!
21
Q
What is the Journal Entry to Reverse the budget?
A
- Dr: Appropriations
- Dr: Estimated other financing uses [transfers to other funds (transfer out)]
- Dr: Budgetary control (positive)
- Cr: Estimated revenue control
- Cr: Estimated other financing sources [transfers from other funds [transfer in])
- Cr: Budgetary control (negative)
22
Q
Non-exchange
Derived Tax Revenues
A
Imposed on or derived from exchange transactions.
- Sales tax, tax payer income
Revenues recognized when measurable & available
23
Q
Imposed Non-exchange Revenues
A
Non-exchange transactions
- Fines, wealth (property taxes), real estate taxes due
Receivables recorded when government has enforceable legal claim (when property taxes levied, subject to availability criterion)
24
Q
Government Mandated Non-exchange Transactions
A
Higher level of government (state) provides funds and mandates certain activities by another level of government (county)
- Environmental clean up
25
Voluntary Non-exchange Transactions
Government receives resources and does not provide equal value
* Grant agreements
26
JE to record accrual of real property taxes levied and proved for the estimated amount of noncollectable amounts.
* **Dr:** Real property taxes receivable - current
* **Cr:** Revenues - property taxes
* **Cr:** Allowance for uncollectible taxes receivable - current
27
What is the Journal entry to reclassify Receivables to Delinquent?
* **Dr:** Property taxes receivable - delinquent
* **Cr:** Property taxes receivable - current
28
What are the Methods to for Inventory and Prepaids?
Consumption and Purchase methods.
29
Classification of Governmental Expenditures:
What are examples of a Function or Program?
Examples: public safety, highways, education
30
Classification of Governmental Expenditures:
What is an Organizational Unit?
Organizational units roll up into Functional Presentations.
Example, the police an fire dept.s can combine to form the public safety function.
31
What are encumbrances generally not used for?
Recurring expenditures like salaries
32
True or False: On the Financial Statements Encumbrances are detailed on the face.
False.
Encumbrance will not be specifically detailed on the face of the financial statement but may by disclosed if material
33
Truck example, what is the J/E to close any outstanding encumbrances at the year-end and reserve the fund balance?
* **Dr:** Budgetary control $45,0000
* **Cr:** Encumbrances $45,000
34
Truck Example, what is the J/E to close budgetary accounts related to outstanding purchase orders?
* **Dr:** Unassigned Fund Balance $45,000
* **Cr:** Fund Balance, committed $45,000
35
What is the J/E to record the receipt of last year's item and pay for it?
* **Dr:** Expenditure - PY $45,000
* **Cr:** Vouchers payable (Cash) $45,000
36
**MAC -** Deferred outflows of resources are presented where and have what effect on the financial statements?
They have a **positive** effect on Net Position.
They're reported following assets but before liabilities.
37
What are the effects of deferred inflows on the Financial statements and where are they presented?
Deferred inflows have a **negative** effect on Net Position
Reported following liabilities but before equity.
38
Governmental Fund Balance Sheet Formula?
Assets
Deferred Outflows of Resources
**=**
Liabilities
Deferred Inflows of Resources
**+**
Fund Balance
Total Liabilities, Deferred Inflows of Resources and Fund Balance
39
General fund:
Name 1 financing use?
* Transfers-out
40
For Proprietary and Fiduciary funds, what is required for the Statement of Net Position?
Proprietary Funds are **ENCOURAGED**
Fiduciary Funds are **REQUIRED **to report net position.
Assets
Deferred outflows of resources
- Liabilities
_Deferred inflows of resources_
= Net Position
41
# 2
What are the criteria to qualify for deferred outflow or deferred inflow treatment?
The transferor conveys to the operator the **right** and **related obligation** to provide public services through the use and operation of a capital asset in exchange for significant consideration, such as an Upfront Payment.
The operator collects and is compensated by fees form third parties.
42
# 4
Transferor accounting steps or criteria?
1. The transferor continues to show the managed facility as a capital asset
2. The transferor displays a liability for significant contractual obligations
3. Upfront or installment payments are displayed as an asset at the present value
4. Deferred inflows should be recognized in a systematic and rational manner.
43
# 3
Derivative instruments and hedge accounting: What are the MAC basis accounting treatments?
1. Derivatives are reported at FV
2. **Changes in value of derivatives** used as investments are displayed within the investment revenue classification
3. **Changes of derivatives** used for hedges are reported as either deferred outflows or deferred inflows of resources
44
Other deferred outflows/inflows of resources:
What are Imposed nonexchange revenue transactions?
Transactions that are reported as receivables prior to their formal levy
* Property taxes recorded in December but not fully levied until January
45
General Fund:
Name the 2 other financing sources?
1. Transfers in
2. Bond Proceeds
46
Unique accounting Issues: What does GASB 34 state?
Expendable trust activity should be accounted for in a special revenue fund
47
Unique accounting Issues: What is one government restricted donation?
Forfeiture Act - Illegal activities
Drug money for cops kids.
48
The Debt service fund does not pay off which funds?
SE-PAPI funds!
It **DOES** pay off GRaSPP funds
49
# Ex: assume the seminanual interest payment associate with the bond issue is due (2,000,000 at 3% x 6/12)
Debt Service Fund:
How to Journalize interest expenditures?
* DR: Expenditures
* CR: Cash
(matured interest payable)
50
Debt service fund:
Treatment of premiums and Discounts
Bond premiums and discounts are treated as a component of bond proceed at the time of bond issuance.
There is no amortization of premium or discount.
51
Capital Project Funds:
Why are they established?
For the construction, purchase or leasing of significant fixed assets.
This is used by GRaSPP.
52
Special Assessments:
When the Government unit is primarily or potentially liable for the special assessment debt, what should the government unit do?
Account for the capital project and debt related transactions through the appropriate governmental or proprietary fund.
53
Special Assessments: What is the Government unit potentially liable or primarily liable for?
The transactions should be reported in an agency fund.
54
What are the 2 Governmental Funds that **do not record** encumbrances?
Debt service fund
Permanent Fund
55
Where are public-restricted funds are recorded?
**Special Revenue Fund** = Principle and Interest
**Permanent Fund** = Interest only
56
Internal service fund:
When are restricted grant revenues recorded?
Restricted Grant Revenues are recognized as revenues in the year monies are spent.
57
Internal Service fund: When are operating revenues recorded?
Recognized when earned
58
Internal Service Fund:
What is the J/E to record billings for services rendered to other funds?
* DR: Cash (or due from other fund)
* CR: Billings to other departments
59
# Internal Service Fund: Unique Accounting issues
True or False: Budgetary Accounts and Encumbrances are recorded in the Internal Service fund.
False.
Budgetary accounts and Encumbrances are not recording in the Internal Service funds
60
How is Net Position presented for the Internal Service Fund?
It is displayed in a manner consistent with other **proprietary funds. **
It displays 3 categories: unrestricted, restricted (for purpose) and net investment in capital assets.
61
True or Fales: Due to other fund is like Accounts Payable?
False!
62
What are some examples of Enterprise fund?
* Public Utilities
* Public Hospitals
* Public Universities
63
Enterprise fund: what are shared revenues?
Revenues collected from one government (State government) and distributed to another government (local government) on a predetermined basis .
* Toll roads
* Gasoline taxes
64
Enterprise Fund: What is are the Net Position items?
Net Investment in capital Assets
Restricted (for purpose)
Unrestricted
65
Enterprise Fund: what are special cost components for a Municipal Landfill?
1. Cost of equipment, facilities installed and expected to be constructed near or after the date the Landfill stops accepting garbage.
2. Cost of Gas monitoring and collection
3. Cost of final cover
4. Estimate should be adjusted annually. Under proprietary fund reporting, a portion of this estimated cost is recognized as an expense and liability based on usage.
66
Pension Trust Fund: What is IRC section 457?
Deferred compensation plans are similar to 403 and 401K defined contribution plans.
67
Pension Trust Fund: how are assets valued?
The assets are reported at a fair value basis. For the most part.
68
# F8-72
Pension trust fund: What are additions and Deductions on the Statement of Changes in Fiduciary Net Position?
**Addition:**
* Contributions:
* Employer
* Plan Members
* Investment earnings:
* Net incr. (decr.) in FV of investments
* Interest
* Dividends
**Deductions**
* Benefits
* Refunds of contributions
* Administrative expenses
69
Agency Trust Fund: Special assessments?
When the **government unit** is not otherwise obligated for the debt (not primarily or pontentially liable), the receivables and debt service transaction are appropriately accounted for in the agency fund
70
Private Purpose Trust Fund: what are the Unique accounting issue?
Escheat Property: Remember the John Lord List.
71
How are the Escheat property reported?
Revenue is reduced and a fund liability is reported to the extend property will probably be reclaimed
72
What is another purpose of GASB 34?
To show = additional and detailed information about the primary government.
73
Budgetary comparisons must be presented in the same?
Basis of accounting.
74
# Meets 1 of 3 criteria
When is an Enterprise fund required?
1. Activity of fund is financed by **debt secured** by **pledge of fee revenue**
2. Laws require collection fees adequate to **recover costs**
3. Pricing policies are established to **produce fees to recover costs**
75
# INCASET you forgot...
Line items for Proprietary fund *Statement of Revenue Expenses, and Changes in Fund Net Position*
**INCASET**
* **Income** (operating)
* **Nonoperating** income and expense
* **Capital** contributions and
* **Additions** to Endowments
* **Special** items (unusual or infrequent)
* **Extraordinary** Items
* **Transfers**
