F8

Question 1

Dual Objectives for Governmental Accounting

Answer 1

1. Operational Accountability
2. Fiscal Accountability
3. Timeliness
4. Consistency
5. Comparability

Question 2

When is governmental accounting used?

Answer 2

*when there exists financial control and/or legal restrictions

Question 3

Who establishes principles and standards for NFPs?

Answer 3

*the FASB; GASB is only for governmental accounting

Question 4

Three General Types of Government Funds

Answer 4

1. Governmental
2. Proprietary
3. Fiduciary

Question 5

Government-Wide Presentation

Answer 5

• full accrual

* economic resources measurement focus

Question 6

Governmental Funds - Guiding Principles

Answer 6

• modified accrual system

* current financial resources measurement focus

Question 7

Types of Governmental Funds

Answer 7

1. General Fund
2. Special Revenue
3. Capital Projects Fund
4. Debt Service Fund
5. Permanent Fund

Question 8

Types of Proprietary Funds

Answer 8

1. Internal Service Fund

2. Enterprise Fund

Question 9

Types of Fiduciary Funds

Answer 9

1. Pension
2. Agency Trust Funds
3. Private Purpose Trust Fund
4. Investment Trust Funds

Question 10

Fund Balance Designations for Governmental Funds

Answer 10

1. Unrestricted
2. Committed
3. Assigned
4. Restricted
5. Non-spendable (inventory, etc.)

Question 11

Net Position Designations for All Other Funds

Answer 11

R estricted
U nrestricted
N et investment

Question 12

Which is the only fund that will have a positive unassigned balance?

Answer 12

*the general fund

Question 13

When setting up a budget for a governmental fund, where does the net difference go?

Answer 13

• budgetary control (DR or CR)

* remember that budgetary accounts are on the opposite side of the T account

Question 14

Revenue Recognition for Derived and Imposed Revenues

Answer 14

Derived = revenue when measurable and available

Imposed - enforceable legal claim; when their use is required or first permitted

Question 15

When recording receivables for governmental funds, is there bad debt associated with the allowance?

Answer 15

No; revenue is just decreased

Question 16

Journal Entry to Reclassify Current Allowance into Delinquent Allowance

Answer 16

DR: (Revenue - cash proceeds)
DR: Allowance - current
CR: Allowance - delinquent

Question 17

Purchase Method vs. Consumption Method

Answer 17

Purchases = all to expenditure and then adjust inventory and fund balance
Consumption = record inventory and expenditure over time

Question 18

Classification of Governmental Expenditures

Answer 18

1. Function Program
2. Organizational Unit
3. Activity
4. Object Class

Question 19

Encumbrances and actual expenditures impact which amount?

Answer 19

*unexpended appropriation

Question 20

How is hedge accounting accounted for in governmental accounting?

Answer 20

*utilizes deferred inflows and deferred outflows

Question 21

Refunding of Debt & Deferred Inflows/Outflows

Answer 21

• difference between reacquisition price and net carrying amount is a deferred outflow or inflow
• recognized as a component of interest expense over the shorter of the life of the old or new debt

Question 22

How should assets associated with revenue that is not available but is measurable be treated?

Answer 22

*deferred inflow of resources if it is more than 60 days after year end

Question 23

When are taxes recorded as revenue in the general fund?

Answer 23

*when they are recorded and billed AND owed

Question 24

Which type of funds does the Statement of Revenues, Expenditures, and Changes in Fund Balance relate to?

Answer 24

*governmental funds

Question 25

Purpose of the Special Revenue Fund

Answer 25

* revenues and expenditures that are legally restricted or committed for specific purposes * forfeited property goes here

Question 26

Two Special Indicators that Agency Fund is Used

Answer 26

1. government is not liable on contract | 2. non-monitoring role for funds

Question 27

Which funds does the debt service fund serve?

Answer 27

ONLY governmental funds; enterprise funds fund themselves

Question 28

Account used when there is a mandatory transfer of funds

Answer 28

*interfund transfers from/to xyz fund

Question 29

Are encumbrances used in the debt service fund?

Answer 29

No

Question 30

Does the debt service fund have amortization of a discount or premium?

Answer 30

No

Question 31

Limitation on the life of capital project funds

Answer 31

*projects that have a construction period of 1 to 3 years

Question 32

If the primary government is not primarily liable for a special assessment, should the asset be reported on the books of the government-wide financial statements?

Answer 32

No

Question 33

When bond issue proceeds include a premium, list that premium amount as a separate __________

Answer 33

other financing source

Question 34

Short-term Borrowing (two methods)

Answer 34

1. Cash & Other Financing Source 2. If it is to be repaid with taxes * *DR: Cash * *CR: Tax or revenue anticipation note payable

Question 35

If encumbrances still exist at the end of the year in a capital project's fund, how will it be classified?

Answer 35

*the original journal entry will be reversed and it will be reported as being RESTRICTED

Question 36

Are interest and principle expendable in special revenue funds?

Answer 36

Yes

Question 37

Are interest and principle expendable in permanent funds?

Answer 37

No, only the interest is expendable

Question 38

Key word for identifying an internal service fund

Answer 38

*CENTRAL

Question 39

Are internal service funds governmental or business-type funds on the government-wide financial statement

Answer 39

governmental

Question 40

Key word for identifying an enterprise fund

Answer 40

PUBLIC (if it was private, it would be NFP)

Question 41

Shared Revenues

Answer 41

*shared revenues are revenues collected by one government and shared on a predetermined basis with another government; they are nonoperating to the local government

Question 42

Proprietary Statement of Revenues, Expenses, and Changes in Fund Net Position Order

Answer 42

``` I ncome N onoperating income and expense C apital contributions A dditions to endowments S pecial items (unusual or infrequent) E xtraordinary items T ransfers ```

Question 43

How is the receipt of capital assets in a non-reciprocal interfund activity recorded?

Answer 43

DR: Capital asset CR: Capital contributions

Question 44

Cost components of a Municipal Landfill

Answer 44

1. equipment to be installed and facilities expected to be constructed near or after the date that it will stop accepting waste 2. cost of gas monitoring system 3. final cover (capping) costs *portion should be expensed and a liability should be increased

Question 45

How to account for AGE components in the Pension Fund

Answer 45

deferred outflows or deferred inflows of resources

Question 46

Difference between Pension Fund and Proprietary Fund

Answer 46

``` Pension = cash flow statement not required Proprietary = cash flow statement required ```

Question 47

Agency Trust Fund Financial Statements

Answer 47

*ONLY Statement of Fiduciary Net Position

Question 48

Private Purpose Trust

Answer 48

Benefits: 1. specific individuals 2. private organizations 3. other governments *escheat property goes here

Question 49

Capital Gains/Losses Treatment for Private Purpose Trust

Answer 49

*increase/decrease principal and are not reported in income

Question 50

Investment Trust Fund

Answer 50

* government entity that sponsors one or more external investment pools that each must be reported separately * statement of cash flows not required