F8: Governmental Funds

Question 1

G in “GRaSPP” stands for what?

Answer 1

General fund

Question 2

Purpose of the general fund

Answer 2

Accounts for the general activities of a government that are not accounted for by any other fund

Question 3

Examples of general fund activities

Answer 3

-Admin and general services of the government

Question 4

What to remember about the revenue sources and expenditure types of the general fund

Answer 4

• Has the largest variety of revenues in a governmental unit

- Has the largest share of expenditures in a governmental unit

Question 5

Types of revenue sources of the general fund

Answer 5

• Taxes (property taxes, franchise and public service)
• Public safety and regulation (fees, fines, license and permit revenues)
• Intergovernmental (shared or grant revenues)
• Charges for services
• Other revenues (investment earnings)

Question 6

Types of expenditures of the general fund

Answer 6

• General government
• Public safety
• Culture and recreation

Question 7

The assets and liabilities of the general fund consist of _______ items

Answer 7

Current items only

Question 8

How are fixed assets accounted for in the general fund?

Answer 8

As expenditures

Question 9

R in “GRaSPP” stands for what?

Answer 9

Revenue (Special) Fund

Question 10

Purpose of the special revenue fund

Answer 10

• Revenues and expenditures that are legally restricted or committed
• Life of the fund may be limited or unlimited

Question 11

Expendable Trust Activities definition

Answer 11

• Examples: scholarship and endowment funds

- Principal and income are expended over the life so they are depleted at the end

Question 12

Expendable Trust Activities should be accounted for how?

Answer 12

In a special revenue fund

Question 13

The rule of thumb for the use of the correct fund with grants is:

Answer 13

• If government monitoring, special revenue fund

- If non-monitoring, agency trust fund

Question 14

S in “GRaSPP” stands for what?

Answer 14

Service (debt) fund

Question 15

Purpose of the service (debt) fund

Answer 15

Accumulation of resources and payment of currently due principal on “LT general obligation debt” by setting aside cash and cash equivalents

Question 16

What does the debt service fund pay off?

Answer 16

The debt of the GRaSPP funds

Question 17

What does the debt service fund NOT pay off?

Answer 17

The debt of the SE-PAPI funds

Question 18

What is NOT used under the debt service fund?

Answer 18

Encumbrances

Question 19

Expenditure timing under the debt service fund

Answer 19

P&I expenditures recorded when they are legally payable per the bond agreement
-There is no profit motive, so no matching principle

Question 20

Is there an allocation between principal and interest under the debt service fund?

Answer 20

NO! both are expenditures

Question 21

Is there an accrual of interest expenditure or interest payable?

Answer 21

NO!

Question 22

Is there any amortization or premium of a bond discount?

Answer 22

NO!

Question 23

Debt Service Fund closing entries

Answer 23

• Reverse for same amount established at beginning

- Close activity for actual amount

Question 24

1st P in “GRaSPP” stands for what?

Answer 24

Projects (Capital) Fund

think: purchasing department

Question 25

Purpose of the projects (capital) fund

Answer 25

For the construction or purchase or leasing of significant fixed assets used by GRaSPP only (not by SE-PAPI)

Question 26

What is the life of the capital projects fund?

Answer 26

Should be short- limited to a construction period of 1-3 years

Question 27

Revenues and Other Financing Sources for the Capital Projects Fund

Answer 27

- Investment earnings - Tax revenues - Capital grants - Special assessments

Question 28

Capital grants definition

Answer 28

Monies received in advance

Question 29

How capital grants are recorded

Answer 29

As a liability, expended as earned

Question 30

Restrictive VS. Unrestrictive grant money treatment

Answer 30

``` Restrictive = Deferred until earned Unrestrictive = revenue now (recognized immediately) ```

Question 31

Special Assessments definition

Answer 31

Taxes or fees levied against property owners who will directly benefit from the project (sidewalks and street lights)

Question 32

If government is potentially liable for the special assessment debt, they should:

Answer 32

Account for the capital project and debt related transactions through the appropriate governmental or proprietary fund

Question 33

If government is NOT potentially liable for the special assessment debt, they should:

Answer 33

- Report the transactions in an agency fund AND | - Exclude assets and liabilities from government-wide presentations

Question 34

What is NOT recorded in the capital projects fund?

Answer 34

Bond liability

Question 35

2nd P in "GRaSPP" stands for what?

Answer 35

Permanent funds

Question 36

Purpose of the permanent fund

Answer 36

Used to report resources that are legally restricted to the extent that only earnings and not principal may be used

Question 37

Example of a Permanent Fund

Answer 37

Something that is for the benefit of the public | example: a public cemetery perpetual care fund

Question 38

What is NOT used under the permanent fund?

Answer 38

Encumbrances

Question 39

What two governmental funds (GRaSPP) do not record encumbrances?

Answer 39

- Debt service fund | - Permanent fund