F9

Question 1

Operational Accountability Goal vs Fiscal Accountability Goal

Answer 1

Operational = efficiency and effectiveness
Fiscal = compliance

Question 2

Two Types of Reporting

Answer 2

Normal:

1. MD&A
2. Government-Wide Financial Statements
3. Fund Statements
4. Notes to Financial Statements
5. Required Supplementary Information
6. Other Supplementary Information

Comprehensive Annual Financial Report (CAFR)

1. Introductory
2. Basic Financial Statements and Required Supplementary Information
3. Statistical Section

Question 3

Primary Government Requirements

Answer 3

1. Separately elected governing body
2. Separate entity
3. fiscally independent

Question 4

Blended Presentation Requirements

Answer 4

1. board is substantively the same
2. component unit serves the primary government exclusively or almost exclusively
3. component unit is not a separate legal entity

Question 5

Reporting NFP Entities as a Component Unit Criteria

Answer 5

1. resources are for the near-exclusive benefit of the primary government
2. government has access to a majority of the resources
3. resources held by the NFP are significant to the primary government

Question 6

Are fiduciary funds reported on the government-wide financial statements?

Answer 6

No

Question 7

Where is the analysis of significant variations in the original and final budget found?

Answer 7

MD&A

*does not include a variance analysis or a reconciliation of fund statements to government-wide statements

Question 8

Must construction period interest be capitalized on the government-wide financial statements?

Answer 8

*it is not required for governmental activities

Question 9

Modified Approach for reporting Capital Assets

Answer 9

Requirement 1: have an inventory and a summarized condition of assets
Requirement 2: a complete condition assessment at least every three years

Question 10

Artwork & Historical Treasures Rules

Answer 10

• can elect not to capitalize if:
  1. held for public exhibition
  2. collection is protected and cared for
  3. proceeds from sales of collection items be used to acquire other items for collections

Question 11

Examples of component units

Answer 11

Rescue Squad & Board of Education

Question 12

3 Categories for Government-Wide Revenues

Answer 12

1. S ervice Charges
2. O perating grants/contributions
3. C apital grants and contributions

Question 13

Major Fund Rules

Answer 13

1. Larger than 10% of all revenues/expenses, asset, etc. of governmental funds or larger than 10% of all enterprise funds
   and
2. larger than 5% of revenues, expenditures, etc. of all governmental and enterprise funds combined

• general fund is always a major fund
• internal service funds are not used in the calculation of these amounts

Question 14

Reconciliation of Fund to Government-Wide

Answer 14

1. Balance Sheet
G RaSPP Fund Balance 
\+ Assets (non-current) (NET OF DEPRECIATION)
- Liabilities (non-current)
\+ Service fund net position 
B asis of accounting
A ccrued
R evenues and
E xpenses

2. Statement of Revenues, Expenditures, and Change in Fund Balance 
G RaSPP Net change 
- Other financing sources 
\+ Expenditure - capital outlay (NET OF DEPRECIATION)
\+ Service fund net income 
B
A
S
E

Question 15

For Fund Financial Statements, where is the statement of cash flows required?

Answer 15

*for proprietary funds

Question 16

Classifications of Proprietary Fund Cash Flow Statement

Answer 16

1. Operating
2. Noncapital Financing
3. Capital Financing
4. Investing

Question 17

What items are included in Noncapital Financing Cash Flows?

Answer 17

1. property taxes (not restricted for capital use)
2. operating transfers in/out
3. operating grants or subsidies

Question 18

Which cash flow method must be used by proprietary funds?

Answer 18

• direct method

* also includes a reconciliation at the end

Question 19

General Governmental Disclosures

Answer 19

• description of government-wide activities
• policies relating to elimination of internal activity
• description of the modified approach if used
• segment information
• measurement standard for measurable and available

Question 20

Required Supplementary Information

Answer 20

Budgetary comparison schedules showing the original budget, final budget, and actual amounts
*variance computation between budgets and between actual and budget are both optional

• infrastructure and assessed condition and cost to maintain for past 5 years
• pension information for the 10 most recent fiscal years

Question 21

Reciprocal vs Non-reciprocal Interfund Activity

Answer 21

Reciprocal

1. interfund loans
2. interfund services provided and used (sales/expenses)

Non-Reciprocal

1. Interfund transfers
2. Interfund reimbursements

• eliminated on the GOVERNMENT-WIDE FINANCIAL STATEMENTS
• shown as transfers, due to/from on the fund financials

Question 22

How should transactions between the primary government and its fiduciary funds be reported?

Answer 22

*expensed, as if it was between external parties

Question 23

Interfund receivables and payable are titled

Answer 23

Due to/due from

Question 24

Which method of accounting do NFPs use?

Answer 24

full accrual accounting

Question 25

Required Financial Statements for NFPs

Answer 25

1. Statement of Financial Position 2. Statement of Activities 3. Statement of Cash Flows (4. ) Statement of Functional Expenses (voluntary health and welfare organizations are REQUIRED)

Question 26

Components of Financial Position

Answer 26

Assets - Liabilities = Net Assets

Question 27

Are internally restricted funds listed as restricted?

Answer 27

NO

Question 28

Net Asset Classifications for NFP

Answer 28

Unrestricted Temporarily Restricted Permanently Restricted

Question 29

How are over-expenditures in temporarily restricted assets handled?

Answer 29

*they are treated as a decrease in unrestricted net assets

Question 30

Expenses decrease which net asset classification?

Answer 30

*expenses always decrease unrestricted net assets

Question 31

Which method of cash flow may be used for NFPs?

Answer 31

*direct or indirect method

Question 32

Restricted donor contributions are what type of cash flow?

Answer 32

Financing

Question 33

If a marketable security meets the definition of a cash equivalent but is restricted by a donor, how is it classified?

Answer 33

*not included as a cash equivalent

Question 34

Example of fundraising expenses

Answer 34

*unsolicited merchandise sent out

Question 35

Functional Classification of Expenses

Answer 35

1. Program Support Expenses 2. Fund-raising expenses 3. Management and general costs 4. Multiple cost items

Question 36

Revenue Recognition for: * Cash Contributions * Unconditional Promises * Conditional Promises

Answer 36

Cash Contribution = revenue when received Unconditional Promises = revenue when received Conditional Promises = revenue when the condition is met *payment ahead of time is credited to REFUNDABLE ADVANCE

Question 37

Donated Services Requirements

Answer 37

1. enhance or create a non-financial asset or 2. require specialized skills that the provider possesses and would otherwise have been purchased by the organization DR: Expense CR: Contributions--non-operating revenue

Question 38

Donated Materials Recording

Answer 38

DR: Asset CR: Contribution: Support Pass Through Organization DR: Expense CR: Unrestricted contributions-supplies

Question 39

Account to use when restrictions are removed

Answer 39

DR: Satisfaction of time restriction CR: Satisfaction of time restriction *revenue can be temporarily restricted and an allowance for doubtful accounts can be set up as well

Question 40

Restricted Contributions Accounting Entries

Answer 40

*will usually include a DR: to expense and CR: to cash in the unrestricted fund as the assets are released from the restriction

Question 41

Exchange Transactions for Members

Answer 41

Amount Transferred =Contribution Revenue

Question 42

Recipient Accounting: Holding Resources for Others

Answer 42

Without Variance Power DR: Asset CR: Refundable advance Granted Variance Power DR: Asset CR: Contribution revenue Financially Interrelated (manages on behalf of beneficiary) DR: Asset CR: Contribution revenue

Question 43

Beneficiary Accounting: Holding Resources for Others

Answer 43

*recognized unless the recipient is explicitly granted variance power Financially Interrelated = Equity DR: Asset CR: Equity transaction Pools of Assets - Beneficial Asset = Revenue DR: Beneficial Interest CR: Contribution Revenue Recognized Receivable and Contribution Revenue DR: Receivable CR: Contribution revenue

Question 44

Gain/Loss Treatment for NFP

Answer 44

increase/decrease to UNRESTRICTED assets UNLESS it is restricted, at which point it increases/decreases temporarily or permanently restricted assets *may be recorded in unrestricted if the stipulations are met in the same reporting period as the gains/losses

Question 45

Endowment Fund Types - NFP

Answer 45

1. Permanent Endowment 2. Term Endowment 3. Quasi-endowment (governing body; unrestricted net asset)

Question 46

Gross Revenue from Tuition and Fees Calculation

Answer 46

Assessed Student Tuition and Fees =Gross Revenue from Tuition and Fees

Question 47

Patient Service Revenue vs. Net Patient Service Revenue

Answer 47

Gross Patient Service Revenue =Net Patient Service Revenue Other Operating Revenue Non-Operating Revenue = unrestricted

Question 48

Donated Services are what type of revenue for NFPs?

Answer 48

non-operating

Question 49

How should income be reported for voluntary health and welfare organizations?

Answer 49

*break out each revenue type by source and whether it is restricted or unrestricted

Question 50

Purpose of Statement of Functional Expenses

Answer 50

*assess an organization's service efforts including the cost of services and how resources are utilized 1. program support services 2. fund-raising 3. management and general