What are the three major types of funds in governmental accounting?
The three major types of funds in governmental accounting are:
- Governmental
- Proprietary
- Fiduciary
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Which two accounting bases are used in governmental accounting?
The two accounting bases used in governmental accounting are:
- Accrual basis - current economic resources focus (revenues recognized when earned)
- Modified accrual basis - current financial resources focus (revenues recognized when available and measurable)
What is a budget appropriation?
Budget appropriation is the highest amount allowed for a particular expenditure under a budget.
What is an encumbrance?
Records purchase and reserves it for the encumbrance.
What is the opening budgetary entry?
Dr Estimated Revenues Control
Cr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
What is the closing budgetary entry?
Dr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
Cr Estimated Revenues Control
What are the types of governmental funds?
The types of governmental funds are:
- General Fund
- Special Revenue Fund
- Permanent Fund
- Capital Projects Fund
- Debt Service Fund
What is a General Fund?
General fund is the operating fund of the governmental unit.
- It records Significant Revenues: Taxes; Tickets; Fines; Licenses
- It records Significant Expenditures: Police; Education; Fire Dept
What is a Special Revenue Fund?
Special Revenue Fund is restricted for a specific purpose such as street repair.
What is a Permanent Fund?
Permanent Fund is legally restricted fund, where only earnings can be used to fund programs.
Principal remains intact.
What is a Capital Projects Fund?
Capital Projects Fund is used to acquire and build facilities.
What is a Debt Service Fund?
Debt Service Fund handles the repayment of long-term debt and related interest.
Which fund statements are issued in Governmental Accounting?
The fund statements that are issued in Governmental Accounting are:
- Balance Sheet
- Statement of Revenues, Expenditures & Changes in Fund Balance
When is Revenue recorded in Governmental Accounting?
Revenue is recorded in Governmental Accounting when it is BOTH available and measurable, regardless of when it is spent.
What is Derived Tax Revenue?
Derived Tax Revenue is money collected from people doing things:
- Sales tax (buying cars) or
- income tax (people working)
What is Imposed Tax Revenue?
Imposed Tax Revenue is tax assessed just because things exist.
Example: property tax on a car (even if it’s never driven); real estate tax
It is recorded as a revenue when BUDGETED.
What are the types of Proprietary Funds?
The types of Proprietary Funds are:
- Internal Service Funds - to serve the needs of other governmental units (i.e. motor pool)
- Enterprise Funds - provide goods or services to external users (i.e. post office)
What are the Fund Balance Types?
The types of fund balance are:
- Restricted - Restricted by Contributor
- Committed - Restricted by Government
- Assigned - Intended for a purpose
- Unassigned - Available to be spent
- Non-spendable - Not in a spendable state
What are the types of Fiduciary Funds?
The types of Fiduciary Funds are:
- Custodial Fund - government acts as an agent or “custodian”
- Pension Trust Fund - Government is a trustee for a pension plan
- Investment Trust Fund - Government is a trustee over a series of investments
- Private Purpose Trust - Trust that benefits various individuals and entities
How are Assets and Liabilities presented on the Statement of Net Position?
- Assets (Current & Non-Current)
- Deferred Outflows of Resources
- Liabilities (Current & Non-Current)
- Deferred Inflows of Resources
See FAR NINJA Notes (page 88) for new governmental lease rules (GASB 87)
How are Capital Assets shown on a governmental Statement of Net Position?
They are shown net of debt.
Asset Cost - Accumulated Depreciation - Asset Liabilities : Net Assets
See FAR NINJA Notes (page 82) for new Construction expense rule (GASB 89)
How is infrastructure reported on a governmental Statement of Net Position?
Modified approach:
- Reported at cost
- no accumulated depreciation
How is a Statement of Net Position divided?
Statement of Net Position is divided into Governmental Activities and Business Activities.
How are activities presented in a Statement of Activities?
They are divided by function.
If the activities of a component are distinguishable from the rest of the governmental entity, then discreet presentation is required.
If the activities of the component cannot be identified and separated from the rest of the governmental activities, then blended presentation is warranted.
Component units are reported in the Entity-Wide Financial Statements and not the Fund Financial Statements.
What is the primary objective of governmental accounting?
Governmental accounting provides information that is useful and benefits a wide range of users including:
- Costs of services provided
- Sufficiency of revenues to cover costs
- Financial position of entity
What Financial Statements are required for Defined Benefit Pension plans?
Defined Benefit Pension plans require:
- Statement of Fiduciary Net Position and
- Statement of Changes in Fiduciary Net Position
What are the components of the Statement of Fiduciary Net Position for Defined Benefit Pension Plans?
The Statement of Fiduciary Net Position for Defined Benefit Pension Plans are:
- Assets
- Deferred Outfows
- Liabilities
- Deferred Inflows
- Fiduciary Net Position
What are the components of the Statement of Changes in Fiduciary Net Position for Defined Benefit Pension plans?
Additions (Contributions and Net Investment Income)
- Deductions (Benefits Payments and Admin Expense)
= Net Change in Fiduciary Net Position
What should be included in the Financial Statement notes for Defined Benefit Pension Plans?
The Financial Statement notes for Defined Benefit Pension Plans should include:
- Types of Benefits
- Plan Member Classes
- Board Information
- Investment Policies
- FV Determination
