State And Local Governments 2 - State And Local Government Concepts

Front 1

What are the differences between not‐for‐profit and for‐profit organizations that necessitate a different accounting and reporting model for not‐for‐profit organizations?

Back 1

- The principal mission of not‐for‐profits is to provide goods and services.

- Primary resources are obtained through nonexchange transactions.

- There are restrictions on resources.

- There are no individual ownership interests.

Front 2

What is the authoritative body for state and local government?

Back 2

The Government Accounting Standards Board (GASB)

Front 3

List the four types of fiduciary funds. (Tip: DRIP CEG PIPPA, fiduciary funds are "PIPPA.")

Back 3

1. Pension trust funds

2. Private‐purpose trust funds

3. Investment trust funds

4. Agency funds

Front 4

List the two types of proprietary funds. (Tip: DRIP CEG PIPPA, vowels in DRIP CEG.)

Back 4

- Enterprise funds
- Internal service funds

Front 5

List the three broad categories of funds for state and local governmental entities.

Back 5

1. Governmental funds
2. Proprietary funds
3. Fiduciary funds

Front 6

What are two important characteristics of a "fund"?

Back 6

- A fiscal entity

- An accounting entity (i.e., debits = credits)

Front 7

What fund is used to account for business‐type activities that primarily provide services to parties external to the government?

Back 7

The enterprise fund. Enterprise funds provide the majority of their services to external users for a fee. In contrast, an internal service fund is used to account for business‐type activities that provide services to other departments within the government.

Front 8

List the five types of governmental funds. (Tip: DRIP CEG PIPPA, consonants in DRIP CEG.)

Back 8

1. General fund

2. Special revenue funds

3. Capital project funds

4. Debt service funds

5. Permanent funds

Front 9

What is the measurement focus basis of accounting for proprietary fund types?

Back 9

Accrual accounting: Flow of economic resources

Front 10

What is the measurement focus basis of accounting for governmental fund types?

Back 10

Modified accrual: Flow of current expendable financial resources

Front 11

What are the revenue recognition criteria under modified accrual accounting?

Back 11

- Measurable

- Available

Front 12

Is the normal balance of estimated other financing sources account a credit or a debit?

Back 12

It is a debit.

Front 13

Describe the journal entry to record a budget at beginning of year.

Back 13

DR: Estimated Revenues CR: Appropriations DR or CR* Budgetary Fund *As required to balance the entry

Front 14

What budgetary account represents the legally mandated spending limit?

Back 14

The appropriations account

Front 15

Describe the journal entry to close budgetary accounts at the end of the period.

Back 15

DR: Appropriations CR: Estimated Revenues DR or CR* Budgetary Fund *As required to balance the entry.

Front 16

What is the basis of accounting in which budgetary accounting is used?

Back 16

Modified accrual basis

Front 17

Is the normal balance of appropriations account a credit or a debit?

Back 17

This is a credit.

Front 18

Is the normal balance of estimated revenues account a credit or a debit?

Back 18

It is a debit.

Front 19

Is the normal balance of estimated other financing uses account a credit or debit?

Back 19

It is a credit.

Front 20

What account represents the estimated dollar value of outstanding purchase orders?

Back 20

The encumbrances account

Front 21

Is the normal balance of the encumbrances account a credit or a debit?

Back 21

It is a debit.

Front 22

What account is credited when general fund revenues are received before they are legally due?

Back 22

The deferred inflow of resources

Front 23

Describe the journal entry to record a levy of property taxes that are to be used to finance the subsequent fiscal year.

Back 23

DR: Property Taxes Receivable CR: Est. Uncollectible Property Taxes CR: Deferred Inflow of Resources

Front 24

When is revenue related to grants, entitlements, shared revenues, and so on, that are subject to eligibility restrictions recognized for government accounting?

Back 24

Revenue is recognized when the eligibility requirements are met. (Until then, a liability is recognized).

Front 25

When is revenue related to grants, entitlements, shared revenues, and so on, that are subject to time restrictions recognized for government accounting?

Back 25

Revenue is recognized when the stated time has arrived or the stated event has occurred. (Until then, deferred inflow of resources is recognized.)

Front 26

List the categories of net position in government‐wide financial statements and in enterprise fund‐level financial statements.

Back 26

- Unrestricted

- Restricted

- Net investment in capital assets (which is capital assets less accumulated depreciation and less debt related to the capital asset)

Front 27

List the fund balance categories for a government's governmental funds.

Back 27

- Nonspendable

- Restricted

- Committed

- Assigned

- Unassigned

Front 28

Where do you find a positive unassigned fund balance for a governmental organization?

Back 28

This balance is found only in the general fund.

Front 29

True or False: Financial reporting for encumbrances outstanding at the end of the year that will be honored in the next year must be displayed separately in the financial statements.

Back 29

False. Usually they are not displayed separately in the financial statements. Encumbrances that do not lapse are part of committed or assigned fund balance, depending on the nature of the constraint on resources.

Front 30

How are stabilization arrangements reported by a government?

Back 30

They may be reported as restricted or committed fund balance if the criteria for either type of constraint are met. Otherwise, they will be reported as unassigned fund balance. Stabilization funds are usually reported in the general fund.

Front 31

True or False: A government's restricted, committed, or assigned fund balance amounts should report only positive amounts.

Back 31

True. These fund balances should not report negative amounts. Negative amounts can appear in unassigned fund balance.

Front 32

When is revenue related to grants, entitlements, shared revenues, and so on, that are subject to purpose restrictions recognized for government accounting?

Back 32

When the resources are measurable (i.e., revenue recognition is not deferred solely because of a purpose restriction)

Front 33

Describe the journal entry to record levy of property taxes that are to be used to finance the current fiscal year.

Back 33

DR: Property Taxes Receivable CR: Est. Uncollectible Property Taxes CR: Property Tax Revenues

Front 34

What fund is used to accumulate resources and manage expenditures related to major capital projects in government accounting?

Back 34

The capital projects fund

Front 35

Describe the journal entry to record receipt of the proceeds from issuance of long‐term debt for a government entity.

Back 35

DR: Cash CR: Other Financing Sources—Bond Proceeds

Front 36

What is the primary function of the debt service fund in governmental accounting?

Back 36

Payment of interest and principal on general long‐term debt

Front 37

Describe the journal entry to record purchase of a fixed asset for a government entity.

Back 37

DR: Expenditures CR: Cash

Front 38

Describe the journal entry to record payment of interest expense now due in a debt service fund.

Back 38

DR: Expenditures‐Interest CR: Cash

Front 39

What account is credited when general fund revenues are received before they are legally due?

Back 39

The deferred inflow of resources

Front 40

Describe the journal entry to record a long‐term loan of $10,000 by the general fund to a special revenue fund.

Back 40

DR: Advances to Special Revenue Fund CR: Cash

Front 41

Describe the journal entry to record a levy of property taxes that are to be used to finance the subsequent fiscal year.

Back 41

DR: Property Taxes Receivable CR: Est. Uncollectible Property Taxes CR: Deferred Inflow of Resources

Front 42

What fund generally receives any remaining resources when a capital projects fund is closed?

Back 42

The debt service fund

Front 43

Describe the journal entry to record a transfer of $10,000 from the general fund to a special revenue fund. (The amount is not expected to be repaid).

Back 43

DR: Other Financing Uses—Transfers Out CR: Cash

Front 44

What fund and entry is required to record receipt of an endowment where the earnings are to be expended on a public purpose?

Back 44

Permanent Fund: DR: Cash CR: Revenues—Endowment Principal

Front 45

Describe the journal entry to record receipt of grant monies that must be used to finance construction of a major capital project. (No other eligibility restrictions apply.)

Back 45

DR: Cash CR: Revenues—Grants

Front 46

When is revenue related to expenditure‐driven grants recognized for government accounting?

Back 46

When the expenditure is made and reimbursement is requested

Front 47

Describe the journal entry to record a short‐term loan for $10,000 by the general fund to a special revenue fund.

Back 47

DR: Due from Special Revenue Fund CR: Cash

Front 48

Describe the journal entry to record an increase in estimated uncollectible property taxes.

Back 48

DR: Property Tax Revenues CR: Est. Uncollectible Property Tax

Front 49

Describe the accounting treatment of gains on the sale of investments that are part of the endowment principal for government accounting.

Back 49

The gain is added to the endowment principal; it is not expendable.

Front 50

When is interest expense on general long‐term debt accrued in a debt service fund?

Back 50

When the interest payment is due (i.e., on the due date)

Front 51

What is the basis of accounting used by special revenue funds?

Back 51

The modified accrual basis

Front 52

Describe the journal entry to record receipt of $10,000 by a special revenue fund from the general fund. (The monies are not expected to be repaid.)

Back 52

DR: Cash CR: Other Financing Sources

Front 53

Describe the journal entry to record payment of matured debt principal in a debt service fund.

Back 53

DR: Expenditures‐Principal CR: Cash

Front 54

Describe the journal entry to record receipt of resources transferred by the general fund to a debt service fund when repayment is not expected.

Back 54

DR: Cash CR: Other Financing Sources—Transfers In

Front 55

What is the principal revenue of an internal service fund?

Back 55

Fees charged to internal users

Front 56

Describe the proprietary fund entry to record interfund sale of goods.

Back 56

DR: Due from xxx CR: Revenues (or Billings to Depts.)

Front 57

What is the principal revenue of an enterprise fund?

Back 57

Fees charged to external users

Front 58

Describe the enterprise fund entry to record capital contributions from an external entity (i.e., developer, outside agency).

Back 58

DR: Capital Assets (Land, Building, Equipment) CR: Contributions from xxx

Front 59

Describe the pension trust fund journal entry to record receipt of employer contributions to the employee pension plan.

Back 59

DR: Cash CR: Additions‐Employer Contributions

Front 60

What funds are used to account for any resources managed in trust by the governmental entity where the beneficiaries are outside of the governmental entity itself?

Back 60

Private‐purpose trust funds

Front 61

Describe the investment trust fund journal entry to record and/or report cash contribution received from an external entity.

Back 61

DR: Cash CR: Net Position Held in Trust for xxx

Front 62

What equity account is used by pension trust funds?

Back 62

Net Position Held in Trust for Pension Benefits

Front 63

What accounts do agency funds use?

Back 63

Agency funds accounts consist only of current assets and current liabilities; they do not recognize revenues, expenditures, or net position.