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20 Cards in this Set

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  • Back
  • 3rd side (hint)
General Fund
-Created at the beginning of the governmental unit, and it exists throughout the life of that unit.
-Accounts for the general activities of a government that aren't accounted for by any other fund.
Revenue Sources
-Usually has the largest share of revenues in a governmental unit.
1. Taxes: Recorded as revenue when billed. Property taxes is often the primary revenue source. Franchise and public service taxes.
2. Public Safety and Regulation: often include fees and fines as well as license and permit revenues.
3. Intergovernmental: shared or grant revenue from other governments may appear in the general fund.
4. Charges for Services: exchange revenues that support general fund activities.
5. Other Revenues: include investment and miscellaneous earnings.
Expenditure Types
-General fund usually has the largest share of expenditures in a governmental unit.
1. General Government: often include administrative functions.
2. Public Safety: often include police and fire departments.
3. Culture and Recreation: activities like parks and libraries.
Unique Accounting Issues
1. Current Resources Measurement Focus: no fixed assets, they're recorded as expenditures and only reported in government-wide F/S's (reconciling item).
2. Modified Accrual and Budgetary Accounting
3. Major Fund Status: only one general fund per reporting entity and it's always reported as a major fund.
4. Internal Financing: automatically finances other funds by making a loan, contribution of equity or revenue, making up a deficit in an enterprise fund.
5. Default Classification: operating "catch-all."
Financial Statements
1. Fund F/S's: B/S (current assets = current liabilities + fund balance). Current items only, no fixed assets or LTD. Includes assets, liabilities, and fund balances (non-spendable, committed, unassigned).
2. Statement of Revenues, Expenditures, and Changes in Fund Balance. Includes revenues, expenditures, and other financing sources (uses) (transfers and bond proceeds). No depreciation expense.
3. Required Supplementary Information: Budgetary Comparison Schedule
Special Revenue Fund
-Account for revenues and expenditures that are legally restricted or committed for specific purposes other than debt service or capital projects. The life of the special revenue fund may be limited or unlimited but resources are expendable.
-Ex's: sale tax fund, gasoline tax fund, funds to account for special fees, and grant funds (state grant or federal grant funds (expendable trust)).
Revenue Sources
-Account for revenues legally restricted for specific purposes and are often classified as either intergovernmental revenue or fees.
1. Fees: collected or other earmarked revenue sources.
2. Intergovernmental Revenues: often from a single intergovernmental source or fee (Ex's: specific taxes and shared taxes, grants).
Expenditure Types
1. Character includes: current operating expenditures, capital outlays, or both.
2. Function: functional expenditures for special revenue funds should be consistent w/ the purpose of the revenue.
Unique Accounting Issues
1. Expendable Trusts: represent funding whose principal and income may be expended in the course of their designated operations so that they are depleted by the end of their designated lives. Accounted for as special revenue funds under GASB 34.
-Rule of thumb for the correct fund is: Monitoring = special revenue fund, Non-monitoring = agency trust fund.
2. Donations: when received by expendable trust, cash or current assets is debited and revenue is credited. May be (1) Donor / Grantor restricted (principal and interest) or (2) Government restricted (Ex: Forfeiture Act - illegal activities).
3. Grants: when received, recipient government monitors and / or determines eligibility, recognize revenues and expenditures equally based on payments of grantor.
Debt Service Fund
-Created to account for the accumulation of resources (cash and investments) and the payment of currently due interest and principal on "long-term general obligation debt" by setting aside cash and equivalents.
-The debt service funds pays off the debt of the GRaSPP funds.
-It does not pay off the debt of the SE-PAPI funds.
Revenue and Other Financing Sources
-Resources from new debt are frequently derived from allocated portions of property taxes and transfers from other funds. J/E to record a transfer from another fund is DR. cash and CR. interfund transfer from appropriate department.
-Journalizing Investment Income: any income from the investment of resources is recorded as revenue. DR. Cash, CR. Revenue - Investment Income
-Makes actual expenditures associated w/ the principal and interest on general obligation LTD.
-To record payment of interest or principal, DR. Expenditures and CR. Cash (matured interest / principal payable). Encumbrances are not used.
-Bond premiums and discounts are treated as a component of bond proceeds at time of issuance and they are not amortized.
-Expenditure Timing: principal and interest expenditures should be recorded when they are legally payable per the bond agreement. There is no profit motive and no need to apply the matching principal. No allocation between interest and principal, both are expenditures. No accrual of interest expenditures or interest payable.
Unique Accounting Issues
-Debt service funds are required only when legally mandated and / or when resources are being accumulated for general LTD.
-General fund may pay interest and principal directly to the bondholders instead of through the debt service fund, unless legally mandated.
-Operations of this fund are similar to a commercial accounting "sinking fund."
-The full face value (less current installments) of the general obligation debt isn't reported in this fund. Debt service fund expenditures are only used to pay "currently payable" principal and interest.
Closing Entries
1. Budget is closed at year-end, reverse for the same amount.
2. Activity is closed at year-end, for actual amount.
-Encumbrances are not applicable therefore not closed.
Capital Projects Fund
-Established for the construction or purchase or leasing of significant fixed assets (used by governmental funds GRaSPP only).
-The life of the capital projects fund is short and limited to a construction period of 1 to 3 years.
Revenues and Other Financing Sources
-Generally funded by bond proceeds. May also be purely funded by a transfer from another fund, specific tax revenues or capital grants. Investment earnings may also appear.
1. Capital Grants: received in advance are often recorded as a liability and displayed as earned as they are expended. Government grants may be restricted and are reported as revenues when earned or may be unrestricted and recognized immediately. Unrestricted, DR. Cash, CR. Revenue. Restricted, DR. Cash, CR. Deferred Revenue.
-Recognize as revenue when spent, DR. Expenditure, CR. Vouchers Payable / Cash & DR. Deferred Revenue, CR. Revenue.
2. General Fund (or Special Revenue) Transfers: debit cash, credit "Other Financing Sources" (transfer in, report on I/S).
3. Special Assessments: taxes or fees levied against property owners who will directly benefit from the project.
-When the government unit is primarily or potentially liable for the special assessment debt, they should account for the capital project through the appropriate governmental or proprietary fund. If not liable, transactions should be reported in an agency fund and assets and liabilities should be excluded from government-wide presentations.
4. Bond Issue Proceeds: presented on the I/S as "other financing sources." Premiums and discounts are included in the proceeds and receive no additional accounting.
Expenditure and Encumbrance Types
-Usually classified as capital outlay, one of the 5 major character classifications. During construction, encumbrances are recorded as commitments are incurred. Vouchers recorded when a liability is incurred and the expenditure is known.
-As vouchers are recorded, the encumbrance entry is reversed (for same amount). Cash is credited and vouchers payable is debited as payments are made.
Unique Accounting Issues
1. Asset Balances: the cumulative balance of the value of the constructed asset is not displayed on the capital fund B/S.
2. Bond Liability: not recorded in the capital projects fund, report on government-wide F/S's.
3. Short-Term Borrowing: the current debt related to the financing is displayed on the B/S.
Closing Entries
1. Budget is closed at year-end, it is reversed for the same amount.
2. Actual activity is closed at year-end, it is for the actual amount.
3. Encumbrances are closed for the same amount. Outstanding encumbrances should be carried forward as a component of fund balance. The entire amount of the capital projects fund is presumed to be restricted for capital outlay.
Permanent Funds
-Should be used to report resources that are legally restricted to the extent that only earnings and not principal, may be used for the purposes that support the reporting government's programs (i.e. that is for the benefit of the public).
-Revenues may include investment earnings from the trust.
-Expenditures related to the operating purposes of the fund.
-Investments generally are required to be accounted for at FV for governmental investments.
-Encumbrances are not applicable.