Governmental Accounting Chapter 3
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Modified accrual funds include all of the eGovernmental Fund Types...
- 1. General Fund
- 2. Capital Projects Funds
- 3. Debt Service Funds
- 4. Special Revenue Funds
- 5. Permanent Funds
Permanent Accounts do what at end of the year? What statement are they on? What Items are on it?
- 1. They are not closed at year-end
- 2. Balance Sheet
- 3. Assets, Liabilities, Fund Balances
Nominal Accounts do what at the end of the year? What statement are they on? What Items are on it?
- 1. They are closed out to Fund Balance
- 2. Financial Statement Activity Accounts (Income Statement)
- 3. Revenues, Expenditures, Other Financing Sources, Other Financing Uses
What are the Budgetary accounts and what happens to them at the end of the year?
- 1. Estimated Revenues, Appropriations, Estimated Other Financing sources, Estimated other financing uses, Encumbrances
- 2. They are closed out to Budgetary Fund Balance
Modified Accrual Funds Us the ___ Focus.
Current Financial Resources Measurement Focus
What does the Current Financial Resources Measurement Focus Mean?
- 1. Assets Represent cash and assets that may be expected to be converted into cash in the normal course of operations. No long-term assets exist.
- 2. Liabilities represent liabilities which will be settled with current financial resources. No long-term liabilities exist.
Fund Balance serves a purpose very similar to _____, in that _________ are closed to this account at the end of each accounting period.
- 1. retained earnings
- 2. activity accounts
the difference between assets and liabilities, or _____, represents the ________.
- 1. Fund Balance
- 2. net resources of the fund that are currently available for future spending.
______, ____________, establishes the reporting of fund balances, with the objective of providing clearer fund balance classifications.
- 1. GASB Statement #54
- 2. Fund Balance Reporting and Governmental Fund Teype Definitions
_______ applies only to the fund financial statements of the ________
GASB # 54, Governmental Type Funds
Fund Balances of governmental-type funds are reported within the following 5 categories....
- 1. Nonspendable
- 2. Restricted
- 3. Committed
- 4. Assigned
- 5. Unassigned
Fund Balances are classified in a two-step process. What are the steps?
- 1. Identify those fund resources that are Nonspendable (Category 1)
- 2. Evaluate all remaining Spendable resources (after removing those determined to be Nonspendable), and further classify according to the nature of any constraints imposed on their use, using a hierarchy of constraints, with Restricted (Category 2) being the most constrained, and Unassigned (Category 5) being the least constrained.
What is the Fund Balance Category #1? Define. Give examples.
- 1. Nonspendable
- 2. Resources that cannot be spent
- 3. Examples:
- a. Inventories and Prepaids (since they are used in operations rather than converted into cash)
- b. Assets held for sale
- c. Long-term receivables
- d. Principal (corpus) of a Permanent Fund
What is the Fund Balance Category #2? Define. Give examples.
- 1. Restricted
- 2. Resources with the enforceable requirement that they be used only for specified purposes.
- 3. Restraints placed on the use of restricted resources can be:
- a. Externally Imposed:
- i. Debt covenant constraints
- ii. Constraints from grantors, contributors, or other governments
- b. Imposed by law, either constitutionally or by enabling legislation
What is the Fund Balance Category #3? Define. Give examples.
- 1. Committed
- 2. Resources that the governing body has specified for particular use. They have constraints placed on the use of them by the formal action of the government's highest level of decision making authority.
- 3. Examples: Contractual Obligations
What is the Fund Balance Category #4? Define. explain.
- 1. Assigned
- 2. Resources with which the government has an expressed intent to use the resources for a specific purpose for:
- a. governmental funds other than the general fund (this is the category for all remaining + amounts)
- b. the General Fund (assignment conveys a narrower intended use than the general purposes of the government)
What is the Fund Balance Category #5? Define. Explain.
- 1. Unassigned
- 2. Residual classification (the remaining balance of everything that is left) of the general fund
- 3. Explanation:
- a. The general fund is the only fund that can report a positive Unassigned Fund Balance
- b. For other governmental funds, this category is used only for a negative fund balance (in any of the 3 previous constraint categories)
What should happen if the reporting of a negative restricted, committed, or assigned fund balance occurs?
The government should reduce any such fund balances to zero, with any remaining deficit/negative amount reported as Unassigned fund balance.
The most common exampoles of nonexchange transactions include
- 1. tax revenues
- 2. Intergovernmental grants
What are nonexchange transactions?
Transactions in which a government receives resources without directly giving equal value in exchange
What are the elgiibility requirementes that must be met in order to recognize revenue resulting from nonexchange transactions?
- 1. Required characteristics of recipients
- 2. Time reuirement
- 3. reimbursement
- 4. contingencies
What is required characteristic of recipients? give example
- The recipient must have the cha. specified by the provider.
- 2. Public school funding by head count
What is time requirement. give example
- If time requirements for expenditures are specified by the resource provider or legislations, they must be met.
- 2. Be in specific time period of use
What is reimbursement? Give example.
- 1. For those grants and gifts thar are payable only upon incurrence of qualifying outlays, revenues would be recognized only when the expenditures have been incurred
- 2. Hurricane Katrina Stone county Fema said if you build then we reimburse.
Contingencies are what? Give example.
- 1. Resources pledged that have a contingency attached are not recognized as revenue until the contingency has beeen met.
- 2. Sciaa hall chuck Scina pledged 5m at first but in order to get more money we have to raise a million and he would match.
What are imposed nonexchange revenues. Give examples.
- 1. Taxes and other assessments that do not result from underlying transactions
- 2. property tax, special assessments imposed on property owners, fines/forfeits
What are derived tax revenues? give examples.
- 1. Taxes assessed on exchange transactions conducted by businesses or citizens.
- 2. Sales tax, income tax, motor fuel tax.
What are govbernment mandated transaction? Give examples.
- 1. Grants from higher levels of geovernment given to support a program
- 2. A state may require schools to mainstream certain special education sstudents and provide funds to carry out this mandate.
What are voluntary nonexchange transactions? give examples.
- 1. Donations and grants given to support a prograg in which the receiving government voluntarily agrees to participate.
- 2. Grants, Donations
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