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Fund accounting -- Financial control or Legal restrictions?
Both yes. Fund accounting enables service and mission-driven organizations to easily monitor compliance with spending purpose (restricctions), spending limits (budget and financial control), and other fiscal accountability objectives.
What is the purpose of the separate fund statements for its governmental and proprietary funds, under GASB#34?
Separate fund F/S should be presented for governmental and proprietary funds to report additional and detailed information about the primary government.
Which of the following characteristics of service efforts and accomplishments is the most difficult to report for a governmental entity? Comparability, Timeliness, Consistency, and Relevance.
Relevance. Relevance means the information must bear a logical relationship with the needs for its purpose. It must also be reliable. This objective is more difficult to report than it is to adhere to consistency in the application of GAAP, wihch enhances comparability. Timeliness requires reports being issued early enough to facilities timely decisions.
What does the measurement focus of governmental-type funds determine?
Current financial resources and financial position. A fund's measurement focus identifies what transactions should be recorded. For governmental funds, the statemnet of revenues and expendirures should report resources received and consumed during the current period (= Current financial resources.) The BS show availale resources and current obligations (=financial positions fucus.)
Whichi of the following fund types of a governmental unit has an economic measurement focus? General funds and Permanent fund?
None of them. Economic measurement = net income determination. The general fund and permanent fund are both governmental fund, and the measurement focus is on the determination of financial position and changes in financial position rather than net income determination.
What kind of resources does the governmental unit use for fund accounting?
Resources that segregated for the purpose of carrying on specific activities or attaining certain objectives. A fund is a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein.
For governmental fund types, what item is considred the primasry measurement focus? Income determination, Current financial resources, Capital maintenance, or Cash flows and balances?
Current Financial Resources. The governmental fund mesurement focus is on deermination of financial position and changes in financial position (sources, uses, and balance) rather than on net income determination.
What is a major exception to the general rule of expenditure accrual for governmental funds under the modified accrual basis?
The treatment of interest and principal payments for long-term debt. Under the modified accrual basis, expenditures are generally recognized when incurred since that is when they become measurable. Interst and principal on long-term debt are recorded when they become due and payable, not when they accrue.
Expenditures represent the actual incurring of bills, whether paid in cash or recorded as vouchers payable.
Which fund is used for the fire department salaries?
General fund since this is a service of the city. The general fund records the salaries as Expenditures with a credit to salaries payable.
What event is supporive of interperiod equity as a financial reporting objective of a governmental unit? A balance budget is adopted or Residual equity transfers out equals residual equity transfers in?
A balanced budget is adopted. Interperiod equity is a signigicant part of accountability on behalf of a governmental entity. It helps users assess whether current year revenues are sufficient to pay for the services provided that year and whether future taxpayers will be required to assume burdens for services previously provided. Residual equity transfers is an obsolete term included as a disracter!
It helps users assess whether current year revenues are sufficient to pay for the services provided that year and whether future taxpayers will be required to assume burdens for services previously provided.
B City legally adopt a cash-basis budget. What basis should be used in the budgetary comparisons?
Cash. When the preparation of the budget is on the cash basis, budgetary comparisons will be on the cash basis, too. Budgetary comparison scheules should be accompanied by information (in separate schedule or in notes to RSI) that reconciles budgetary information to GAAP information.
When does the revenue control account of a governmental unit is increased?
When property taxes are recorded. When the taxes are levied, Dr. Property Taxes Receivable, Cr. Allowance, Cr. Revenues
What acount should be credited when a PO for supplies was issued?
Fund Balance reserved for encumbrances. Debit to Encumbrances
When the estimated revenues control account should be debited ?
When the bueget is recorded. Dr. Est. Revenue Control, Cr. Budgetary Fund Balance
How is the expenditures of a governmental unit for insurance extending over more than one accounting period?
May be allocated between or amoung accounting periods or may be accounted for as expenditures of the period of acquisition.
In which situations should property taxes due to a governmental unit be recorded as deferred revenue? 1) Property taxes receivable are recognized in advance of the year for which they are levied. 2) Property taxes receivable are collected in advance of the year in which they are levied.
Both! Revenues are recognized when measurable and available. In the case of property taxes, revenues are recognized in the period in which the taxes are levied (課税される. When property taxes receivalbe are either recognized or collected in advance of the year in which they are levied, deferred revenue is recorded. 1) Dr. Property Taxes Rec, Cr. Deferred Revenue/ 2) Dr. Cash, Cr. Deferred Revenue
What does a budgetary fund balance reserved for encumbrances in excess of a balance of encumbrances indicate?
Error!!!! The budgetary FB reserved for encumbrances represents a portion of the fund balane that has been segregated for expenditure on vendor performance, usually being goods ordered but not yet received. (PO entry is Dr. Encumbrances, Cr. FB reserved for encumbrances) Likewise, the encubrance blanace represents PO outstanding. For the budgetary balance reserved for encumbrance to exceed the encumbrance balance, a recording error must have been made!
When the estimated revenues control accout balance of a governmental fund type is eliminated?
WHen the budgetary accoutns are closed.
As what account is recorded when encumbrances outstanding at year-end in a general fund should be reported?
Fund Balances reserved in the general fund. Encumbrances are commitments for unperformed contracts for goods or services. Encumbrances at year-end do not constitute expenditures or liabilities. Therefore, at year-end encumbrances are closed to fund balance, leaving the reserve for encumbrances intact as a portion of the FB not appropriable for expediture.
When a government unit recognizes reveneues in the accounting period for enterprise fund?
When they are earned.
The budget of a governmental unit for which the apropriations exceed the estimated revenues was adopted and recorded in the general ledger at the beginning of the year. During the year, expenditures and encumbrances were less than appropriations; whereas revenues equaled estimated revenues. What is the entry or the budgetary fund balance?
Budgetary FB -- Dr.@BB, Cr. @EB --- When appropriations exceed estimated revenues at the beginning of the year (Dr. Est Reve, Dr. Budgetary FB, Cr. Appropriations), and then expenditures and encumbrances are less than appropriations (Dr. Appropriations, Cr. Est. Reve, Cr. Budgetary FB) the buddgetary FB is debited at the beginning of the year and credited at the end of the year.
Genearl fund has the following disbursements during the year. 1) Payment of principal on long-term debt $100, 2) Payment to vendors $500, 3) Purchase of a computer $300. What amount should be reported as expenditures in its governmental funds statement of revenue, expenditures, and change in fund balances?
$900. Governmental funds use the current financial resources measurement focus. As a result, the governmental fund satement of revenues, expenditures and changes in fund balance will emphasized the financial flow of resources and recognize all of the disbusements as expenditure. $500 payment to vendor = current, $300 purchase PC = Cpital outlay, $100 princiipal payment on long-term debt = Debt service, and total expenditures $900.
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