Governmental and Non-Profit Accounting Chapter 6

Typically, governments finance large capital acquisitions or construction projects with the proceeds from the sale of __.

general obligation bonds

Governmental GAAP require that a government use a ___ if the project is financed wholly or partly by general obligation bond proceeds.

Capital Projects Fund

A ___ presents information on the capital improvements desired over a multiyear period of time.

long-term capital program

The entry to record the budget for a capital project will credit ___.

Appropriations

State grant proceeds are recognized as revenue to the Capital Projects Fund when ___ are made.

qualifying expenditures

Proceeds from a bond issue are classified as other financing sources ___.

when received

The entry to record the issuance of bonds debits __.

Cash

The entry to record the issuance of bonds credits ___.

Other financing source - long-term debt issued

Because Capital Projects Funds follow a current financial resources measurement focus, bonded-debt principal is not recorded as a ____ of a Capital Projects Fund.

liability

If grant proceeds are received from the state before project costs are incurred, receipt of the cash is recorded with a credit to ___.

Advance on state grant

As qualifying construction expenditures occur, revenue from the state grant is recognized and the ___ is reduced.

advance account

The entry to record an encumbrance of an architect's fee in the Capital Projects Fund will debit ___.

Encumbrances - capital project

The entry to record an encumbrance of an architect's fee in the Capital Projects Fund will credit___.

Budgetary fund balance reserved for encumbrances

The entry to reverse an encumbrance for a capital project will debit ___.

Budgetary fund balance reserved for encumbrances

The entry to reverse an encumbrance for a capital project will credit___.

Encumbrances - capital project

The entry to record a liability for architect's fees will debit ___.

Expenditures - architect's fees

The entry to record a liability for architect's fees will credit___.

Vouchers payable

The entry to record encumbrance of a construction contract after a contract is signed will debit ___.

Encumbrances - capital project

The entry to record encumbrance of a construction contract after a contract is signed will credit___.

Budgetary fund balance reserved for encumbrances

The entry to record investment of idle cash debits___.

Investments

The entry to record investment of idle cash credits___.

Cash

The entry to reverse part of the encumbrance for the construction contract upon receipt of a progress billing will debit ___.

Budgetary fund balance reserved for encumbrances

The entry to reverse part of the encumbrance for the construction contract upon receipt of a progress billing will credit___.

Encumbrances - capital project

The entry to record a construction expenditure including retainage will credit ___ and ___.

Retainage payable, Construction contracts payable

The entry to record a construction expenditure will debit ___.

Expenditures - construction costs

Retainage is reported as a ___ on the ___ of the Capital Projects Fund.

liability, balance sheet

The entry to record payment of the construction voucher debits ___.

Construction contracts payable

The entry to record revenues from a state construction grant after recording construction expenditures would debit ___ if grant money was already received.

Advance on construction grant

The entry to record revenues from a state construction grant after recording construction expenditures would credit ___ if grant money was already received.

Revenues - construction grant

The entry to record interest earned but not yet received will debit ___.

Interest receivable on investments

The entry to record interest earned but not yet received will credit ___.

Revenues - investments

At the end of the year, the Expenditures - Construction Costs account will be closed into ___.

Restricted Fund Balance

Consistent with the current financial resources measurement focus used for governmental-type funds, an asset's cost is not ___ in the Capital Projects Fund.

capitalized

Investments held by governments generally are reported at ___.

current fair value

Changes in the fair value of most governmental investments are reported in the ___.

operating statement

Commercial paper and U.S. Treasury obligations are reported at ___ in the Capital Projects Fund.

amortized cost

The budgetary entries made at the beginning of the year for Estimated Revenues, Estimated Other Financing Sources and Appropriations are ___ at year-end.

reversed

The year-end remaining balances in Encumbrances - Capital Project and the related Budgetary Fund Balanced Reserved for Encumbrances are ___.

reversed

Revenues, Other Financing Sources and Expenditures are closed to ___ in the Capital Projects Fund.

Restricted Fund Balance

Individual financial statements prepared for the Capital Projects Funds include __ and __.

operating statement, balance sheet

At the beginning of the year, if there are ongoing capital projects, the entity needs to reestablish the ___.

budgetary accounts for encumbrances

The entry to reestablish the encumbrances account will debit ___.

Encumbrances - Capital Project

The entry to reestablish the encumbrances account will credit __.

Budgetary Fund Balance Reserved for Encumbrances

The beginning-of-the-year entry to record the budget for estimated project revenues may include the ___ of a state grant.

unrecognized portion

The entry to record liquidation of investments and related revenues will credit __, __, and __.

Interest Receivable on Investments, Revenues - Investment Interest, Investments

The entry to record payment of a retainage will debit ___.

Retainage Payable

The entry to record the remainder of a state grant as revenue will debit ___.

Advance on Construction Grant

The entry to record the remainder of a state grant as revenue will credit__.

Revenues - Construction Grant

The entry to close the budgetary accounts will debit ___.

Appropriations

The entry to close the budgetary accounts will credit ___ and ___.

Estimated Revenues, Budgetary Fund Balance

The entry to close the operating accounts will debit the ___ accounts and the ___ account.

Revenues, Restricted Fund Balance

The entry to close the operating accounts will credits the ___ accounts.

Expenditures

The entry to record transferring a remaining cash balance to a debt service fund will debit ___.

Transfer Out to Debt Service Fund

When the bond price is different from the face value of the bonds, the difference should be recorded ___.

separately from the face value

Whether bonds are issued at a premium or discount, an account, ___, is credited for the face value of the bonds.

Other Financing Source - Long Term Debt Issued

If the bonds are sold at a premium, an account, ___, is credited for the excess of cash received over the face value of the bonds.

Other Financing Source - Bond Issue Premium

If a bond issue premium must be used to repay the bonds, it is transferred to the ___.

Debt Service Fund

If bonds are issued at a discount, the ___ are recorded in the Capital Projects Fund, and Other Financing Source - Long-Term Debt Issued is credited for the face amount of the bonds.

total proceeds

Another account, ___ is debited for a bond issue discount.

Other Financing Use - Bond Issue Discount

The entry to record payment of bond issue costs debits ___.

Expenditures - Bond Issue Costs

If bonds are issued between interest payment dates, the accrued interest will be recorded directly in the ___.

Debt Service Fund

The IRC has strict rules regarding the amount of interest that can be earned without penalty from the proceeds of ___ issued by a government.

tax-exempt debt

IRC rules generally state that interest earned on the investment of tax-exempt debt proceeds cannot be greater than the __.

interest paid

Excess interest earned by a state or local government must be paid to the __ or it will be subject to an ___.

federal government, excise tax

General obligation debt does not include debt that will be serviced from resources accumulated in ___ or ___.

Enterprise Funds, Internal Service Funds

If bonds are issued at a discount, the ___ are recorded in the Capital Projects Fund, and Other Financing Source - Long-Term Debt Issued is credited for the face amount of the bonds.

total proceeds

If the bonds are sold at a premium, an account, ___, is credited for the excess of cash received over the face value of the bonds.

A ___ fund accumulated resources currently for the future servicing of debt.

sinking

Long-term liabilities such as general obligation bonds and interest on them are not reported in governmental funds until they are __.

due and payable

The most common types of general obligation debt are ___ and ___ general obligation bonds.

term, serial

The principal portion of ___ bonds matures at one specified future date.

term

The principal portion of __ bonds matures over a period of time-often over 10 or more years.

serial

Using ___ when term bonds are issued accomplishes the same financial effect as issuing serial bonds.

sinking funds

Accounting for long-term notes in governmental-type funds is similar to accounting for __.

bonds

When a Debt Service Fund receives assets they are recorded as ___ or ___.

revenues, transfers in from other funds

201

201