Exam 2 - Ac 456 - Linda Parsons - powerpoints

General Capital assets are

long-lived assets used by activities accounted for by governmental fund types

General capital assets are distinguished from capital assets that are specifically associated with

activities reported in proprietary and fiduciary funds

General and/or special revenue funds account for

capital outlay expenditures from budget appropriations

Capital Projects Funds account for construction and

major capital expenditures

Government - wide and Governmental Activities

Account for cost and depreciation of general capital assets

Land is a

general capital asset

Buildings are a

general capital asset

Improvements other than buildings is a

general capital asset

Machinery and equipment is a

general capital asset

Construction work-in-progress

general capital asset

Infrastructure is a

general capital asset

Service concession Arrangements are

general capital assets

Infrastructure assets include

highways, streets, sidewalks, storm drainage systems, and lighting systems

Infrastructure assets are stationary in nature and normally can be

preserved for a longer life than most other capital assets

Infrastructure assets are depreciated unless

the government adopts the modified approach

Typically when accounting for Government-wide general capital assets we should

capitalize the historical cost of the asset or the fmv of donated items

When accounting for general capital assets- government-wide we should depreciate (with some exceptions)

1) land/art

2) certain infrastructure (modified approach)

When accounting for general capital assets that fall under the governmental fund, we should

charge to expenditures in the appropriate fund

- general fund

- capital projects fund

- special revenue fund

Capital projects funds involve

construction of assets (v. purchase)

For capital projects funds the focus is the

life of the project (vs. fiscal year), no budget is recorded, and encumbrances are still used

There may be as many capital projects funds as

there are projects

Capital project funds ensure revenues and other financing sources dedicated to a certain purpose are

used for that purpose and no other

capital project funds continue to exist until the

project is completed

In capital project funds do not record any

debt incurred to finance the project

For the capital projects funds there is no need for

appropriations or estimated revenues, but the use of encumbrances is recommended

Governmental operating accounts include

exchange transactions and Non exchange transactions

to be an exchange transaction

Each party receives value equal to that given up

The conditions to be a non exchange transaction include

- one party gives or receives value without a direct exchange

- it is voluntary (donation) or imposed (tax)

- it meets eligibility requirements

Interfund activity included

- interfund loans

- interfund transfer

- internal exchanges

Interfund loans are recorded as

receivables/payables

If interfund loans occur within the same type of fund there is

no government-wide impact (between governmental funds)

Interfund transfers are recorded as

other source/ use of proceeds

If interfund transfers are within the same type of fund there is

no government wide impact

Internal exchange is treated as

expenditures/revenues

Receipt of goods ordered in the prior year - expenditures reduce

fund balances in current year

Receipt of goods ordered in the prior year - Expenditure applied to the prior year's budget if

expenditures is less than or equal to encumbrances

If expenditures are greater than encumbrances then

overage is applied to the current year budget

When recording inventory using the consumption method

record inventory purchases as an asset

When recording inventory using the consumption method, adjust supplies balance and expenditures at

year-end to reflect remaining supplies

When recording inventory using the consumption method expenditure equals the amount

actually consumed

The fund balance classifications include

nonspendable

restricted

committed

assigned

unassigned

Governmental funds include:

- permanent funds

- capital projects funds

- debt service funds

- special revenue funds

The General funds purpose is that it is used to

account for the general administration and most traditional services of government

Public safety is a traditional service covered by the general fund that includes

the police and fire rescue

Public works is a traditional service covered by the general fund that includes

The maintenance of buildings, roads, and bridges

Culture and Recreation is a traditional service covered by the general fund that includes the

promotion of the arts, parks, and youth activities

Health and welfare are traditional services covered by the general fund, including the

public health, food facilities inspection, and juvenile counseling

Education is a traditional service that is covered by the

general fund

The fund equation for the governmental fund

Assets = Liabilities + Fund Balance

Current assets and deferred outflows of resources less current liabilities and deferred inflows of resources equals

fund balances

Governmental Funds - Actual include

Revenues, Expenditures, and other sources & Uses

- Used modified accrual method

The classification of revenues and estimated revenues is done by

fund and done by sources

Source classifications of revenues and estimated revenues include

1) Taxes (ad valorem and self-assessing)

2) Special assessments

3) Licenses and permits

4) Intergovernmental revenues

5) charges for services

6) Fines and forfeits

7) Miscellaneous

Revenues - Taxes include

ad valorem and self assesing

Revenues - special assessments - are levied against certain properties that

receive a particular benefit that not all taxpayers receive

Revenues - Special assessments can include

street repair and noise walls

Revenues - Licenses and permits include

- vehicle licenses

- business licenses

- liquor licenses

- marriage licenses

- animal licenses

- building permits

- zoning variances

Revenues - intergovernmental includes

grants and other financial assistance from higher levels of government

Intergovernmental revenues are generally recognized when time and eligibility requirements

have been met

Charges for services revenues include

charges to recipients of services

Charges to recipients of services can be seen as

- recreational services

- building inspections

- court costs

- parking meters

Revenues - fines and forfeits

include fines and forfeits

Fines are

assessed by the courts

Forfeits are deposits or bonds made by contractors, accused felons, and other to assure

performance on contracts or appearance in court

A budget is

legally binding

a budget is

recorded

actual is compared to

budget

Budget is a type of

governmental fund

Budget accounts include

- Estimated revenues

- appropriations

- encumbrances

Expenditures Budgetary control flow includes

appropriation - encumbrance - expenditure - disbursement

Budgetary Journal entries are recorded at both the

general ledger level and the subsidiary level

Details of sources for estimated revenues includes

types of revenue

Details of expected uses of resources include the

program or function