GNP Exam 2

Government & Not for Profit Accounting Chapter 5, 6, 7, 8

Revenues must be…

Measurable, available, legally usable

Legally usable

Government has legal claim to the resources established by end of period and resources were raised to finance expenditures of the current or prior period

When do you use deferred inflow?

for taxes

When do you use unearned revenue?

for grants

What are the kinds of non-exchange transactions?

derived tax revenue, imposed tax revenue, government mandated, voluntary

When do you recognize revenue?

When available, measurable, and when the underlying exchange transaction takes place.

What are the kinds of derived tax revenue?

Income, sales, gas

What are the journal entries for derived tax revenue?

DR: Cash CR: Tax revenue DR: Tax receivable CR: Tax revenue

What are the kinds of imposed tax revenues?

Property taxes, fines, forfeitures

What are the journal entries for imposed tax revenues?

DR: Cash CR: Tax/Fine Revenue DR: Tax/Fine Receivable CR: Tax/Fine Revenue

When can you recognize government mandated grant revenue?

When it is measurable, available and when the performance obligations have been met

What are the journal entries for when grant money is received before the eligibility requirements are met?

When you get it: DR: Cash CR: Unearned Revenue

DR: Expenditure CR: Cash

DR: Unearned revenue CR: Revenue

What are the journal entries for when grant money is spent before you get it?

DR: Expenditure CR: Cash

When it’s 60 days out: DR: Grant receivable CR: Revenue

When you get the money: DR: Cash CR: Grant Rec

What are the entries for voluntary grant revenue?

The same as the government mandated ones

What are pass through grants?

Primary recipient received grant and must pass through resources to a secondary recipient

What are the entries for a primary recipient WITH administrative control?

When they get it: DR: Cash CR: Revenue

When they pass: DR: Expenditure CR: Cash

What are the entries for a primary recipient WITHOUT administrative control?

When they get it: DR: Cash CR: Payable

When they pass: DR: Payable CR: Cash

What are the entries for the subrecipient in pass through grants?

DR: Cash CR: Revenue

When should expenditures be recognized?

In the accounting period in which the fun liability is incurred if measurable.

What is the exception?

Unmatured interest (principal) on general long-term liabilities. They are recognized when DUE and NOT PAID

What is the exception to the exception?

Interest/principal can be accrued on LTD if funds have been transferred to a DSF already and the debit will be paid within 30 days of the new year

What are the entries for the consumption method and purchases method when you purchase materials?

DR: Expenditures CR: V/P

What is the entry for when supplies are put into use under the consumption method and purchases method?

No entry

EOY a count determines that 50,000 of supplies remain unused, what is the entry under the CONSUMPTION method?

DR: Inventory CR: Expenditures

EOY a count determines that 50,000 of supplies remain unused, what is the entry under the PURCHASES method?

DR: Inventory CR: OFS-Inventory

EOY a count determines that 50,000 of supplies remain unused (650k purchased), what is the impact on FB under the purchases and consumption method?

Down 600k

How do we account for inventory under the consumption method preputial system?

We capitalize at the beginning, and it will become an expenditure when the supplies are used up

When is a lease considered short term?

When it has a term of 12 months or less

Are there entries in the non-fund for short term leases?

No

When can you usually accrue vacation?

Usually if it is taken in the first month

What are the two types of debt refunding?

Current refunding and advance refunding

What are the reasons for refunding?

Lower interest rates, extend maturity dates, revise payment schedule, remove or modify restrictions

Legal defeasance

Debtor fulfills defeasance provisions of debt indenture or other agreement

In-substance defeasance

Conditions are met that in essence make it such that the debit is defeased

Non-defeasance

When can the modified approach be used?

When 1. an asset management program is in place and 2. Documentation that Aarone beign preserved at or above given conditi