accounting quiz midterm

General Fund

The main fund for a government's everyday operating activities.

Number of General Funds

Each government has only one General Fund.

General Fund purpose

Accounts for financial resources not accounted for in another fund.

Special Revenue Fund

A fund for specific revenues restricted or committed to particular operating purposes.

Special Revenue Fund example

Gasoline taxes restricted for road maintenance.

Restricted revenue

Revenue that can only be used for a specified purpose.

Committed revenue

Revenue set aside for a specific purpose through formal government action.

General Fund vs Special Revenue Fund

The General Fund covers general operations; Special Revenue Funds cover specific operating purposes.

Modified accrual basis

Recognizes revenues when measurable and available and expenditures when liabilities are incurred

Current financial resources

Resources available to pay for current-period needs.

Measurable revenue

Revenue whose dollar amount can be reasonably estimated.

Available revenue

Revenue collectible during the current period or soon enough afterward to pay current-period bills.

Availability period

The period after year-end during which revenue must be collected to count as available; class notes generally use 30–60 days.

Expenditure

An outflow of current financial resources for government operations or other fund purposes.

Revenue recognition

Revenue is recognized when it meets the fund's recognition rules

Property tax levy

The government establishes the amount of property taxes owed.

Property taxes receivable

Property taxes owed to the government but not yet collected.

Property tax collection

Debit Cash and credit Property Taxes Receivable.

License and fee revenue

Often recognized when cash is collected because amounts may be small or difficult to estimate.

Intergovernmental grant

Money received from another government.

Tax Anticipation Note (TAN)

Short-term borrowing repaid from expected tax collections.

Bond Anticipation Note (BAN)

Short-term borrowing repaid from a future bond issue.

Revenue Anticipation Note (RAN)

Short-term borrowing repaid from other expected revenues.

Anticipation note payable

The liability created when the government borrows against expected future receipts.

Idle cash

Cash not currently needed that may be invested temporarily.

Interest accrual

Recognizing interest incurred even if it will be paid later.

Interest calculation

Principal × annual interest rate × fraction of the year.

Estimated Revenues

Budgeted amounts the government expects to receive.

Appropriations

Budgeted spending authority for specified purposes.

Budgetary Fund Balance

The balancing account in the budget entry.

Budget adoption entry

Debit Estimated Revenues; credit Appropriations; use Budgetary Fund Balance to balance.

Budget deficit at adoption

Occurs when appropriations exceed estimated revenues.

Encumbrance

An amount set aside when a purchase order is issued.

Purpose of encumbrances

To track commitments against the spending budget before goods or services are received.

Encumbrance entry

Debit Encumbrances; credit Budgetary Fund Balance Reserved for Encumbrances.

Reverse an encumbrance

Debit Budgetary Fund Balance Reserved for Encumbrances; credit Encumbrances.

Actual expenditure entry

Debit Expenditures; credit Vouchers Payable or Cash.

Are encumbrances expenditures?

No. They track purchase commitments before the actual expenditure is recorded.

Vouchers Payable

Amounts owed to vendors for goods or services received.

Accrued expenditure

An expenditure incurred but not yet paid.

Property tax levy entry

Debit Property Taxes Receivable; credit Revenues—Property Taxes.

Cash collection entry

Debit Cash; credit Property Taxes Receivable.

Salary payment entry

Debit Expenditures—Salaries; credit Cash.

Unpaid salary entry

Debit Expenditures—Salaries; credit Accrued Salaries Payable.

Investment purchase entry

Debit Temporary Investments; credit Cash.

Investment sale at a gain

Debit Cash; credit Temporary Investments and credit investment revenue for the gain.

Statement of Revenues

Expenditures

Fund Balance

The difference between a governmental fund's assets and its liabilities

Beginning Fund Balance

The fund balance at the start of the period.

Ending Fund Balance

Beginning Fund Balance plus the period's net change.

Net change in fund balance

Revenues minus expenditures

Budgetary comparison schedule

Compares budgeted amounts with actual results.

Preclosing trial balance

The list of ledger account balances after adjusting entries but before closing entries.

Control account

A general ledger account supported by detailed records in a subsidiary ledger.

Subsidiary ledger

A detailed record that supports the balance of a control account.

Tax roll

A subsidiary ledger listing property taxes owed by individual property owners.

Nominal accounts

Temporary accounts such as revenues and expenditures that are closed at year-end.

Budgetary account closing

Close Estimated Revenues and Appropriations against each other and Budgetary Fund Balance.

Revenue and expenditure closing

Close revenues and expenditures into Fund Balance.

Deficit at year-end

Occurs when expenditures exceed revenues.

Current financial resources measurement focus

Focuses on spendable resources such as cash investments and taxes receivable.

Capital assets under current financial resources focus

Capital assets are not reported as assets in governmental funds.

Deferred outflows of resources

Amounts recognized as expenditures in a future period rather than the current period.

Deferred inflows of resources

Amounts recognized as revenue or expenditure reductions in a future period rather than the current period.

Unmatured long-term debt

Long-term debt not yet due for payment and generally not reported as a governmental fund liability.

Matured long-term debt

Debt that has come due and is normally payable from available financial resources.

Short-term liability

A liability normally paid promptly from current financial resources.

Compensated absences

Amounts owed for earned leave such as vacation or sick time.

Claims and judgments

Amounts a government may owe because of legal claims or court decisions.

Property tax revenue recognition

Recognize revenue in the year levied if it is available.

Property tax availability rule

Property taxes are normally considered available if collected within 60 days after year-end.

Allowance for refunds and uncollectible taxes

Reduces property tax revenue for estimated refunds and taxes that will not be collected.

Net property tax revenue

Property taxes levied minus estimated refunds and uncollectible taxes.

Property tax appeal

When a taxpayer wins an appeal the government reduces the tax amount owed.

Allowance adjustment

Change the allowance and adjust property tax revenue by the same amount.

Delinquent property taxes

Unpaid property taxes classified as delinquent.

Unavailable property taxes

Levied taxes not expected to be collected within the availability period.

Unavailable property tax entry

Debit Revenues—Property Taxes; credit Deferred Inflow of Resources—Unavailable Property Taxes.

Recognition after deferral

Debit Deferred Inflow of Resources; credit Revenues when the previously unavailable taxes become recognizable.

Property tax discount allowance

An estimate of discounts taxpayers may receive for early payment.

Interest on delinquent taxes

Usually recognized as revenue when available and often when cash is received.

Tax lien

The government's legal right to prevent property sale until a tax claim is satisfied.

Tax lien entry

Debit Tax Liens Receivable; credit delinquent property taxes receivable and interest and penalties receivable.

Derived tax revenue

Tax revenue based on an underlying exchange such as a sale or income earned.

Sales tax revenue

Revenue generated by applying a tax rate to taxable sales.

Income tax revenue

Revenue generated by applying tax rules to taxable income.

Derived tax asset recognition

Recognize cash or a receivable when the underlying exchange occurs.

Derived tax revenue recognition

Recognize revenue when the exchange occurs and resources are available.

Deferred sales tax revenue

Sales tax amounts that are earned but not available under the applicable rules.

Income tax refunds payable

Amounts expected to be refunded to taxpayers.

Intergovernmental grant eligibility

Requirements that must be met before grant revenue can be recognized.

Time requirements for grants

Rules specifying when grant resources may be used.

Purpose restrictions for grants

Rules specifying which activities grant resources may fund.

Expenditure-driven grant

A grant for which eligible costs must be incurred before the government qualifies.

Grant received before time requirements are met

Debit Cash; credit Deferred Inflow of Resources—Grant.

Pass-through grant

A grant received by one government and transferred to or spent for another government.

Custodial Fund exception

A custodial fund may be used when a government acts only as a cash conduit without administrative or direct financial involvement.

Imposed nonexchange revenue

Revenue such as fines and penalties that does not come from an equal exchange.

Miscellaneous exchange revenue

Revenue from services such as pool fees inspection fees or parking fees.

Payments in lieu of taxes (PILOTs)

Payments made to a government to offset property taxes lost from tax-exempt entities.