Chapter one and two accounting

what is the heirarchy and sources of authoritative GAAP?

category A: GASB statements (and interpretations)

category B: GASB implementation guides, GASB technical bulletins, and literature of the AIPCA specifically cleared by GASB 

*if no A or B, something similar, if still not, then non authoritative sources

how do GASB objective differ from business objectives

more emphasis on the budget, legal compliance, efficiency and effectiveness measures other than net income

what two sets of statements are required by state and local governments

1. fund financial statements- show restrictions on use of resources and report current revenues and expenditures from certain activities

2. gov.- wide financial statements - report all revenues and costs w/ a long term focus of interest to creditors to assess the likelihood of being paid

what is accrual basis/economic resources measurement focus

general business concepts of revenue and “expenses” apply when recording exchange like transactions (gov wide statements, typical GAAP)

what is modified accrual basis/ current financial resources measurement focus?’

applies to funds financed by taxes and other involuntary contributions (fund statements) —> outflows are expenditures ad revenues are recorded when “measurable and available”

what is the emphasis, measurement focus, general info, and timing of recognition for fund financial statements?

emphasis: individual activites

measurement focus: current financial resources (cash, investments)

general info: inflows and outflows of current financial resources'

timing of recognition: modified accrual accounting 

what is the emphasis, measurement focus, general info, and timing of recognition  for gov wide financial statements 

emphasis: government as a whoole

measurement focus: all economic resources

general information: overall financial health

timing of recognition: accrual accounting 

what is a fund?

represents a part of the activities of some organization

is an accounting entity —> self balancing set of accounts, reflecting the assets, liabilities, net assts, and changes in those balances

segregates resources for specific activites

what are the five governmental type funds (general citizens services)

1. permanent funds: resources that are restricted to extent that only income (not principle) may be used for purposes that support programs (endowments)

2. capital project funds: financial resources restricted/ committed/ assigned to expenditures for capital outlay

3. debt services funds: financial resources restricted/ committed to expenditure for principle interest

4. special revenue funds:proceeds of specific revenue sources that are restricted/ committed to expenditure for special purpose

5. general funds: anything else

what are the two types of proprietary funds 

-business like activities such as water, utilities 

-USE ACCRUAL BASIS

1. enterprise fund: measure net income for gov. dept. providing goods/ services primarily to outside customers (water, golf course) (sell gov to customer)

   1. internal service fund: measure net income for gov. dept. providing services, primarily to other dept. or agencies (sell gov to gov)

what are the 4 types of fiduciary funds

-holding resources for others

-ommited from gov wide

1. investment trust funds: accounts for external portion of investment pools

2. pensions fund: account for assets provided to pension trust

3. private- purpose trust fund: all other trust arrangements under which pricipal income benefits others

   1. custodial funds: all other fudiciary activities

which funds uses a budget comparison schedule

general and each special revenue fund with a legally adopted budget

what is the annual report called from state and local accounting

annual comprehensive financial report

what are the 3 sections of the annual comprehensive financial report

1. introductory

2. financial section

   1. statistical section

what’s in the required supplementary section 

1. management discussion and analysis 

2. budgetary comparison schedule 

3. info about infrastructure assets

4. info about define benefit pension plans 

   1. schedules for external risk pools 

whats a component unit and when should it be included in the financial reporting of a primary government

1. relationship with a financial entity must have two things

   1. the related organization must represent a financial benefit or burden to primary government

• must represent fianancial benefit —> see notes

how are component units reported?

may be discreetly blended or reported

name the government wide financial statements

1. statement of net positions (aka balance sheet)- 3 parts

   1. net investment and capital assets, restricted, unrestricted

   2. statement of activities - measures revenues and expenses using accrual basis

name the fund basis financial statements

a. governmental type funds

……balance sheet, statements of revenues/ expenses, reconciliation of gov. statements

b. proprietary funds

…..statement of net position, statement of cash flows

c. fiduciary funds

……statement of fiduciary net position, statements of changes in fiduciary net positions 

three ways fund financial statements differ from the government wide financial statements

1. internal service funds are grouped with the funds they benefit

2. gov activities use the economic resources measurement focus, and gov funds use the current financial resources measurement focus'

   1. timing of recognition is different, and the differences create the need for reconciliations between the totals on the two types of statements

what is the “major funds” concept?

-must show column for general funds

-seperate column from other funds

-remaining funds added together and shown in one column

-use total column

expenditures are classified by….

“character” 

(current, debt service, capital outlay)

5 fund balance categories

fund balance- non spendable

fund balance- restricted

fund balance - commited'

fund balance- assigned

fund balance- unassigned

what is a budgetary comparison schedule

shows original budget and final revised budget after revisions during the year. variance column is useful, but optional