Accy 407 Exam 1

Flashcards covering key concepts from the lecture notes on Governmental and Not-for-Profit Accounting (GAAP, reporting formats, fund structure, and budgetary concepts).

General purpose governments provide a broad array of services. Give an example.

City or county governments (e.g., a city government).

Which is an example of a special purpose government?

Minneapolis Public Schools.

Not-for-Profit Organizations are legally separate and usually exempt from taxation. Give examples.

Religious, community service, private educational and health care institutions, museums, fraternal and social organizations.

According to SFAC 4, resource providers do not expect to receive __.

Repayment.

Not-for-profit and governmental entities lack defined ownership interests that can be sold or redeemed.

This absence differentiates them from business organizations.

In governmental entities, power ultimately rests in the hands of the people through the and taxation powers.

Election of public officials.

Which standard-setter governs state and local governments?

GASB.

Interperiod equity is: .

A government's obligation to disclose whether current-year revenues were sufficient to pay for current-year benefits.

Minimum requirements for general purpose external financial reporting include __.

MD&A; government-wide financial statements; fund financial statements; notes to the financial statements; required supplementary information (RSI).

State and Local Governments have two categories of basic government financial statements: .

Government-wide financial statements and Fund financial statements.

The government-wide financial statements use the basis of accounting.

Accrual.

ACFR is divided into three sections: .

Introductory Section, Financial Section, and Statistical Section.

ACFR - Introductory Section includes the Letter of Transmittal and .

List of principal officials and city organization chart.

Not-for-Profit financial statements required by FASB include the following three statements: .

Statement of financial position (balance sheet), Statement of activities (income statement), and Statement of cash flows.

Net assets categories in NFP reporting are .

Net assets without donor restrictions and net assets with donor restrictions.

Program service expenses should be reported separately from .

Supporting services (management and general, fundraising).

Two sets of basic financial statements required for state and local governments are .

Government-wide financial statements and fund financial statements.

Integrated reporting model includes Government-wide statements and .

Fund financial statements (Governmental Funds, Internal Service Funds, and Enterprise Funds).

The five elements of financial statements are .

Assets; Deferred outflows of resources; Liabilities; Deferred inflows of resources; Net position.

A fund is a separate fiscal and accounting entity and is conceptually .

Self-balancing.

GASB requires separate columns for all major funds; nonmajor funds may be grouped.

Major funds are reported in separate columns.

Fund Balance Classifications include Nonspendable; Restricted; Committed; Assigned; and .

Unassigned.

Unassigned Fund Balance is reported only in the .

General Fund.

Budgets are legally binding and integrated into the general ledgers; each operating account has a corresponding budgetary .

Budgetary account.

Budgetary accounts are posted twice during the year and reversed at year-end. This statement is .

True.

Encumbrances are commitments to spend and should not be treated as .

Expenditures.

The encumbrance outstanding account acts as a restriction on the government’s .

Fund balance.

Revenues of governmental funds are classified into major source classes such as .

Taxes, intergovernmental revenues, licenses and permits, charges for services, fines and forfeits, and miscellaneous.

Expenditure classification in governmental funds includes Fund, Function or program, Organization unit, Activity, and .

Character.

Intergovernmental revenue is not recognized until time and requirements are met.

Eligibility.

Not-for-Profit reporting requires showing the relationship between program service expenses and expenses.

Supporting expenses (fund-raising and management).

Federal government reporting uses FASAB; reporting occurs at two levels: government-wide and agency-level per .

OMB Circular A-136.

In the federal PAR, required components include a performance section, an MD&A, and a financial statements section.

Basic financial statements section.

Licenses and permits revenues are typically recorded when is received.

Cash.

Fines and forfeits accrue when the amount is prior to receipt.

Known.

Types of activities

• Governmental

• Business-type

  • Fudiciary

Governmental Activities

Core governmental services

• protection of life

• parks and rec facilities

• educational

Fiduciary Activities

Government often act either as a custodian or trustee for parties outside the government, managing resources for the benefit of others.

i.e agent for collecting taxes

Deferred outflow of resources

A consumption of net assets by the government that is applicable to a future reporting period, typically related to pension contributions or debt refunding.

A deferred outflow represents a reduction in net position and will be recognized as an expense or expenditure in subsequent periods.

Deferred inflow of resources

A consumption of net assets by the government that represents future revenue that has been received but not yet earned, often related to taxes or grants.

A liability until earned, it reflects funds received in advance for services yet to be performed or obligations unmet.

Net position

Assets + Deferred Outflows - Liabilities - Deferred inflows

Inflow of resources

The addition of net assets by the government that typically represents resources that will be available for use in future periods.

Outflow of resources

The consumption of net assets by the government that represents a use of resources now that may lead to future benefits. This often includes expenses or liabilities that have been incurred.

Fund

a separate fiscal and accounting entity. Has its own assets, liabilities, and its own operating activity. Funds are used to track the financial resources allocated for specific purposes in governmental accounting.

Self Balancing

Governmental Funds

General, special revenue, permanent, debt service, and capital projects

General Fund

Only one per government. It serves as the primary operating fund and is used for most government functions not accounted for in other funds.

Special Revenue Funds

Funds used to report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes, excluding debt service or capital projects.

Raising revenues for a library, bridges, and roads

Debt Service Funds

Funds established to account for the accumulation of resources for the payment of principal and interest on long-term debt.

Pay interest when interest is due and pay principal when principal is due

Capital Projects Funds

Funds used to account for financial resources that are used for the acquisition or construction of major capital assets, such as buildings or infrastructure.

Permanent Funds

Money put into trust, and you can’t spend the money given to youexcept for earnings that can be used for specific purposes, often benefiting the public.

Modified accrual basis of accounting

revenues recognized when measurable and available

Are capital assets and long-term liabilities recorded in governmental funds

No

Required Financial Statements for Governmental Funds

Balance sheets, reconcilation schedules, and statements of revenues, expenditures, and changes in fund balances.

Proprietary Funds

Internal Service Funds and Enterprise Fundsare used to report activities that are similar to private sector businesses, focusing on providing goods or services to external parties.

Internal Service Funds

Account for activities in which goods or services are provided for a charge to other departments of the same government.

i.e UoM charging departments for printing

governmental activities

Enterprise Funds

Account for activities that provide goods or services to the public for a fee, such as water and sewer services.

Business typeactivities that operate like private businesses.

Required Financial Statements for Proprietary Funds

Statement of net position, statement of revenues expenses and changes in net position, statement of cash flows

Fiduciary Funds

Custodial Funds and Trust Funds

Custodial Funds

government oversees cash or other assets for external parties. These funds receive and manage cash on behalf of others, ensuring proper accountability and distribution.

Investment Trust Funds

Private-purpose Trust Funds

Pension Trust Funds

• account for external investment pools in which the assets are held for other governments

• government acts as trustee for private individuals, orgs, or other governments

• trustee for the employees of the government to provide retirement benefits.

Major Funds

are funds that have a significant impact on a government's overall financial position, typically defined by the criteria set forth in accounting standards.

Determination of Major Funds

• General Fund is always a major fund

• Any fund a government considers of significant importance

• fund element >10% of total element and fund element >5% of total combined element