Governmental Accounting questions
and actual answers.
what are the three broad funds that a governmental unit uses ANS -1. governmental funds
2. proprietary funds
3. fiduciary funds
tier 1: governmental funds ANS -1. general fund- day-to-day/general operations
2. special revenue fund- revenue that is restricted for a special purpose
3. capital projects fund- construction of major assets
4. the permanent fund- restricted funds that are nonexpendable (you can never spend the original
principle, only the dividends and interest)
bonus: debt service fund
what does it mean when you say that the governmental special revenue fund is expendable? ANS -you
can spend every bit of dividends, interest, and principle on the activity that the fund is used for
what does it mean when we say that the governmental permanent fund is NOT expendable ANS -you
can only spend the dividends and interest on a specified operation. you cannot spend the principle
difference between the governmental special purpose fund and permanent fund ANS -special purpose
fund- expendable (can spend the principle)
permanent fund- nonexpendable ( cannot spend the principle)
what do four of the governmental funds have in common? ANS -1. general fund
2. special revenue fund
3. capital fund
4. permanent fund
,-none can carry their own long-term debt- you would never see the account *bonds payable* or *long
term notes payable*
-not allowed to service their long term debt. you would never see *interest expense*
what are the two accounts you would never see in the four governmental funds ANS -bonds payable
long term notes payable
you have to credit an account called *other financing sources*
what would credit in governmental accounting when you issue bonds? ANS -other financing sources.
you never have bonds payable or long term notes payable accounts.
there is a fifth governmental fund called the ANS -debt service fund. it accumulated money to make
interest payments and principal payments for long-term debt of the other four governmental funds
what do ALL 5 governmental funds have in common? ANS --the measurement focus- the flow of current
financial resources.
-they all use modified accrual accounting
what is the major difference in modified accrual accounting for governmental funds on the *revenue*
side? ANS -normal accrual accounting recognizes revenue as it's earned, but since everything is funded
by tax revenue, this doesn't work. the governmental funds do not *earn* tax dollars.
*governments accrue tax revenue when it's available and measurable*
if a government levies taxes, it's not available and measurable. you have to estimate the expected
collections within the year and 60 days after. that money is available and measurable
,what is the major difference in modified accrual accounting for governmental funds on the
*expenditure* side? ANS -none of the five funds are allowed to carry their own fixed assets
if one of these funds buys a fixed asset, they can't debit machinery or equipment, they have to debit
*expenditures control* and credit *vouchers payable*
*treat a fixes asset purchase as an expense*
governments accrue tax revenue when it's ANS -available and measurable
what sort of governmental money is accounted for under a cash basis? ANS -meter money
finishing licenses
hunting licenses
if a governmental fund goes out and buys a fixed asset, what entry can they make? ANS -DR
expenditures control
CR vouchers payable
treat the purchase of a fixed asset as an expense
where does a governmental fund record their fixed assets? ANS -since they have to treat purchases of
fixed assets as expenditures, they report the asset on a statement called *government-wide statement
of net position*. the government-wide statements use normal accrual accounting
governments make journal entries to record their budgets. what entry do they make when they have
estimated revenue and are approved to spend only a certain amount (legislative authority)? ANS -DR
est. revenues control 100,000
CR appropriations control 97,000
Other balancing accounts are added depending on what is on the budget
what is the account called in governmental fund accounting when there is a restriction (legislative
authority) on how much of a tax revenue the fund is allowed to spend? ANS -Appropriations control
, the exam loves transfers between the five governmental funds. What do they call these accounts for a
*permanent* transfer? ANS -Other financing sources (if they receive the money)
Other financing uses (if they are sending the money)
what account do you hit when a budget has on it that it will *receive* an amount of money from
another account? ANS -DR Est. other finance sources
what account do you hit when a budget has on it that it will *give* an amount of money from another
account? ANS -CR Ect. other finance uses
what account do you hit when you need to balance a budget entry? ANS -budgetary fund balance
in modified accrual, there are only 5 types of revenue that you'll accrue ANS -1. property taxes
2. real estate taxes
3. income taxes
4. sales taxes
5. tax payments due from other governmental bodies
what is the account *revenues control* for? ANS -the actual revenue you think you will receive/receive.
a CR.
if you collect more taxes than you originally estimated, you'll DR cash and CR taxes rec, but then you'll
have too large of a credit in taxes receivable, so what adjustment will you have to make? ANS -DR
uncollectible tax to make it what amount was actually uncollectible.
CR revenues control because you didn't record enough revenue originally.
what entry do you make when you collect meter money? ANS -DR cash
CR revenues control
and actual answers.
what are the three broad funds that a governmental unit uses ANS -1. governmental funds
2. proprietary funds
3. fiduciary funds
tier 1: governmental funds ANS -1. general fund- day-to-day/general operations
2. special revenue fund- revenue that is restricted for a special purpose
3. capital projects fund- construction of major assets
4. the permanent fund- restricted funds that are nonexpendable (you can never spend the original
principle, only the dividends and interest)
bonus: debt service fund
what does it mean when you say that the governmental special revenue fund is expendable? ANS -you
can spend every bit of dividends, interest, and principle on the activity that the fund is used for
what does it mean when we say that the governmental permanent fund is NOT expendable ANS -you
can only spend the dividends and interest on a specified operation. you cannot spend the principle
difference between the governmental special purpose fund and permanent fund ANS -special purpose
fund- expendable (can spend the principle)
permanent fund- nonexpendable ( cannot spend the principle)
what do four of the governmental funds have in common? ANS -1. general fund
2. special revenue fund
3. capital fund
4. permanent fund
,-none can carry their own long-term debt- you would never see the account *bonds payable* or *long
term notes payable*
-not allowed to service their long term debt. you would never see *interest expense*
what are the two accounts you would never see in the four governmental funds ANS -bonds payable
long term notes payable
you have to credit an account called *other financing sources*
what would credit in governmental accounting when you issue bonds? ANS -other financing sources.
you never have bonds payable or long term notes payable accounts.
there is a fifth governmental fund called the ANS -debt service fund. it accumulated money to make
interest payments and principal payments for long-term debt of the other four governmental funds
what do ALL 5 governmental funds have in common? ANS --the measurement focus- the flow of current
financial resources.
-they all use modified accrual accounting
what is the major difference in modified accrual accounting for governmental funds on the *revenue*
side? ANS -normal accrual accounting recognizes revenue as it's earned, but since everything is funded
by tax revenue, this doesn't work. the governmental funds do not *earn* tax dollars.
*governments accrue tax revenue when it's available and measurable*
if a government levies taxes, it's not available and measurable. you have to estimate the expected
collections within the year and 60 days after. that money is available and measurable
,what is the major difference in modified accrual accounting for governmental funds on the
*expenditure* side? ANS -none of the five funds are allowed to carry their own fixed assets
if one of these funds buys a fixed asset, they can't debit machinery or equipment, they have to debit
*expenditures control* and credit *vouchers payable*
*treat a fixes asset purchase as an expense*
governments accrue tax revenue when it's ANS -available and measurable
what sort of governmental money is accounted for under a cash basis? ANS -meter money
finishing licenses
hunting licenses
if a governmental fund goes out and buys a fixed asset, what entry can they make? ANS -DR
expenditures control
CR vouchers payable
treat the purchase of a fixed asset as an expense
where does a governmental fund record their fixed assets? ANS -since they have to treat purchases of
fixed assets as expenditures, they report the asset on a statement called *government-wide statement
of net position*. the government-wide statements use normal accrual accounting
governments make journal entries to record their budgets. what entry do they make when they have
estimated revenue and are approved to spend only a certain amount (legislative authority)? ANS -DR
est. revenues control 100,000
CR appropriations control 97,000
Other balancing accounts are added depending on what is on the budget
what is the account called in governmental fund accounting when there is a restriction (legislative
authority) on how much of a tax revenue the fund is allowed to spend? ANS -Appropriations control
, the exam loves transfers between the five governmental funds. What do they call these accounts for a
*permanent* transfer? ANS -Other financing sources (if they receive the money)
Other financing uses (if they are sending the money)
what account do you hit when a budget has on it that it will *receive* an amount of money from
another account? ANS -DR Est. other finance sources
what account do you hit when a budget has on it that it will *give* an amount of money from another
account? ANS -CR Ect. other finance uses
what account do you hit when you need to balance a budget entry? ANS -budgetary fund balance
in modified accrual, there are only 5 types of revenue that you'll accrue ANS -1. property taxes
2. real estate taxes
3. income taxes
4. sales taxes
5. tax payments due from other governmental bodies
what is the account *revenues control* for? ANS -the actual revenue you think you will receive/receive.
a CR.
if you collect more taxes than you originally estimated, you'll DR cash and CR taxes rec, but then you'll
have too large of a credit in taxes receivable, so what adjustment will you have to make? ANS -DR
uncollectible tax to make it what amount was actually uncollectible.
CR revenues control because you didn't record enough revenue originally.
what entry do you make when you collect meter money? ANS -DR cash
CR revenues control
