CPFO Final Accounting Exam

CPFO Final Accounting Exam Five components of Fund Balance - Correct Answer-Nonspendable Restricted Committed Assigned Unassigned Six essential characteristics of accounting data for inclusion in the GPEFR? - Correct Answer-Understandable to someone with a reasonable understanding of government and public finance activities & of the fundamentals of governmental financial reporting Reliable - not precise because estimates are acceptable Relevant - Should make a difference in how users assess a problem, condition, or event. Irrelevant data obscure rather than enhance understanding Timely - Issued soon enough after the end of a period to affect decision making Consistent - Allows analysis of financial trends over time necessary to make decisions Comparable - Similar events, transactions, and activity should be treated similarly Source: 2021 eGAAFR Chapter 1 Formula for fund balance - Correct Answer-(Assets + Deferred outflows) - (Liabilities + Deferred Inflows) = Fund Balance Difference between fund balance and net position - Correct Answer-Fund balance - governmental funds only Net position - proprietary, fiduciary and government-wide Two types of nonspendable fund balance - Correct Answer-Resources not in spendable form (supplies inventories/prepaid items) Resources in spendable form that are legally or contractually required to remain intact (endowments/revolving loan funds) Difference between restricted and committed fund balance - Correct Answer-Restricted - externally enforceable restraints Committed - internally, self-imposed legal restrictions set by the government's highest level of authority (Council) Which funds can have a positive unassigned fund balance? - Correct Answer-Only the general fund. All other funds have a specific purpose, so they would always be restricted, committed or assigned How are encumbrances classified in fund balance? - Correct Answer-All encumbrances must be classified as restricted, committed, or assigned, based on the type of funds used to encumber. Encumbrances not made from restricted or committed must be assigned. Note: Encumbrances are not reported separately within restricted, committed, assigned, on the face of the financials Three differences between committed and assigned fund balance - Correct Answer-Committed Who? Highest level of authority (Council) How? Formal action by Council When? No later than the end of reporting period. Assigned Who? Lower level, can be delegated by Council How? Less formal action When? can occur at a later date (decision based on final figures for the reporting period. How are stabilization funds recorded in fund balance? - Correct Answer-Restricted or Committed - never assigned - expressly prohibited by accounting guidance What is the maximum amount of fund balance that can be assigned? - Correct Answer-The difference between total fund balance and the sum of its nonspendable, restricted and committed components. Assignments cannot result in a negative fund balance Can funds have a negative unassigned fund balance? - Correct Answer-Governmental funds, other than the general fund, show a negative unassigned fund balance when nonspendable, restricted and committed exceed total fund balance.