CGFM Exam 2 - Section 2, Chapter 2 -
Fund Accounting and Reporting
Questions and Answers.
2 types of proprietary funds? - Answer (1) Enterprise and (2) Internal Service Funds
3 major categories of funds used by state and local governments - Answer governmental,
proprietary and fiduciary.
A governmental or enterprise fund is reported as a major fund if it meets the following two
criteria: - Answer a. Total assets, liabilities, revenues or expenditures/expenses of that
individual govt or enterprise fund are at least 10 percent of the corresponding total for all funds
of the category (total governmental funds) or fund type (total enterprise funds);
b. Total assets, liabilities, revenues or expenditures/expenses of the fund are at least 5 percent
of the corresponding total for all governmental funds and enterprise funds combined.
Agency Funds - Answer Agency funds are used to report resources held by the reporting
government in a purely custodial capacity. Ex. payroll
Assigned fund Balance - Answer Assigned fund balance includes (a) amounts in the general
fund that are intended to be used for specific purposes and (b) all remaining amounts that are
reported in governmental funds that are not classified as non-spendable, restricted, nor
committed.
Capital Projects funds - Answer used to account and report for financial resources that are
restricted, committed, or assigned to expenditure for major capital facilities and further capital
assets, other than those financed by proprietary and trust funds. Provide for efficient
management of resources for multiple-year capital projects
Committed Fund Balance - Answer Amounts that can only be used for specific purposes
pursuant to constraints imposed by formal action of the government's highest level of decision
making authority should be reported as committed fund balance.
Criteria used to determine whether an activity should be reported as an enterprise fund: -
Answer Any one of the following
(1) activity is financed with debt that is secured solely by a pledge of the net revenues from fees
and charges of the activity.
(2) Laws or regulations require fees
(3) The pricing policies of the activity establish fees and charges designed to cover costs
, Debt Service Funds - Answer is required to be used when legal requirements mandate the use,
or when financial resources are being accumulated to make principal and interest payments,
such as through earmarking tax revenue
Describe the columnar requirements for the budgetary comparison schedule. - Answer The
budgetary comparison schedule requires the original budget, final budget and actual. Any
variances that are reported are optional.
Enterprise Funds - Answer may be used to report any activity for which a user fee is charged to
external users for goods and services. It establishes a separate accounting and financial
reporting mechanism for municipal services for which a fee is charged in exchange for goods or
services.
Fiduciary Funds - Answer used to account for assets that the government holds as an agent or
trustee for other individuals,
organizations or governments.
Ex: a government has a pension program. The assets in the pension trust belong to the
employees of the government and to retirees receiving pensions.
focus of governmental funds for reporting purposes - Answer use the current financial
resources measurement
focus and modified accrual basis of accounting. Expendable assets are used to pay for current
liabilities. The difference between assets and liabilities is fund balance.
Fund - Answer Funds are fiscal and accounting entities that are segregated for the purpose of
carrying out specific activities.
GASB Codification Section 1300 - Answer Establish the foundational accounting and reporting
standards for state and local FUNDS
GASB Statement No. 31 Accounting and Financial Reporting for Certain Investments and for
External Investment Pools - Answer created the notion of investment trust funds and states
that a government entity that sponsors one or more external investment pool(s) should report
the external portion of each pool as a separate investment trust fund
General Fund purpose - Answer - to account for and report all financial resources, except
those required to be accounted for in another fund.
- Considered most important fund.
- Most administrative services of the government should be accounted for in the general fund.
Fund Accounting and Reporting
Questions and Answers.
2 types of proprietary funds? - Answer (1) Enterprise and (2) Internal Service Funds
3 major categories of funds used by state and local governments - Answer governmental,
proprietary and fiduciary.
A governmental or enterprise fund is reported as a major fund if it meets the following two
criteria: - Answer a. Total assets, liabilities, revenues or expenditures/expenses of that
individual govt or enterprise fund are at least 10 percent of the corresponding total for all funds
of the category (total governmental funds) or fund type (total enterprise funds);
b. Total assets, liabilities, revenues or expenditures/expenses of the fund are at least 5 percent
of the corresponding total for all governmental funds and enterprise funds combined.
Agency Funds - Answer Agency funds are used to report resources held by the reporting
government in a purely custodial capacity. Ex. payroll
Assigned fund Balance - Answer Assigned fund balance includes (a) amounts in the general
fund that are intended to be used for specific purposes and (b) all remaining amounts that are
reported in governmental funds that are not classified as non-spendable, restricted, nor
committed.
Capital Projects funds - Answer used to account and report for financial resources that are
restricted, committed, or assigned to expenditure for major capital facilities and further capital
assets, other than those financed by proprietary and trust funds. Provide for efficient
management of resources for multiple-year capital projects
Committed Fund Balance - Answer Amounts that can only be used for specific purposes
pursuant to constraints imposed by formal action of the government's highest level of decision
making authority should be reported as committed fund balance.
Criteria used to determine whether an activity should be reported as an enterprise fund: -
Answer Any one of the following
(1) activity is financed with debt that is secured solely by a pledge of the net revenues from fees
and charges of the activity.
(2) Laws or regulations require fees
(3) The pricing policies of the activity establish fees and charges designed to cover costs
, Debt Service Funds - Answer is required to be used when legal requirements mandate the use,
or when financial resources are being accumulated to make principal and interest payments,
such as through earmarking tax revenue
Describe the columnar requirements for the budgetary comparison schedule. - Answer The
budgetary comparison schedule requires the original budget, final budget and actual. Any
variances that are reported are optional.
Enterprise Funds - Answer may be used to report any activity for which a user fee is charged to
external users for goods and services. It establishes a separate accounting and financial
reporting mechanism for municipal services for which a fee is charged in exchange for goods or
services.
Fiduciary Funds - Answer used to account for assets that the government holds as an agent or
trustee for other individuals,
organizations or governments.
Ex: a government has a pension program. The assets in the pension trust belong to the
employees of the government and to retirees receiving pensions.
focus of governmental funds for reporting purposes - Answer use the current financial
resources measurement
focus and modified accrual basis of accounting. Expendable assets are used to pay for current
liabilities. The difference between assets and liabilities is fund balance.
Fund - Answer Funds are fiscal and accounting entities that are segregated for the purpose of
carrying out specific activities.
GASB Codification Section 1300 - Answer Establish the foundational accounting and reporting
standards for state and local FUNDS
GASB Statement No. 31 Accounting and Financial Reporting for Certain Investments and for
External Investment Pools - Answer created the notion of investment trust funds and states
that a government entity that sponsors one or more external investment pool(s) should report
the external portion of each pool as a separate investment trust fund
General Fund purpose - Answer - to account for and report all financial resources, except
those required to be accounted for in another fund.
- Considered most important fund.
- Most administrative services of the government should be accounted for in the general fund.
