CGFM Exam 2 - Section 2, Chapter 2 - Fund Accounting and Reporting correctly answered

CGFM Exam 2 - Section 2, Chapter 2 - Fund Accounting and Reporting correctly answeredGASB Codification Section 1300 Establish the foundational accounting and reporting standards for state and local FUNDS Fund Funds are fiscal and accounting entities that are segregated for the purpose of carrying out specific activities. 3 major categories of funds used by state and local governments governmental, proprietary and fiduciary. Governmental Funds Traditionally been used to account for the general services provided to the public. These services include public safety, health, transportation, social services, recreation and the administration of the government. focus of governmental funds for reporting purposes 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. Type of accounting used for governmental funds current financial resources measurement focus and modified accrual basis of accounting. Types of Government Funds General Fund, Special Revenue Funds, Capital Projects Funds, Debt Service Funds, Permanent Funds General Fund purpose - 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. General Fund sources of revenues & expenditures • Property taxes, sales taxes and income taxes are the most common revenue sources used to finance government activities. • Permit and license fees may also be significant resources that are used to finance services. • Other major revenue sources are intergovernmental grants and shared revenues. • Fines, forfeitures and investment earnings may be substantial for some governments Special Revenue Funds Purpose should be used to account and report for the proceeds of specific revenue sources (other than major capital projects) that are restricted or committed to expenditure for specified purposes. Single Audit Act/OMB A-123 Audit organization-wide audit or examination of an entity that expends $750,000 or more of Federal assistance (commonly known as Federal funds, Federal grants, or Federal awards) received for its operations Capital Projects funds 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 Debt Service Funds 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 Permanent Funds A permanent fund is used to account for governments receive bequests from individuals stipulating that donated resources are to be invested by the government. The bequest restricts the use of resources so that only the earnings, and not the principal, may be used for activities that benefit the government. Proprietary Funds proprietary funds generally match revenues to expenses that result directly and jointly from the same transactions or other events, such as sales and cost of goods sold. Proprietary funds require a fee or user charge. Similar to the private sector. 2 types of proprietary funds? (1) Enterprise and (2) Internal Service Funds what determines the type of proprietary fund that should be used? which fund type to use is dependent on the primary customer Enterprise Funds 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. Internal Service Funds account for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units on a cost reimbursement basis, as long as THE RERORTING GOVERNMENT is the predominant user