Review sheet for Governmental Accounting Exam 1

Know what a fund is and why we use it

- Funds are separate fiscal and accounting entities and include both cash and noncash
resourcessegregated according to the purposes or activities for which they are to be usedas
well as related liabilities.
What are the three categories of funds? What are examples of each?
- Proprietary: Enterprise
- Governmental: General
- Fiduciary: Pension trust funds
Know the fund equation for each type of fund and nonfund accounts.
Which types of activities are Enterprise Funds (see p. 37). What is the key factor distinguishing whether
a fund should be an Enterprise or Governmental fund?
- Utilities and such. The purpose of these is to make enough money to cover the use, not to make
a profit. The factor is usually fees
Know how an outlay would be accounted for in each type of fund
- Expenditure for govt fund
Where/how will capital outlays be recorded in each type of fund? Where is depreciation recorded?
- Expenditure for govt fund
- Depreciation expense for proprietary
Expenses vs expenditures (look at solution to E 1-2How would each outlay be treated if it were in a
government fund vs a proprietary fund). What is the MFBA for each type of fund?
What gets accrued under modified accrual basis?
- 1. Revenues must be (1) earned during or levied for the period, (2) objectively measurable , and
(3) available collected within the period or soon enough thereafter to pay liabili-ties
incurred for expenditures of the period. Otherwise, they must be reported either as unearned
revenues or as deferred revenues. Revenues are recognized only when all three criteria,
including the availability criterion, are met. (Thus, revenues may be recognized later in
governmental funds than in proprietary funds.)
- 2. Expenditures (not expenses)for current operations, capital outlay, and debt serviceare
recognized (1) when operating or capital outlay liabilities to be paid currently from
governmental funds are incurred, and (2) when general government debt service (princi-pal and
interest) payments on long-term liabilities are due.
What are GCA and GLTL accounts? Why are they used?
- General capital assets Often buildings and other capital resources shared by all funds
- General Long Term Liabilities Liabilities that are long term and do not require current
appropriation or expenditure
What is an encumbrance?
- Estimated cost of goods or services ordered but not yet received
What are the classifications of Fund Balance? Know the order and the criteria for classifying as each.
- Nonspendable Inventory / certain grants & things that literally cannot be spent
- Restricted Assets restricted by external parties, constitutional provisions, or enabling
legislation
- Committed Assets committed for a purpose decided by a governments governing body
- Assigned - Assets assigned with explicit indication of governments intent to limit use of
resources

- Unassigned
Know the example on page 92.
What re financial resources and related liabilities?
Know the criteria for revenue recognition (p 40). Explain availability. (I wont make you calculate
deferred revenue on this exam, but you do need to know why deferred or unearned revenue is recorded
at year end. Where would deferred revenue appear on the financial statements of a governmental
fund)). Why do we use the net revenue method? How do you record unpaid tax receivables that are
delinquent?
Look at all the examples of transaction analysis in the chapter and in the solutions
and pay attention to which fund is affected by each transaction. For items that affect the FB, know
where it would appear in the financials (for example, borrowing money on a bond would increase
Financial Assets and Fund Balance. On the financials the increase in fund balance would be shown as
Other Financing Sources.)
Know how LT debt and ST debt are recorded in both the Governmental Funds, non fund accounts, and
Proprietary Funds. When do you accrue interest?
Know the four types of interfund transactions, how they are recorded, and where they appear on the
financial statements.
Problems:
One transaction analysis problem like P2-1, P2-2, P2-3 (note that you will need to know the fund or
nonfund account equations, which fund is affected and how, and when nonfund accounts are affected
and how). Look at pp 43-44 for how transactions are treated in proprietary and governmental funds.
One journal entry problem like P3-1, P3-2, P3-3.