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Chapter 17 - GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTING
17-11
P17-19
LO 17-7,
LO 17-8
25 min.
M
Questions on Fund Items [AICPA Adapted]
Revenues and expenditures and transfers amounts together with additional
relating information are provided. Students must answer nine questions requiring
identification/calculation of the correct amount to be recognized in each fund or
government-wide financials.
P17-20
LO 17-2,
LO 17-8
20 min.
M
Identifying Types of Revenue Transactions
Students must apply the requirements of GASB No. 33 to identity the type of
revenue derived from 14 different transactions.
OTHER RESOURCES
Chapter 17
Governmental Entities: Introduction and General Fund Accounting
FUND ACCOUNTING - GENERAL FUND
FUND ACCOUNTING: Fund accounting is a system of accounting in which an organization’s
resources (and related equities) are segregated into self-balancing sets of accounts (called
“funds”) established according to legal and other restrictions on their use.
FUND: A fund is a separate accounting group with accounts to record transactions and to
prepare financial statements of a defined part of the government entity that is responsible for
specific activities or objectives. Each fund records its transactions affecting its assets, related
liabilities, and residual equity balance.
Chapter 17 - GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTING
17-12
CLASSIFICATION OF FUNDS
A. GOVERNMENTAL FUNDS
(1) General Fund
(2) Special Revenue Funds
(3) Capital Projects Funds
(4) Debt Service Funds
(5) Permanent Funds
B. PROPRIETARY FUNDS
(6) Enterprise Funds
(7) Internal Service Funds
C. FIDUCIARY FUNDS
(8) Trust Funds
Pension (and other employee benefit) trust funds
Investment Trust Funds
Private-Purpose Trust Funds
(9) Agency Funds
Chapter 17 - GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTING
17-13
THE GOVERNMENT REPORTING MODEL
1. Independent auditors’ report
2. Management’s Discussion and Analysis (required supplementary information)
3. Government-wide financial statements
a) Statement of Net Assets
b) Statement of Activities
4. Fund-based financial statements
a) Governmental funds
1) Balance Sheet
2) Statement of Revenues, Expenditures, and Changes in Fund Balances
3) Reconciliation Schedules
b) Proprietary funds
1) Statement of Net Assets
2) Statement of Revenues, Expenses, and Changes in Fund Net Assets
3) Statement of Cash Flows
c) Fiduciary funds
1) Statement of Fiduciary Net Assets
2) Statement of Changes in Fiduciary Net Assets
5. Notes to the financial statements
6. Required Supplementary Information (RSI) (in addition to the MD&A)
a) Budgetary Comparison Schedules
b) Information about Infrastructure Assets
c) Information about Pensions
Chapter 17 - GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTING
17-14
MODIFIED ACCRUAL BASIS
• A hybrid system that includes some aspects of accrual and some of cash basis accounting
• Used in funds that have a flow of current financial resources measurement focus
• Revenues: Recognized in the accounting period in which its is both measurable and
available to finance expenditures made during the current fiscal period
• Expenditures: Recognized in the period in which the liabilities are both measurable and
incurred and are payable out of current financial resources.
Chapter 17 - GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTING
17-15
ACCOUNTING FOR THE GENERAL FUND
Transactions for 20X9 fiscal year ending June 30, 20X9
1. Adoption of budget:
Estimated revenues $950
Appropriations 900
2. Tax levy. The tax levy is $602, but it is estimated that $12 of the levy will prove to be
uncollectible.
3. Collection of taxes. During the year, $582 of the tax levy was collected, and $11 was
written off as uncollectible. Of remaining $9, $5 is considered uncollectible.
4. Other cash receipts. Other revenues collected in cash totaled $351.
5. Encumbrances. During the year, appropriations were encumbered for $213 of purchase
orders issued, of which $198 were completed and vouchered at an actual cost of $195.
6. Other expenditures. Additional expenditures of $684 (Primarily for salaries and wages)
were vouchered.
7. Cash disbursements. Vouchers totaling $839 were paid.
8. Inventory. The 6/30/20X9 inventory of supplies was $14. The entity uses the
consumption method.
9. Interfund transactions. A loan of $25 was made to the internal service fund.
10. Purchase of fixed assets. General fixed assets costing $12 were vouchered and paid.
11. Payment of long-term debt. General obligation bonds of $18 reached maturity and were
retired. This amount was vouchered and paid.
12. Closing the books. (The entity uses the lapsing method to account for outstanding
encumbrances.)
Chapter 17 - GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTING
17-16
ACCOUNTING FOR THE GENERAL FUND
(1)
ESTIMATED REVENUES CONTROL
950
APPROPRIATIONS CONTROL
900
BUDGETARY FUND BALANCE-UNRESERVED
50
(2)
Taxes Receivable - Current
602
Allowance for Uncoll. Accts.-Current
12
Revenues
590
(3)
Cash
582
Allow. for Uncoll. Accts.-Cur.
11
Taxes Rec. - Current
593
Taxes Receivable - Delinquent
9
Taxes Receivable - Current
9
Allowance for U/A - Current
1
Revenues
4
Allow. for U/A - Delinquent
5
(4)
Cash
351
Revenues
351
(5)
ENCUMBRANCES
213
BUDGETARY FUND BALANCE
RESERVED FOR ENCUMBRANCES
213
Expenditures
195
Vouchers Payable
195
BUDGETARY FUND BALANCE
RESERVED FOR ENCUMBRANCES
198
ENCUMBRANCES
198
Chapter 17 - GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTING
17-17
(6)
Expenditures
684
Vouchers Payable
684
(7)
Vouchers Payable
839
Cash
839
(8)
Inventory of Supplies
14
Expenditures
14
Fund Balance - Unreserved
14
Fund Balance Reserved for Supplies
14
(9)
Due from Int. Serv. Fund
25
Cash
25
(10)
Expenditures
12
Cash
12
(11)
Expenditures
18
Cash
18
(12)
APPROPRIATIONS CONTROL
900
BUDGETARY FUND BALANCE UNRESERVED
50
ESTIMATED REVENUES CONTROL
950
BUDGETARY FUND BALANCE
RESERVED FOR ENCUMBRANCES
15
ENCUMBRANCES
15
Fund Balance - Unreserved
15
Fund Balance Reserved for Encumbrances
15
Revenues
937
Fund Balance - Unreserved
42
Expenditures
895
Chapter 17 - GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTING
17-18
EXAMPLE CITY
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE--BUDGET AND ACTUAL
(Lapsing Encumbrances)
YEAR ENDED JUNE 30, 20X9
Budget
Actual
Actual Over
(Under) Budget
Revenues:
Property Taxes
$590
$582
$(8)
Other
$360
355
(5)
Total Revenues
$950
$937
$(13)
Expenditures:
Wages and Salaries
(these items
Supplies
are not broken
Debt Repayment
down in the
Capital Outlay
example)
Total Expenditures
$900
$895
$ (5)
Excess of Revenues over Expenditures
$ 50
$ 42
$ (8)
Other Financing Sources (Uses)
Operating Transfers In
0
0
Operating Transfers Out
0
0
____
Excess of Revenues and Other Sources over
Expenditures and Other Uses
$ 50
$ 42
$ (8)
Increase in Reserve for Encumbrances
(15)
(15)
Increase in Reserve for Supplies
(14)
(14)
Unreserved Fund Balance, July 1, 20X9
100
100
Residual Equity Transfers
0
0
____
Unreserved Fund Balance, June 30, 20X9
$150
$113
$(37)
Chapter 17 - GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTING
17-19
EXAMPLE CITY
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE
YEAR ENDED JUNE 30, 20X9
Revenues:
Property Taxes
$582
Other
355
Total Revenues
$937
Expenditures:
Wages and Salaries
(these items
Supplies
are not broken
Debt Repayment
down in the
Capital Outlay
example)
____
Total Expenditures
$895
____
Excess of Revenues over Expenditures
$ 42
Other Financing Sources (Uses)
Operating Transfers In
0
Operating Transfers Out
0
Excess of Revenues and Other Sources over
Expenditures and Other Uses
$ 42
Increase in Reserve for Encumbrances
(15)
Increase in Reserve for Supplies
(14)
Unreserved Fund Balance, July 1, 20X9
100
Residual Equity Transfers
0
____
Unreserved Fund Balance, June 30, 20X9
$113
Chapter 17 - GOVERNMENTAL ENTITIES: INTRODUCTION AND GENERAL FUND ACCOUNTING
17-20
EXAMPLE CITY
GENERAL FUND
BALANCE SHEET
JUNE 30, 20X9
Assets:
Cash
$139
Taxes Receivable-Delinquent
$ 9
Less Allow. for Uncoll. Accts.
(5)
4
Due from Other Funds
25
Inventory of Supplies
14
____
Total Assets
$182
Liabilities and Fund Balance:
Vouchers Payable
$ 40
Fund Balance:
Reserve for Encumbrances
$ 15
Reserve for Inv. of Supplies
14
Unreserved
113
Total Fund Balance
142
____
Total Liabilities and Fund Balance
$182
