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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
resources—segregated according to the purposes or activities for which they are to be used—as
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 1-2—How 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 service—are
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
- 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

and when nonfund accounts are affected and how). On the financials the increase in fund balance would be shown as Other Financing Sources. For items that affect the FB.. P2-2. know where it would appear in the financials (for example. which fund is affected and how. Problems: One transaction analysis problem like P2-1. 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.) Know how LT debt and ST debt are recorded in both the Governmental Funds. non fund accounts. (I won’t make you calculate deferred revenue on this exam.Unassigned Know the example on page 92. One journal entry problem like P3-1. Where would deferred revenue appear on the financial statements of a governmental fund)). and where they appear on the financial statements. P3-2. borrowing money on a bond would increase Financial Assets and Fund Balance. . When do you accrue interest? Know the four types of interfund transactions. Explain availability. but you do need to know why deferred or unearned revenue is recorded at year end. P2-3 (note that you will need to know the fund or nonfund account equations. how they are recorded. and Proprietary Funds. P3-3. What re financial resources and related liabilities? Know the criteria for revenue recognition (p 40). Look at pp 43-44 for how transactions are treated in proprietary and governmental funds.