Chapter 2 State and Local Government Accounting P. ples What is a Fund? « A“fund” is a fiscal and an independent accounting entity with a self-balancing set of accounts. A jlgin/] GLLusdl yo acgore yy aylu> o1>9 « A fund has its own assets, liabilities, revenues, expenditures and fund balance. + Similar to a business accounting entity Jol elball Jio ssball oLLus, — Business entity captures all reported attributes for the entire business and all its transactions Ypillolao gros [ples abel UlocVI olow guar aS pill gore — Eund captures all reported attributes of a portion of the government's activities and resources accounted for in that fund gaia) AB 93 Auuircall LoojIg0g AogSaul Abuiul go jad Sgauall Jou Spliall elgil Fund Categories + Proprietary funds olSinol gsluo * Governmental funds aogS> glia Plus the Nonfund AccountsProprietary Funds + Similar to accounting for businesses vols! glad! obLu> aguis Yiblu> + Accounting measures net position, changes in net position, and cash flows Wool! Golbial awlroll Usleodl Proprietary Funds: Accounting Equation Current Assets Current Liabilities + + Noncurrent Assets - Long-Term Liabilities = Net Position + + Deferred Outflows Deferred Inflows Proprietary Funds: MFBA + Measurement Focus (MF): — Economic resources — Financial statement recognition of all assets and all liabilities + Basis of Accounting (BA): — Accrual — Recognize revenues when earned andGovernmental Funds + Used to account for sources, uses, and balances of general government financial resources AosSaW) Aolall lal! s,lgall da.0,)9 ololriwls lac GLusd prdius + Funds represent segregations of general government net financial assets Aolall AogSaW AJLall Ugo! sdlo yo Wad igo! Jios Governmental Funds: Accounting Equation Financial Assets Related Liabilities Fund + + Balance Deferred Outflows Deferred Inflows Reporting Format Liabilities Fund + + Balance Deferred Outflows Deferred Inflows Governmental Funds: MFBA + Measurement focus (MF): — current financial resources + Basis of accounting (BA): — modified accrual+ Financial Assets: refers primarily to cash, investments, and receivables + Related Liabilities: related to the current year and normally paid for available current financial resources + Fund Balance: — Net financial assets of fund — Difference in financial assets and related liabilities (FA — RL) olslyVb Brel Lo Recognition Criteria—Revenues * Earned during or levied for the period * Objectively measurable (lpioud y3223) lpwhd uSoy * Collected in period or soon enough thereafter (usually 60 days) to pay liabilities incurred for expenditures of the period (available) S4Sioll Olol;IV! slaw (Lage 1+ dole) Ws roy LES! aud Loy ay8 By 0d of Spill 09 pleco (Abie) dal olias ldoBsa BLic VI Lo Recognition Criteria—Expenditures + When operating or capital outlay: adlowl, clidig hed clea paid currently from governmental funds are incurred + When debt service (principal and interest): (o./I985 yu! el slow) ql! class payments on long-term liabilities are due Expenditure/Expense Comparison Expenditures (net financial assets expended) Expenses (cost of goods or services used) Operating Salaries, supplies, utilities, etc. Salaries, supplies, utilities, etc. Capital Outlay Acquisition Depreciation Debt Service Principal and Interest InterestCommon Examples of Deferred Inflows in Governmental Funds + Taxes collected in advance of the period for which they are levied * Taxes levied in the current period to finance next period Nonfund Accounts + General Capital Assets(GCA): not financial resources available for expenditure, but must maintain accountability + General Long-Term Liabi ies(GLTL): unmatured principal that does not require current appropriation or expenditure of fund financial resources Nonfund Accounts: Accounting Equation Geieral Capital Unmatured General Net Asccts (cca) - Long-Term Liabilities = Position (GLTL) (NP)Categories and Types of Funds GOVERNMENTAL FUNDS * General Fund (GF): aolall glial - used to account and report all financial resources * Special Revenue Funds (SRF): wlalyYl Guslio - resources that are restricted for specified purposes * Capital Projects Funds (CPF): alow JI gylisoll Sslio - used to account for acquisition or construction of capital assets + Debt Service Funds (DSF): gall glue - used to account for expenditure for principal and interest + Permanent Funds: aul goal - resources that are restricted to the extent that only earnings may be used PROPRIETARY FUNDS + Enterprise Funds (EF): - Resources used to supply goods and service for a fee to external users and to governmental units + Internal Service Funds (ISF): - Resources used to supply goods and service for a fee to governmental unit