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Principles of Accounting and Financial Reporting For State and Local Governments
Principles of Accounting and Financial Reporting For State and Local Governments
2
Principles of Accounting
and Financial Reporting
for State and Local Governments
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
2-2
Learning Objectives (Cont’d)
2-3
Activities of Government
Governmental
Business-type
Fiduciary
2-4
Required Financial Statements
2-5
Required Financial Statements (Cont’d)
2-6
Required Financial Statements (Cont’d)
2-7
Required Financial Statements (Cont’d)
2-8
Definition of “Fund”
2-10
Governmental Funds
2-11
Governmental Funds (Cont’d)
2-12
Governmental Funds (Cont’d)
I.O.U.
2-13
Governmental Funds (Cont’d)
2-14
Governmental Funds (Cont’d)
Permanent Funds
Account for resources provided by trust for which
the principal is not spendable, but the earnings on
the principal are required to be used for a public
purpose, such as an endowment to provide art for
public buildings
2-15
Governmental Funds —
Common Characteristics
2-16
Governmental Funds —
Required Financial Statements
2-18
Dual Effect of Capital
and Related Transactions (Cont’d)
Debits Credits
Governmental Activities,
Government-wide:
1b. Cash 400,000
Notes Payable 400,000
2-19
Dual Effect of Capital
and Related Transactions (Cont’d)
Debits Credits
General Fund:
2a. Expenditures—Capital Outlay 400,000
Cash 400,000
Governmental Activities,
Government-wide:
2b. Buildings 400,000
Cash 400,000 2-20
Proprietary Funds
2-21
Proprietary Funds (Cont’d)
Enterprise Funds
Account for activities in which goods or
services are provided to the general
public for a charge
Examples: electric and water utilities,
airports, parking garages, transportation
systems, and golf courses
Reported as business-type activities in
the government-wide financial
statements
2-22
Proprietary Funds
Common Characteristics
2-23
Proprietary Funds
Required Financial Statements
2-24
Fiduciary Funds
Agency Funds
Account for financial resources for which
the government is acting in an agency capacity
Accounting is simple: assets = liabilities
Since there is no net position, there are no
additions to or deductions from net position
Examples: tax agency funds and pass-through
agency funds
2-25
Fiduciary Funds (Cont’d)
2-26
Fiduciary Funds (Cont’d)
2-27
Fiduciary Funds (Cont’d)
2-28
Fiduciary Funds
Characteristics and Financial Reporting
2-29
Reporting of Major Funds
2-30
Determination of Major Funds
2-31
Determination of Major Funds (Cont’d)
2-32
Reporting Capital Assets
(See Appendix B)
2-33
Valuation of Capital Assets
2-34
Depreciation of Capital Assets
2-35
Reporting Long-term Liabilities
(See Appendix B)
2-38
Measurement Focus & Basis of Accounting
Summary
Measurement Basis of
Focus Accounting