Government & Non-profit Accounting Exam 1 (chapters 1-4)
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Course
Government & Non-profit Accounting
Institution
Government & Non-profit Accounting
_________ endowments require the NFPs to maintain the principal amount of the contributions in perpetuity, but also permit the use of earnings on invested capital. - answer-Permanent
A legal authorization to expend cash or other financial resources for goods, services, or facilities, to be used ...
Government & Non-profit Accounting Exam 1 (chapters
1-4)
_________ endowments require the NFPs to maintain the principal amount of the contributions in
perpetuity, but also permit the use of earnings on invested capital. - answer-Permanent
A legal authorization to expend cash or other financial resources for goods, services, or facilities, to be
used for specific purposes is called a(n) - answer-appropriation
According to GASB, expenditure classifications include: - answer-fund, function or program, organization
unit, activity, character, and object
Activities that are supposed to be self-supporting by charging users for the services they receive are
classified as: - answer-business-type activities
Ad Valorem Taxes are a good source of financing for _______ governments, and are not used for
financing in many ______ governments. They are based on _______ _________. - answer-local, state,
property value
Agency (fiduciary)- definition - answer-Account for financial resources for which the government is
acting in an agency capacity;
-represents taxes, or fees, collected on behalf of another organization.
-accounting is simple A=L
-ex. tax agency funds & pass through agency funds
- since there is no net position, there are no additions to or deductions from net position.
Allotments - answer-Allotments are internal allocations of funds by executive management to quarters
or other time periods
An activity that is directed at the attainment of a specific purpose is called _________ - answer-program
Appropriation - answer-A legal authorization granted by the legislative body to incur liabilities for
purposes specified in the appropriation act or ordinance.
Assessed Valuation - answer-Generally determined by an elected "Tax Assessor"
Assessed Valuation = estimated true value of taxable property * assessment ratio
Authoritative bodies - answer-1. Financial Accounting Foundation --> FASB --> Business (for profit) orgs
& non-governmental, NFP orgs.
2. Financial Accounting Foundation --> GASB --> State & local government orgs. & Governmental NFP
orgs.
3. Comptroller General, Director of Office & Mgmt, Secretary of Treasury --> Federal Accounting
Standards Advisory Board (FASAB)--> Federal government & its agencies & departments.
, Budget Revisions - answer-Possible Reasons: an error may have been made in estimating revenues or
expenditures, or ongoing events and circumstances may have altered estimated revenues or cause
unforeseen expenditure needs. Also, because the budget is legally binding on managers, it is important
that the budget be revised to reflect changed conditions.
Budgetary Accounts - answer--purpose: used to record the budgetary inflows and outflows estimated or
authorized in the annual budget
*NOTE: the general fund and special revenue from taxes and other sources and incur expenditures; legal
penalties may exist for failure to comply with the budget, so it is imperative that the accounting system
facilitate accounting for the budget as well as all other operating transactions.
Budgetary and Operating Accounting Relationships - answer-see chart on page 14 of notes
Budgetary Controls for Expenditures (three control accounts) - answer-Appropriation
Encumbrance
Expenditure
Budgetary Controls for Revenues - answer--Periodically compare actual revenues to estimated revenues
(and actual other financing sources to estimated other financing sources)
-Use the same classification scheme for revenues and estimated revenues
-Accounting control over resources
--- Two control accounts (estimated revenues and revenues) are used to control similarly named
columns in the detail accounts in the Revenue subsidiary ledger
-- The sum of Estimated Revenues and Revenues account balances of the subsidiary ledger must equal
the general ledger control account balances for those accounts.
Budgeted inter-fund transfers and debt proceeds are recorded in: - answer-Estimated other financing
sources, estimated other financing uses
By its nature, the General fund, is always considered a ________ fund. - answer-major
Capital Projects (Special Projects) Fund - definition - answer-Used to account for & report financial
resources that are restricted, committed, or assigned to expenditures for capital outlays, including the
acquisition or construction of capital facilities & other capital assets.
-ex. buildings, highways, bridges.
Classes of non-exchange Transactions - answer--derived tax revenues, ex. income and sales tax
-imposed non-exchange revenues, ex. property taxes, and fines & penalties.
-government-mandated non-exchange transactions, ex. certain services funded by a higher level of
government.
-voluntary, non-exchange transactions, ex. grants and entitlements from higher levels of government
and certain private donations.
Classification by character: - answer-is based on the fiscal period that benefits from a particular
expenditure.
Classification of expenditure and appropriations - answer-see page 17 in notes
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