Intro to Internal Service Funds

Intro to Internal Service Funds - Introduction to Internal...

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July 2002 11 Introduction to Internal Service Funds
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July 2002 22 Internal Service Funds (ISFs) n Instructions for this power point presentation. n This button appears throughout the presentation. Click to obtain additional data. n Clicking on underlined text will provide links to additional information.
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July 2002 33 ISFs . . . continued n Established to avoid duplication of effort. n Bill clients for service. n Are self supporting. n Provide services more conveniently or at a lower cost.
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July 2002 44 ISFs . . . continued n Reflect major capital items as assets. n Record depreciation to determine all costs of operating the activity. n Measure the full cost of the goods or services. n Operate as a business.
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July 2002 55 Journal Entries n Various journal entries record the establishment and operational activities of an Internal Service Fund. n See slides 6 through 9 for these journal entries.
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July 2002 66 Journal Entries . . . continued n Establish an equity transfer: n Debit: Cash n Credit: Contributed capital from General Fund
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July 2002 77 Journal Entries . . . continued n Acquisition of IT equipment n Debit: IT equipment n Credit: Cash n Supplies for the operation n Debit: Computer supplies expense n Credit: Cash
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July 2002 88 Journal Entries . . . continued n Billings for services rendered n Debit: Due from State department n Credit: Revenues n Payment of billings n Debit: Cash n Credit: Due from State department
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July 2002 99 Journal Entries . . . continued n Depreciation n Debit: Depreciation expense n Credit: Accumulated depreciation
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July 2002 1010 End of the Year n Internal Service Funds prepare various financial statements: n Trial Balance n Closing Entries n Balance Sheet n Revenue and Expense Statement n Cash Flow Statement
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July 2002 1111 Internal Service Funds (ISFs) n From here on, this presentation is on the State of California’s Internal Service Funds. n How does California establish an Internal Service Fund?
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July 2002 1212 Establishing ISFs n First, an Internal Service Fund is: n Created n Classified
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July 2002 1313 ISFs Created Legislation Administratively (Government Code Section 13306) Electorate Initiative
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July 2002 1414 ISFs Classified n Funding source/appropriation to finance program activities must: n Identify the resources. n Specify the legal authority to expend.
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July 2002 1515 ISFs Classified . . . continued n Fund Codes n Alphabetical n Numerical n Fund structure n Generally Accepted Accounting Principles (GAAP) n Legal basis
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July 2002 1616 Uniform Codes Manual (UCM) n Provides the source for coding the ISF. n Provides a uniform coding system. n Provides a chart of accounts for budgetary, accounting, and reporting purposes.
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July 2002 1717 UCM . . . continued Comprehensive listing of n Accounts n Funds n Objects of expenditures n Receipts
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July 2002 1818 In California, Internal Service Funds are used to:
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July 2002 1919 Internal Service Funds (ISFs) n Account for State of California activities, which provide: n Goods and services to other State departments.
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