ACCY161_Sp11_Notes16 - ACCY 161 Spring 2011 Chapter 9...

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ACCY 161 – Spring 201 1 Chapter 9 – Financial Reporting for State and Local Governments #2 Chapter 10 – Financial Analysis of Governmental Financial Statements ACCY161_Notes16 Page 1 of 5 I. Class Notes 1. Exam #2 II. Last Time A. Example for prior exam on the closing entries III. Re-establishment of Prior Year Encumbrance See page 131/125 and page196/191 in the current/previous textbook A. Not always allowed to carry forward appropriations and encumbrances – see fn 4 in Chapter 4 B. Steps 1. Re-establish the encumbrance with: Encum brance DR Fund Balance CR And at same time move the Reserve for Encumbrances out the fund balance to where it was before – sort of just hanging around When the good are received, then just reverse the encumbrance like we did in Chapter 4 – this will liquidate the encumbrance and remove the reserve for encumbrance 2. You then recognize the expenditure as normal. See text for fine points, but this is all that is needed on the exam. IV. Component Units A. Characteristics 1. Legally separate organizations 2. Elected officials of the primary government are financially accountable – others may be accountable as well 3. Exclusion of such organizations from the financial statements of the primary government would or could result in misleading or incomplete financial disclosure on the part of the primary government B. Component unit financial reporting in the basic financial statements 1. Blended 2. Discrete 3. Comments in the footnotes as well 4. See page 357/350 in the text – do not need to know for the exam V. Footnote Disclosure A. Footnote order 1. The first footnote is sometimes called the “pervasive note” in that it covers all aspects of the financial statement but generally does note contain specific information.
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