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Governmental Handout I - Summer 2011

Governmental Handout I - Summer 2011 - Governmental...

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Governmental Accounting – Handout I FAF $ $ AICPA GFOA FASB GASB (1984) business, state & local non-govt., & govt. organ. non-profit Business Governmental Funds A - L = SE A - L = Fund Balance MODIFIED ACCRUAL Retained Earnings: Fund Balance: Revenues Revenues Expenses Expenditures Gains Other financing sources - Operating Transfer In Losses Other financing sources - Bond Proceeds Other financing sources – Proceeds: Sale of Capital Lease Other financing sources – Proceeds: Sale of Fixed Asset Other financing uses - Operating Transfer Out Proprietary Funds: A – L = NET ASSETS, ACCRUAL Net Assets: Operating & Non-operating Revenues Operating & Non-operating Expenses Operating Transfers In Operating Transfers Out distinction between accrual and modified accrual helps with recording entries in each fund Governmental Funds Fiduciary Funds General Fund MA Agency Funds A Special Revenue Funds MA Trust Funds Capital Projects Funds MA Private Purpose Trusts A Debt Service Funds MA Pension Trusts A Permanent Funds MA Investment Trusts A Proprietary Funds Internal Service Funds A
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Enterprise Funds A 2
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Governmental Accounting Issues to Consider: Purpose of governmental unit (to collect funds and spend funds) - govt. units DO NOT EARN REVENUE like for-profit organizations do; they collect $ and spend in accordance with agreements (legal emphasis) - "matching" of revenue and expenses not possible since the persons providing revenue are not the same persons receiving the services Governmental accounting emphasizes accountability or stewardship of resources entrusted to public officials Fund accounting is used Some funds record budgets Modified Accrual versus Accrual basis used in some funds Accrual Modified Accrual Revenue recognize when measurable & earned recognize when measurable and available (susceptible to accrual) Expenses (accrual) Expenditures (modified accrual) = outflows or other using up of assets or incurrences of liabilities from delivering goods and/or services = decreases in net financial resources; when fund liabilities are incurred & measurable & payable out of current financial resources recognized when measurable & incurred recognized when the related liability is incurred Other financing source/use increase/decrease the financial resources of a given fund without bettering the economic position of the government as a whole Accounting for taxes that are levied versus taxes that are collected but not levied Receivables for property taxes AND an allowance should be recognized when taxes are levied Any revenue from property taxes not due by the end of the period or not collectible within 60 days after the end of the period should be treated as deferred revenue Revenues NOT levied should be reported as revenue when collected Appropriations versus Encumbrances versus Expenditures Appropriations = legally approved budgeted expenses/expenditures = estimated amounts
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