Governmental Accounting and Fund Accounting Flashcards

Which of the following fund balance classifications under GASB 54 is the most restrictive?

Answer: Nonspendable

Nonspendable fund balance is the most restrictive classification, representing amounts that cannot be spent because they are not in spendable form (e.g., prepaid items, inventories).

Under GASB 54, 'Committed' fund balance is established by:

Answer: Formal action of the government's highest level of decision-making authority

Committed fund balance requires formal action by the government's highest level of decision-making authority (e.g., legislation or ordinance) to impose and remove the constraint.

Capital Projects Funds account for:

Answer: Financial resources used for the acquisition or construction of major capital facilities

Capital Projects Funds account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by proprietary funds.

In governmental fund financial statements, which of the following would be reported as an expenditure rather than an expense?

Answer: Principal payment on long-term debt

Under modified accrual, governmental funds report principal payments on long-term debt as expenditures when due, since they do not carry long-term liabilities.

Which of the following is an example of a fiduciary fund?

Answer: Pension Trust Fund

Pension Trust Funds are fiduciary funds that account for resources held in trust for pension plan members and beneficiaries.

Under governmental accounting, long-term debt of governmental funds is reported in:

Answer: The government-wide statement of net position

Long-term debt is not reported in governmental fund balance sheets but is reported in the government-wide statement of net position, which uses full accrual accounting.

The 'available' criterion for revenue recognition under modified accrual means revenues must be collected:

Answer: Within the period or soon enough to pay current-period liabilities (typically 60 days)

GASB considers revenues available if collected within the current period or within 60 days after year-end, soon enough to be used to pay current-period liabilities.