Podcast
Questions and Answers
Who were the forerunners of the FASB before it was formed in 1973?
Who were the forerunners of the FASB before it was formed in 1973?
- The Accounting Principles Board and The Committee on Accounting Procedure (correct)
- The Securities and Exchange Commission and The International Accounting Standards Board
- The Internal Revenue Service and The Governmental Accounting Standards Board
- The Financial Accounting Foundation and The American Institute of Certified Public Accountants
Which body is responsible for establishing Generally Accepted Accounting Principles (GAAP) for state and local governments?
Which body is responsible for establishing Generally Accepted Accounting Principles (GAAP) for state and local governments?
- GASB (correct)
- FASAB
- American Institute of Certified Public Accountants
- FASB
Who are considered major external users of financial reports according to the text?
Who are considered major external users of financial reports according to the text?
- Taxpayers, donors, investors, bond-rating agencies, and grant-providing organizations (correct)
- Budgeting departments, management consultants, financial regulators, and business owners
- Government employees, non-profit organizations, bond investors, and tax authorities
- Stockholders, creditors, board members, and financial analysts
Who are classified as internal users of Government & Non-Profit entity accounting information?
Who are classified as internal users of Government & Non-Profit entity accounting information?
Which body is responsible for establishing Generally Accepted Accounting Principles (GAAP) for business organizations and nongovernmental not-for-profit organizations?
Which body is responsible for establishing Generally Accepted Accounting Principles (GAAP) for business organizations and nongovernmental not-for-profit organizations?
Which group of users of federal financial reports has the FASAB identified?
Which group of users of federal financial reports has the FASAB identified?
Which section of the Comprehensive Annual Financial Report (CAFR) contains the basic financial statements?
Which section of the Comprehensive Annual Financial Report (CAFR) contains the basic financial statements?
What is the main purpose of government-wide financial statements?
What is the main purpose of government-wide financial statements?
What does the Statement of Net Position in government-wide financial statements provide information about?
What does the Statement of Net Position in government-wide financial statements provide information about?
What is included in the Statement of Activities in government-wide financial statements?
What is included in the Statement of Activities in government-wide financial statements?
In what sections does the FASAB focus its standards according to the text?
In what sections does the FASAB focus its standards according to the text?
Which financial statement reports the assets, liabilities, and net position of fiduciary funds?
Which financial statement reports the assets, liabilities, and net position of fiduciary funds?
What type of funds are used to account for resources held in a trustee or agency capacity?
What type of funds are used to account for resources held in a trustee or agency capacity?
What is the focus of Government fund statements?
What is the focus of Government fund statements?
Which financial statement reports the additions, deductions, investment income, and changes in net position of fiduciary funds?
Which financial statement reports the additions, deductions, investment income, and changes in net position of fiduciary funds?
Which type of financial statements provide a broader perspective on the overall financial health and results of the government entity as a whole?
Which type of financial statements provide a broader perspective on the overall financial health and results of the government entity as a whole?
Why are long-term obligations and noncurrent assets not reported in governmental funds?
Why are long-term obligations and noncurrent assets not reported in governmental funds?
What is the main purpose of Fund Financial Statements in government accounting?
What is the main purpose of Fund Financial Statements in government accounting?
Which type of funds in government accounting are used to account for activities related to general government operations?
Which type of funds in government accounting are used to account for activities related to general government operations?
What do the fund financial statements for governmental funds include?
What do the fund financial statements for governmental funds include?
Which type of funds in government accounting are used to account for activities similar to those of private businesses?
Which type of funds in government accounting are used to account for activities similar to those of private businesses?
What does the Statement of Net Position in proprietary funds present?
What does the Statement of Net Position in proprietary funds present?
Which statement shows the fund's assets, liabilities, and fund balance for governmental funds?
Which statement shows the fund's assets, liabilities, and fund balance for governmental funds?
In the government-wide statement of net assets, where are both modified accrual basis revenues and expenses reported?
In the government-wide statement of net assets, where are both modified accrual basis revenues and expenses reported?
According to the modified accrual basis of accounting, when are revenues recorded?
According to the modified accrual basis of accounting, when are revenues recorded?
How are expenditures generally recognized under the modified accrual basis of accounting?
How are expenditures generally recognized under the modified accrual basis of accounting?
Why are expenses reported in the governmental fund statement of revenues, expenditures, and changes in fund balances, while expenditures are reported in business-type activities?
Why are expenses reported in the governmental fund statement of revenues, expenditures, and changes in fund balances, while expenditures are reported in business-type activities?
For which type of funds do proprietary fund financial statements present financial information?
For which type of funds do proprietary fund financial statements present financial information?
Why do enterprise funds and internal service funds follow accounting and reporting practices similar to those of business organizations?
Why do enterprise funds and internal service funds follow accounting and reporting practices similar to those of business organizations?
Study Notes
History and Structure of Accounting Bodies
- The Financial Accounting Standards Board (FASB) was preceded by the Accounting Principles Board (APB) and the Committee on Accounting Procedure (CAP).
- The Governmental Accounting Standards Board (GASB) establishes Generally Accepted Accounting Principles (GAAP) for state and local governments.
- External users of financial reports typically include investors, creditors, regulators, and analysts who rely on financial information for decision-making.
Internal Users and Regulatory Bodies
- Internal users of accounting information in Government & Non-Profit entities include management, department heads, and executives who utilize data for operational and strategic purposes.
- The FASB sets GAAP for business organizations and nongovernmental not-for-profit organizations.
- The Federal Accounting Standards Advisory Board (FASAB) identifies various groups of users for federal financial reports, including Congress, executive agencies, and the general public.
Comprehensive Annual Financial Report (CAFR)
- The basic financial statements are found in the financial section of the CAFR.
- Government-wide financial statements aim to provide a complete view of the government's overall financial position.
- The Statement of Net Position offers insights into an entity's assets, liabilities, and net position within government-wide financial statements.
Government-Wide Financial Statements
- The Statement of Activities summarizes revenues, expenses, and changes in net position for the government as a whole.
- The FASAB emphasizes standards for core areas including federal financial reporting and the accountability of public funds.
Fiduciary and Proprietary Funds
- Fiduciary funds report assets, liabilities, and net position while focusing on resources held in trust or agency capacity.
- Governmental fund statements focus on current financial resources and operational budgets.
- Financial statement reports for fiduciary funds detail additions, deductions, investment income, and changes in net position.
Fund Financials and Accounting Practices
- Government fund financial statements report revenues, expenditures, and fund balance changes, differentiating from business-type activities where expenditures are typically categorized differently.
- Proprietary fund financial statements are used for business-like activities within government accounting and emphasize an entity's operational profitability.
- Enterprise funds and internal service funds have accounting practices reflecting those of private businesses due to their self-sustaining nature.
Accounting Principles and Revenue Recognition
- Long-term obligations and noncurrent assets are excluded from governmental funds to maintain a focus on current resources and liabilities.
- Fund Financial Statements serve the purpose of detailing the financial status of various funds within a government entity, reflecting their operational flows.
- Under the modified accrual basis, revenues are recorded when measurable and available, while expenditures are recognized when liabilities are incurred, aligning closely with budgetary provisions.
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Description
Test your knowledge on fund financial statements in government accounting, which focus on individual funds or categories of funds within the government entity. Learn about the main types of funds, such as governmental funds, used in government accounting practices.
