ACCT 4071
Accounting 4070
Chapter 2
ACCT 4072
1. Types of Gov’t Activities
Governmental Business-type Fiduciary
ACCT 4073
2. Reporting Entity
Primary Government and Component Units– primary government - state, local, special– component units – legally separate
organization
ACCT 4074
2. Reporting Entity
Type of presentation– discrete presentation– blending
ACCT 4075
3. Required Financial Statements
Government-wide financial statementsFund financial statements
ACCT 4076
3. Required Financial Statements
Government-wide financial statements– total economic resources measurement focus– accrual basis of accounting– use two columns (governmental activities and
business-type activities)– Internal Service Fund - report in the governmental
activities column– fiduciary activities - not reported
ACCT 4077
3. Required Financial Statements
Fund financial statements– two governmental fund financial statements
balance sheet; statement of revenues, expenditures, and changes in fund balances
– three proprietary fund financial statements statement of net assets; statement of revenues,
expenses, and changes in fund net assets; statement of cash flows
– two fiduciary fund financial statements statement of fiduciary net assets; statement of changes in
fiduciary net assets
ACCT 4078
4. Major Funds
Reported on fund financial statements– separate column for each major
governmental fund– nonmajor governmental funds - combined
in single column Definition of “major funds” – Prob 2-5
ACCT 4079
5. Basic Concepts of Funds
Fund– a fiscal and accounting entity with a self-balancing
set of books; segregating financial resources, liabilities payable from fund resources, and fund equities to attain objectives specified by regulations, restrictions, or limitations
– i.e. an entity with its own set of books
ACCT 40710
5. Basic Concepts of Funds
Budgetary accounting– funds controlled by system of budgets– estimated revenues and expenditures– legally approved– budgets entered into budgetary accounts– actual expenditures recorded in proprietary
accounts
ACCT 40711
6. Types of Funds
Governmental Funds (5 types) – General Fund; Special Revenue Funds; Capital Projects Funds; Debt Service Funds; Permanent Funds
Proprietary Funds (2 types) – Internal Service Funds; Enterprise Funds
Fiduciary Funds (4 types) – Agency Funds; Investment Trust Funds; Private-purpose Trust Funds; Pension Trust Funds
ACCT 40712
7. Government Funds
General fund– one per government– most of general government operating activities
accounted for in GF Special Revenue Funds (SRF)
– financial resources earmarked for a specified operating purpose
– accounting and budgeting usually identical to GF
ACCT 40713
7. Government Funds
Capital Projects Funds (CPF)– financial resources segregated for
construction or acquisition of long-lived capital assets
Debt Service Funds (DSF) – financial resources segregated to pay
principal or interest on long-term general liabilities
ACCT 40714
7. Government Funds
Permanent Funds – account for resources provided by trust in
which the earnings but not the principal must be used for public purposes
ACCT 40715
7. Government Funds
Governmental Funds Common Characteristics– use current financial resources measurement
focus– use modified accrual basis of accounting– account for expenditures of appropriations (not
expenses) – capital assets and long-term liabilities are not
accounted for within governmental funds
ACCT 40716
8. Proprietary Funds
Internal service funds (ISF)– account for activities in which goods or services
are provided to other departments of the same government or to other governments for a charge
– examples: central stores, central computing, motor pools, and printing
– reported as governmental activities in government-wide statements because primarily benefit the government.
ACCT 40717
8. Proprietary Funds
Enterprise Funds– account for activities in which goods or
services are provided to the general public for a charge
– examples: electric and water utilities, airports, parking garages, transportation systems, and liquor stores
– reported as business-type activities in government-wide financial statements
ACCT 40718
8. Proprietary Funds
Proprietary Funds Common Characteristics– accounting and reporting essentially same as
for-profit entitiesfull accrual accounting
– capital assets and long-term liabilities accounted for in the funds
– depreciation expense reported in the funds– reports expenses not expenditures
ACCT 40719
9. Fiduciary Funds
Agency Funds (often several)– account for financial resources in which the
government is acting in an agency capacity– accounting is simple; assets = liabilities– no revenue and expense accounts used– no fund equity account – examples: tax agency funds, special
assessment debt service funds, and pass-through agency funds
ACCT 40720
9. Fiduciary Funds
Trust Funds– Investment trust funds– Private-purpose trust funds– Pension trust funds
ACCT 40721
10. Capital Assets
General capital assets are distinguished from capital assets of proprietary and fiduciary funds– general capital assets reported in
government-wide financial statements– not reported in fund financial statements
ACCT 40722
10. Capital Assets
Proprietary capital assets– reported in both government-wide and fund
financial statementsFiduciary capital assets
– reported only in the statement of fiduciary net assets
ACCT 40723
10. Capital Assets
Accounted for at historical cost, or estimated cost if actual cost is unknown
Donated assets accounted for at estimated fair value at time of gift
Capital assets depreciated over estimated useful lives, except inexhaustible assets such as land
ACCT 40724
10. Capital Assets
Depreciation expense for general capital assets– reported only in the government-wide
financial statementsProprietary and fiduciary capital assets
depreciation– reported in the fund financial statements
and government-wide statements
ACCT 40725
10. Capital Assets
Infrastructure assetshighways, streets, sidewalks, storm sewers,
street lights, etc.GASB 34 requires reporting (and
depreciating) in government-wide statements“modified approach” may be used for certain
infrastructure assets instead of depreciation
ACCT 40726
11. Long-term Liabilities
General long-term liabilities are distinguished from fund long-term liabilities– general long-term liabilities reported in
government-wide statements – general long-term liabilities not reported in
the fund financial statements
ACCT 40727
11. Long-term Liabilities
Long-term liabilities to be repaid from proprietary funds– reported in the proprietary fund statements
and government-wide statementsLong-term liabilities to be repaid from
fiduciary funds– reported in the fiduciary fund statements and
government-wide statements
ACCT 40728
12. Measurement Focus – Basis of Accounting
Measurement Focus
Basis of Accounting
Government-wide statements
Economic resources
Accrual
Governmental fund statements
Current financial resources
Modified accrual
Proprietary fund statements
Economic resources
Accrual
Fiduciary fund statements
Economic resources
Accrual
ACCT 40729
13. GASB 34 in the News