Summery of governmental

Government accounting refers to the process of recording and the management of all financial
transactions incurred by the government which includes its income and expenditures. entities.
Governmental accounting: the primary focus of fund accounting is responsibility for spending.
government fund is a grouping used in accounting for tax-supported activities completed by the
federal government.

Fund accounting system: for recording resources whose use has been limited by the donor,
grant authority, governing agency.
Fund: a sum of money saved or made available for a particular purpose.

Principle users of external financial report:

1. Citizen

2. Legislative and other oversight body

3. Creditors and investment

Types of fund:

1. Governmental fund: is a grouping used in accounting for tax-supported activities

completed by the federal government.

2. Proprietary fund: Enterprise funds provide goods or services to the general public for a
fee.

3. Fiduciary fund: When financial statements are prepared for fiduciary funds,
they are presented using the economic resources measurement focus and the accrual
basis of accounting.

1) Governmental fund

1. General fund: The activities being paid for through the general fund constitute the core
administrative and operational tasks of the government entity. For example all
operational fund

2. Special revenues fund: is an account established by a government to collect money that

must be used for a specific project. Special tax assessment

3. Capital project fund: is used in governmental accounting to track the financial resources
used to acquire and/or construct a major capital asset. For example building road and
construction

4. Debt service fund: is a cash reserve that is used to pay for the interest and principal
payments on certain types of debt. For example all collect and receive cash disbursement

PREPARED: MAAH
 5. Permanent fund: may be used to generate and disburse money to those entitled to
receive payments by qualification or agreement. For example debt fund

2) Proprietary fund

1. Enterprise fund: fund that sells goods and services to the general public. For example
water agency, electrical power, airport, general hospital.

2. Internal service fund: is a fund used in governmental accounting to track goods or

services shifted between departments on a cost reimbursement basis. For example used
only governmental department such as agency to agency governmental

3) Fiduciary fund
1) Trust fund: allows a person (the grantor) to set aside assets for example cash,
investments, real estate, and life insurance for the benefit of one or more beneficiaries.

 Expendable trust fund: Asset accounts held by a state whose principal and interest is
used to pay for operations. Such as scholarship.

 Non expendable trust fund: esources that activities of the government itself and only
make investment

 Pension trust fund: fund that is made up of money that has been contributed to by both
the employer and the employee for pension benefits.
2) Agency fund: is any external organization, public or private, which undertakes a
contractual agreement with the University to sponsor research or an entrepreneurial
activity. For example agency cargo or agency public
Measurement and recognition of revenues
1. Cash

2. Claims to cash (securities and receivables)

3. Claims to goods or service (prepayment)

4. Consumable goods (supplies inventory)

5. Equity security

Two major types of inter fund transferred

1. Residual entity transfer: funds that is remaining operation or project

2. Operational transfer: means all operations on the Real Property as conducted

PREPARED: MAAH
Debt service fund
1. Balance sheet
2. Statement of revenues, expenditure and changes of fund balance

Fund balance
1. Reserved fund balance
2. Unreserved fund balance
Financial report: are formal records of the financial activities and position of a business such as
balance sheet and financial statement

Estimate revenues: means estimate chargeable income or revenues

Estimate appropriate: is the amount of money set aside from the budget to pay for certain
budgetary

Expenditure: the action of spending funds or an amount of money spent.

Budget: an estimate of income and expenditure for a set period of time.
Encumbrance: is a reservation of the appropriation for a specific item.

Unencumbrance: refers to an asset or property that is free and clear of any encumbrances, such
as creditor claims or liens.

Capital expenditure: are funds used by a company to acquire, upgrade, and maintain physical
assets such as property, buildings, an industrial plant, technology, or equipment.
Tax revenues: mean collected from taxes on income and profits, social security
contributions, taxes levied on goods and services, payroll taxes, taxes on the ownership and
transfer of property, and other taxes.
Non tax revenues: is the recurring income earned by the government from sources other than
taxes.
Delinquent tax: tax that is unpaid after the payment due date.

Tax-deductible interest: is a borrowing expense that a taxpayer can claim on a federal or state
tax return to reduce taxable income.
GAAP: means common set of accounting principles, standards, and procedures issued by
the Financial Accounting Standards Board (FASB).

Legal compliance: is the process or procedure to ensure that an organization follows relevant
laws, regulations and business rules

PREPARED: MAAH
Bond premium: is a bond trading above its face value or it costs more than the face amount on
the bond.

Bond discount: is a bond that is issued for less than its par—or face—value.

Account group
1. General fixed asset account group: n government accounting, self-balancing set
of accounts to account for the general fixed assets of a governmental unit.
2. General long term debt account group: is used to account for the outstanding principal
on all long-term debt except that payable from a special assessment, proprietary, or trust
fund.

Classification of fixed asset

1. Land

2. Building

3. Improvements other sush as equipment, building, construction in progress

4. Identified sources

Characteristics of non-profit organization

1. Contributions of significant amounts of resources from resource providers who do not

expect commensurate or proportionate pecuniary return

2. Operating purpose other than to provide goods or service at profit

3. Absent of ownership interests like those of business enterprise

Nonprofit organization: meaning they do not pay income tax on the money that they receive for
their organization. They can operate in religious, scientific, research, or educational settings.

What are difference between business and nonprofit organization:

1. Profit organization is built to serve the business owners.
2. nonprofit organization is built to serve the society at large.
Mandatory transfer: are transfers from the current (operating) fund group to other fund groups
arising out of binding legal agreements related to the financing, e.g., in education: debt
retirement, interest, and grant agreements with federal agencies and other organizations to match
gifts and grants.
Non-mandatory Transfers - transfers used to move unrestricted funds from one fund to another
at the discretion of administrative management (excludes transfers within Unrestricted Current
Funds).

PREPARED: MAAH
Accrual accounting: Accounting method that records revenues and expenses when they are
incurred, regardless of when cash is exchanged.

Accrual depreciation: means the reduction in the actual value of the property over a period of
time.
Endowment fund: is an investment fund established by a foundation that makes consistent
withdrawals from invested capital.

Fund Group - a grouping of funds of a similar nature such as Unrestricted Current Funds,
restricted current funds, loan funds, endowment & similar funds, and plant funds.
Restricted Funds - funds that are restricted in purpose by a third party covenant Examples
include gifts and sponsored program (grant and contract) funds from donors, grantors.
Unrestricted Current Funds - funds that are available to be spent in the near term for
operational purposes that are not restricted by external sources.

Revenues: expenditure:
By fund By fund
By sources By function
Encumbrance: By activity
Agreement By organization
Contract By character
Purchase order By objective
RESTRICT ASSET:
1. Customer deposits
2. Revenues bond construction account
3. Revenues bond current debt service account
4. Revenues bond future debt service account
5. Revenues bond contingency ( renewal and replacement ) account

PREPARED: MAAH