Accounting 4070
Chapter 2
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1. Types of Gov’t Activities
Governmental
 Business-type
 Fiduciary

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2. Reporting Entity

Primary Government and Component
Units
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primary government - state, local, special
component units – legally separate
organization
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2. Reporting Entity

Type of presentation
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discrete presentation
blending
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3. Required Financial Statements
Government-wide financial statements
 Fund financial statements
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3. Required Financial Statements

Government-wide financial statements
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–
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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
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3. Required Financial Statements

Fund financial statements
–
two governmental fund financial statements

–
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

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balance sheet; statement of revenues, expenditures, and
changes in fund balances
statement of fiduciary net assets; statement of changes in
fiduciary net assets
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4. Major Funds

Reported on fund financial statements
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–
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separate column for each major
governmental fund
nonmajor governmental funds - combined
in single column
Definition of “major funds” – Prob 2-5
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5. Basic Concepts of Funds

Fund
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–
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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
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5. Basic Concepts of Funds

Budgetary accounting
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funds controlled by system of budgets
estimated revenues and expenditures
legally approved
budgets entered into budgetary accounts
actual expenditures recorded in proprietary
accounts
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6. Types of Funds



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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
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7. Government Funds

General fund
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–

Special Revenue Funds (SRF)
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one per government
most of general government operating activities
accounted for in GF
financial resources earmarked for a specified
operating purpose
accounting and budgeting usually identical to GF
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7. Government Funds

Capital Projects Funds (CPF)
–

Debt Service Funds (DSF)
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financial resources segregated for
construction or acquisition of long-lived
capital assets
financial resources segregated to pay
principal or interest on long-term general
liabilities
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7. Government Funds

Permanent Funds
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account for resources provided by trust in
which the earnings but not the principal
must be used for public purposes
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7. Government Funds

Governmental Funds Common
Characteristics
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–
–
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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
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8. Proprietary Funds

Internal service funds (ISF)
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–
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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 governmentwide statements because primarily benefit the
government.
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8. Proprietary Funds

Enterprise Funds
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–
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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
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8. Proprietary Funds

Proprietary Funds Common
Characteristics
–
accounting and reporting essentially same as
for-profit entities
 full
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accrual accounting
capital assets and long-term liabilities
accounted for in the funds
depreciation expense reported in the funds
reports expenses not expenditures
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9. Fiduciary Funds

Agency Funds (often several)
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–
–
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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 passthrough agency funds
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9. Fiduciary Funds

Trust Funds
–
–
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Investment trust funds
Private-purpose trust funds
Pension trust funds
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10. Capital Assets

General capital assets are distinguished
from capital assets of proprietary and
fiduciary funds
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–
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general capital assets reported in
government-wide financial statements
not reported in fund financial statements
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10. Capital Assets

Proprietary capital assets
–

Fiduciary capital assets
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reported in both government-wide and fund
financial statements
reported only in the statement of fiduciary
net assets
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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
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10. Capital Assets

Depreciation expense for general capital
assets
–

Proprietary and fiduciary capital assets
depreciation
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reported only in the government-wide
financial statements
reported in the fund financial statements
and government-wide statements
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10. Capital Assets

Infrastructure assets
 highways,
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
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11. Long-term Liabilities

General long-term liabilities are
distinguished from fund long-term
liabilities
–
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general long-term liabilities reported in
government-wide statements
general long-term liabilities not reported in
the fund financial statements
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11. Long-term Liabilities

Long-term liabilities to be repaid from
proprietary funds
–

Long-term liabilities to be repaid from
fiduciary funds
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reported in the proprietary fund statements
and government-wide statements
reported in the fiduciary fund statements and
government-wide statements
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12. Measurement Focus – Basis of
Accounting
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Measurement
Focus
Basis of
Accounting
Government-wide
statements
Economic
resources
Accrual
Governmental fund
statements
Modified
accrual
Proprietary fund
statements
Current
financial
resources
Economic
resources
Fiduciary fund
statements
Economic
resources
Accrual
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Accrual
13. GASB 34 in the News
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