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Accounting for
State and Local
Governments,
Part I
McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
LO 1
Importance of Governmental Accounting
16-2
Governmental Accounting
16-3
LO 2
GASB Statement No. 34
Requires the production of two sets of
financial statements:
16-4
LO 3 Reporting Diverse Governmental
Activities - Fund Accounting
Examples include:
Governmental units
Public Safety
have many different
types of activities. Sanitation
No common motivation Health & Welfare
links these activities. Education
Each activity operates a Parks & Recreation
quasi-independent, self- Judicial System
balancing set of Water and Sewer
accounts called
Employee Pensions
funds.
16-5
LO 4
Fund Accounting Classification
All funds fall into one of three
broad classifications.
Governmenta Proprietary Fiduciary
l Funds Funds Funds
16-6
LO 5 Government-Wide Financial
Statements
Two statements are required:
1)Statement of Net Assets
2)Statement of Activities
16-7
Fund Financial Statements
16-8
LO 6 Procedures
Importance of Budgets
The budget serves several purposes:
Expresses public policy
Expresses financial intent
Provides spending limits
Compares actual results to the budget as a
means of evaluating performance
Indicates proposed deficits
The budget is recorded in the books as a
DEBIT to estimated revenues, and a CREDIT
to each appropriation approved.
16-9
LO 7 Procedures
Fixed Assets
The expenditure for fixed assets is recorded in
the General Fund for fund-based statements.
But, depreciation is not recorded in the
governmental fund, since net income is not a
concept relevant to governmental units.
However, GASB requires a record of ALL
capital assets in the Statement of Net Assets in
government-wide statements.
And, depreciation expense is recorded.
16-10
LO 8 Procedures
Recognition of Revenues
Classifications
Derived Tax Revenues
Imposed Nonexchange Revenues
Government-mandated Nonexchange Transactions
Voluntary Nonexchange Transactions
16-12
LO 10
Interfund Transactions
Commonly used, particularly monetary transfers
from the General Fund
Normally reported as other financing source
and other financing use within the fund-based
financial records
Many of these are not reported in the
government-wide financial statements because
they create no net impact (intra-activity
transactions)
Interactivity transactions occur between
governmental and enterprise funds and are
reported on government-wide financial statements
16-13