Governmental Accounting--Exam #1
-exam elaborations with 100% verified answer/solutions-
Excel & Succeed - academic year (2026-2027)
93 Q&A
Expenditures
Are the foundation of planning, authorizing, controlling, and evaluating
activities of governmental funds. It's a measure of the fund liabilities incurred
(or expendable financial resources used). Typically classified as operations,
capital outlay, or debt service.
When to Recognize Expenditures
In the accounting period in which the fund liability is incurred except for
unmatured interest (and principal) on long-term debt, which is recognized
when due.
Inventory Expenditures
May be recognized using either purchases method or consumption method.
Prepayment Expenditures
May be allocated over benefited period or accounted for only in current period.
Pension Cost Expenditures
Payments to pension plans, even self-administered ones, qualify as
expenditures; most govt's either use defined contribution or defined benefit
contribution.
, Defined Contribution Plan
Government obligation is limited to making contributions required by the plan;
retiree benefits dependent upon contributions made and the investment
performance of the plan. Government should recognize the expenditure in the
year employees earned the benefit -- underpayment is not liability of fund but
a noncurrent liability.
Defined Benefit Plan
Government obligation is to pay certain amount to retirees each period.
Annual required contribution (ARC) based on many actuarial assumptions.
Consumption Method for Inventory
Supplies represent an expendable current financial resource - it can be used
to finance future "expenditures" for supplies.
Purchases Method for Inventory
Already charged to expenditures, so it does not represent a current financial
resource.
Consumption Method for Prepayments
The prepayments account balance is reported as an asset.
Purchases Method for Prepayments
The prepayments account balance is not reported as an asset, since the
amount has already been charged to expenditures.
Fund
Basic classification of these are by this, but it does have other options.
Capital Leases
Assets under this are recorded in General Capital Assets with corresponding
entry in General Long-Term Liabilities.
Allocation
-exam elaborations with 100% verified answer/solutions-
Excel & Succeed - academic year (2026-2027)
93 Q&A
Expenditures
Are the foundation of planning, authorizing, controlling, and evaluating
activities of governmental funds. It's a measure of the fund liabilities incurred
(or expendable financial resources used). Typically classified as operations,
capital outlay, or debt service.
When to Recognize Expenditures
In the accounting period in which the fund liability is incurred except for
unmatured interest (and principal) on long-term debt, which is recognized
when due.
Inventory Expenditures
May be recognized using either purchases method or consumption method.
Prepayment Expenditures
May be allocated over benefited period or accounted for only in current period.
Pension Cost Expenditures
Payments to pension plans, even self-administered ones, qualify as
expenditures; most govt's either use defined contribution or defined benefit
contribution.
, Defined Contribution Plan
Government obligation is limited to making contributions required by the plan;
retiree benefits dependent upon contributions made and the investment
performance of the plan. Government should recognize the expenditure in the
year employees earned the benefit -- underpayment is not liability of fund but
a noncurrent liability.
Defined Benefit Plan
Government obligation is to pay certain amount to retirees each period.
Annual required contribution (ARC) based on many actuarial assumptions.
Consumption Method for Inventory
Supplies represent an expendable current financial resource - it can be used
to finance future "expenditures" for supplies.
Purchases Method for Inventory
Already charged to expenditures, so it does not represent a current financial
resource.
Consumption Method for Prepayments
The prepayments account balance is reported as an asset.
Purchases Method for Prepayments
The prepayments account balance is not reported as an asset, since the
amount has already been charged to expenditures.
Fund
Basic classification of these are by this, but it does have other options.
Capital Leases
Assets under this are recorded in General Capital Assets with corresponding
entry in General Long-Term Liabilities.
Allocation
