Governmental Accounting
Objectives:
• Not- profit but must be efficient and effective in delivery of service
• Fiscal Accountability
• Operational Accountability
Accounting concepts in Governmental Accounting 12:
Modified Accrual Full Accrual
Economic Recsources Concept
• Revenue is recognized only • Revenue is recognized when
Current Financial Resources Concept
when its measurable and earned or realized
available • Expenses are recognized
• Expenditure is recognized when incurred
when incurred (no accrual)
• Assets - Resources with
present service capacity
• Liabilities - Present
obligations
• Deferred Outflow of
resources - E.g., Prepaid
expenses
• Deferred Inflow of
resources - E.g., Unearned
Income
• Net Position = Assets +
Deffered outflow - Liabilites
- Deffered Inflow
1
Measurable - Quantifiable in $ ; Available – Collectable in current year or 60 days after next year
2
It is called EXPENDITURE in modified accrual NOT expenses
, Fund Accounting: How Balance sheet and Income statement are named under each fund is very
important while attempting MCQs 3
Governmental Funds Proprietary Funds Fiduciary Funds
• General fund – Service • Internal Service Funds • Agency Funds
Operation (ONLY ONE) (Transportation) • Trust Funds
• Specific Revenue – Specific • Enterprise Funds (Water,
Tac for specific purpose – Rail and Road)
Toll Tax • These funds are like
• Capital project fund – business - Full accrual of
Construction of asset expenses
• Debt service – Payment of
Interest & Loan
• Permanent Fund – Principal
restricted – ONLY income
used for any purpose
Accounting Concept Accounting Concept Accounting Concept
Current Financial Resources Economic resources concept Economic resources concept
Modified Accrual Full Accrual Full Accrual
Balance Sheet (Contents) Balance Sheet (Contents) Balance Sheet (Contents)
Balance sheet Statement of Net ASSET Statement of Fiduciary Net
Asset
• Asset = Current Asset • Asset = Current & Non- • Asset = Current & Non-
• Liability = Current Current assets Current assets
Liability • Liabilities = Current & • Liabilities = Current &
• E = Fund Balance Non-Current Liabilities Non-Current Liabilities
• E = Net Asset • E = Net Asset
Income Statement (Contents) Income Statement (Contents) Income Statement (Contents)
Statement of revenue, Statement of revenue, Statement of changes in Net
expenditure & changes in fund expenses 4 & changes in fund asset
balance Net asset
• Income = Revenue and • Income = Operating & • Income = Addition
other financing sources Non- Operating revenue • Expenses = Deductions
• Expenses = Expenditure • Expenses = Operating & • Net Income = Changes
and other financing Non- Operating in Net asset
uses expenses • Non-Operating Income
• Net Income = Net • Net Income = Changes for Agency fund
changes in Fund in Net asset
balance
3
Note: If all legal steps have been taken to refinance the bond
4
Remember expenditure and Expenses are not same
Objectives:
• Not- profit but must be efficient and effective in delivery of service
• Fiscal Accountability
• Operational Accountability
Accounting concepts in Governmental Accounting 12:
Modified Accrual Full Accrual
Economic Recsources Concept
• Revenue is recognized only • Revenue is recognized when
Current Financial Resources Concept
when its measurable and earned or realized
available • Expenses are recognized
• Expenditure is recognized when incurred
when incurred (no accrual)
• Assets - Resources with
present service capacity
• Liabilities - Present
obligations
• Deferred Outflow of
resources - E.g., Prepaid
expenses
• Deferred Inflow of
resources - E.g., Unearned
Income
• Net Position = Assets +
Deffered outflow - Liabilites
- Deffered Inflow
1
Measurable - Quantifiable in $ ; Available – Collectable in current year or 60 days after next year
2
It is called EXPENDITURE in modified accrual NOT expenses
, Fund Accounting: How Balance sheet and Income statement are named under each fund is very
important while attempting MCQs 3
Governmental Funds Proprietary Funds Fiduciary Funds
• General fund – Service • Internal Service Funds • Agency Funds
Operation (ONLY ONE) (Transportation) • Trust Funds
• Specific Revenue – Specific • Enterprise Funds (Water,
Tac for specific purpose – Rail and Road)
Toll Tax • These funds are like
• Capital project fund – business - Full accrual of
Construction of asset expenses
• Debt service – Payment of
Interest & Loan
• Permanent Fund – Principal
restricted – ONLY income
used for any purpose
Accounting Concept Accounting Concept Accounting Concept
Current Financial Resources Economic resources concept Economic resources concept
Modified Accrual Full Accrual Full Accrual
Balance Sheet (Contents) Balance Sheet (Contents) Balance Sheet (Contents)
Balance sheet Statement of Net ASSET Statement of Fiduciary Net
Asset
• Asset = Current Asset • Asset = Current & Non- • Asset = Current & Non-
• Liability = Current Current assets Current assets
Liability • Liabilities = Current & • Liabilities = Current &
• E = Fund Balance Non-Current Liabilities Non-Current Liabilities
• E = Net Asset • E = Net Asset
Income Statement (Contents) Income Statement (Contents) Income Statement (Contents)
Statement of revenue, Statement of revenue, Statement of changes in Net
expenditure & changes in fund expenses 4 & changes in fund asset
balance Net asset
• Income = Revenue and • Income = Operating & • Income = Addition
other financing sources Non- Operating revenue • Expenses = Deductions
• Expenses = Expenditure • Expenses = Operating & • Net Income = Changes
and other financing Non- Operating in Net asset
uses expenses • Non-Operating Income
• Net Income = Net • Net Income = Changes for Agency fund
changes in Fund in Net asset
balance
3
Note: If all legal steps have been taken to refinance the bond
4
Remember expenditure and Expenses are not same
