Acct 410 Quiz 3 Questions Are Worth 5 Points Each

Acct 410 Quiz 3tf Questions Are Worth 5 Point Each1a Fund In Itsel

ACCT 410 Quiz 3 T/F questions are worth .5 point each: 1.A fund in itself is a separate legal entity that is established to comply with laws that require that certain transactions be segregated and accounted for as a separate "fund." F 2.The Financial Accounting Standards Board (FASB) sets generally accepted accounting principles (GAAPs) for non-government not-for-profit organizations, while government non-profit organizations must follow GASB. T 3.The size of a government's operations does not necessarily coincide with the number of funds it establishes. T 4.The MDA section of the basic financial statements is an introduction of events that have occurred in the organization as well as the possible effects of events that might happen.

T 5.The government wide financial statements are presented in addition to fund financial statements and include the entity's fiduciary activities. 6.The budget of an NFP organization is not integrated into the record-keeping procedures and the applicable financial statements, as it is for governmental entities. 7.Certain revenues are precluded by GAAP from being recorded in special revenue funds. Revenues that are earmarked for expenditures for major capital projects should be recorded in special revenue funds. 8.NFP organizations adjust the value of their long-term debt for discounts or premiums on issuance of the debt, whereas governments list their long-term debt in the General Long-term Liabilities accounts at face value even though it may have been issued at a discount or at a premium. 9.Because they use full accrual accounting, NFPs account for depreciation. There is an exception, however, in regard to certain assets that have collection value which are preservable in their current condition, and have a claim on resources sufficient to preserve them indefinitely. 10. Proprietary funds use the accrual basis of accounting and the economic resources measurement focus. Accordingly, proprietary funds recognize revenues when they are earned and recognize expenses when a liability is incurred. 11.The basis of accounting describes when transactions are recorded, not what transactions are recorded. Accordingly, allocations such as depreciation and amortization are not recorded as expenditures of governmental funds, nor are long-term liabilities. 12.Governmental funds use the current financial resources measurement focus, which recognizes as expenditures those costs that result in a decrease in current financial resources. 13.Routine employer contributions from the general fund and internal services billings from the enterprise fund are treated as transfers between funds. 14.The City of Virginia Beach issues $5 million in revenue bonds on January 1 to build a water line for the water enterprise fund. Interest is payable every six months. What entry is made for interest expense as of June 30 th ? 0 60,000 45,000 30,000 15.The GASB requires each governmental entity to prepare a CAFR. 16. The budget for Virginia Beach authorizes expenditures of 12 million and forecasts revenues of 10 million for 2016. The entry to record the budget in the General Fund is as follows (true or false). Costs to acquire rights to future revenues Grant amounts received in advance of meeting timing requirements. Proceeds from the sale of future revenues Deferred gain from a sale and leaseback transaction. 18. GASBS 34 updated the types of fiduciary funds to include the following: Pension (and other employee benefit) trust funds Investment trust funds Private-purpose trust funds Enterprise funds 19.Identify 4 main (the big ) differences between fund accounting and proprietary accounting. 20.How are the 4 main differences (refer to question 19) reflected in the fund verses the government financial statements and why ?

Paper For Above instruction

The distinction between fund accounting and proprietary accounting forms a fundamental component of governmental and non-profit financial reporting, each serving different informational needs and adhering to distinct standards. Understanding these differences is crucial for interpreting financial statements and assessing organizational performance in governmental entities and non-profit organizations.

Fund accounting is a system primarily used by governmental entities and non-profit organizations to track and report resources segregated for specific purposes. It emphasizes accountability and the legal constraints associated with each fund. For instance, a government might establish separate funds for general operations, capital projects, debt service, and fiduciary activities. These funds are not separate legal entities but are accounted for independently to ensure compliance with legal and regulatory requirements. In contrast, proprietary accounting, employed by entities like government enterprises or internal service funds, reflects a focus on assessing operational efficiency and profitability, akin to private sector business accounting. Proprietary funds use accrual accounting and the economic resources measurement focus to recognize revenues when earned and expenses when incurred, providing a more comprehensive view of an entity’s financial position.

The first core difference lies in the basis of accounting. Fund accounting generally utilizes modified accrual for governmental funds, recognizing revenues when they are measurable and available and expenditures when the related liability is incurred, with an emphasis on current financial resources. Proprietary funds, however, employ full accrual accounting, recognizing revenues when earned and expenses when incurred, including depreciation and amortization. This difference reflects the distinct informational needs: governmental funds focus on fiscal accountability, while proprietary funds aim to measure operational performance.

Secondly, the measurement focus distinguishes the two systems. Governmental funds use the current financial resources measurement focus, which emphasizes sources and uses of current financial resources, excluding capital assets and long-term liabilities. Proprietary funds use the economic resources measurement focus, which encompasses the entire economic picture, including capital assets and long-term liabilities, aligning more with private sector financial statements. This affects the presentation and analysis of financial health, with proprietary funds providing a broader and more detailed perspective.

The third fundamental difference pertains to the types of financial statements produced. Fund accounting results in specific funds’ financial statements, such as balance sheets and statements of revenues, expenditures, and changes in fund balances, each focusing on individual segments of the organization. Proprietary accounting consolidates these into comprehensive statements like the statement of net position and statement of revenues, expenses, and changes in net position, offering a holistic view. These differences influence how stakeholders interpret financial data for decision-making.

The fourth significant difference involves the scope of reporting and the treatment of certain transactions. Fund financial statements do not include long-term assets and liabilities unless they are financial resources, whereas proprietary statements incorporate whole economic assets and liabilities, including depreciation and long-term debt. Consequently, proprietary funds provide deeper insights into the long-term financial sustainability and operational efficiency, which are critical for making strategic decisions.

In conclusion, the distinctions between fund accounting and proprietary accounting are fundamental to governmental and non-profit financial reporting. Fund accounting emphasizes accountability, legal compliance, and current financial resources, while proprietary accounting focuses on operational performance, economic position, and long-term sustainability. These differences are reflected across statements—funds versus consolidated full accrual reports—and influence how various stakeholders interpret and utilize financial information for oversight, decision-making, and accountability purposes.

References

• GASB (Governmental Accounting Standards Board). (2020). Statement No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments.
• FASB (Financial Accounting Standards Board). (2022). Accounting Standards Codification (ASC) Topic 958, Not-for-Profit Entities.
• Copley, P. (2019). Governmental and Nonprofit Accounting & Auditing. Wiley & Sons.
• Public Sector Accounting Standards Board. (2021). Principles of Governmental Accounting.
• Morley, L. W. (2020). Financial and Managerial Accounting for Not-for-Profit Organizations. Routledge.
• Leys, C. (2018). Introduction to Governmental and Not-for-Profit Accounting. Pearson.
• Schmidt, J. J. (2021). Advanced Governmental Accounting and Budgeting. Pearson.
• Willett, R. P. (2020). Financial Management for Nonprofit Organizations. Routledge.
• Hood, M. (2022). Foundations of Governmental and Nonprofit Accounting. Springer.
• Yiamouyiannis, C. (2019). Understanding Public Sector Financial Management. Oxford University Press.