ACCT 403 Final Exam

Required fund financial statements:

1. Balance Sheet 2. Statement of Revenues, Expenditures, and Changes in Fund Balances

Required Disclosures for Operating Segments

1. General information about the segment (identification factors, types of products and services) 2. Segment profit/loss (internal and external revenues, interest revenue/expense, depreciation, unusual items, equity method investments, income tax expense, other significant noncash items) 3. Total segment assets (investment in equity method affiliates, expenditures for additions to long-lived assets)

The CAFR is composed of three broad sections:

1. Introductory section 2. Financial section 3. Statistical section

The FASB established three tests for identifying operating segments for which separate disclosure is required:

1. Revenue test 2. Profit or loss test 3. Asset test

What are the criteria for identifying a primary government?

1. Separate legal status 2. An elected governing board 3. Fiscal independence

Required not-for-profit financial statements:

1. Statement of Financial Position 2. Statement of Activities 3. Statement of Cash Flows 4. Statement of Functional Expenses (often reported within the statement of activities)

Required government-wide financial statements:

1. Statement of Net Position 2. Statement of Activities

U.S. GAAP allows hedge accounting to for foreign currency derivatives only if three conditions are satisfied:

1. The derivative is used to hedge either a cash flow exposure or a fair value exposure to foreign exchange risk 2. The derivative is highly effective in offsetting changes in the cash flows or fair value related to the hedged item 3. The derivative is properly documented as a hedge

Form 10-K

An annual report filed with the SEC to provide information and disclosures required by Regulation S-K and Regulation S-X (filed 90 days after end of the fiscal year end)

Enterprise Funds

Any government operation that is open to the public and financed, at least in part, by user charges

The financial statements included in Form 20-F may be prepared in accordance with:

U.S. GAAP, IFRS, or some other foreign GAAP. The SEC requires companies using some other foreign GAAP to reconcile income and stockholders' equity to U.S. GAAP.

Users of State and Local Governmental Financial Reports:

(a) The citizenry (b) Legislative and oversight bodies (c) Investors and creditors

What are the five major factors influencing the development of a country's financial practices?

(1) Legal System, (2) Taxation, (3) Financing System, (4) Inflation, and (5) Political and Economic Ties

Chapter 11 Bankruptcy

Reorganization

Special Revenue Fund

Account for current financial resources restricted or committed for a specific purpose (other than debt payments or capital projects)

Proprietary Funds

Accounts for a government's ongoing activities that are similar to those conducted by a for-profit entity

General Fund

Accounts for and reports all financial resources not accounted for and reported in another fund

Internal Service Funds

Accounts for any operation that provides services to another department or agency within the government for a fee

Permanent Fund

Accounts for financial resources restricted by external donor, contract, or legislation with the stipulation that the principal can never be spent

Capital Projects Fund

Accounts for financial resources restricted, committed, or assigned for capital outlays such as acquiring or constructing bridges, high schools, roads, or municipal office buildings

Government-wide financial statements follow which method of accounting?

Accrual Accounting

Non-profit financial statements follow which method of accounting?

Accrual Accounting

Landfills—Government-Wide Financial Statements

Closure and post-closure costs in government-wide statements must be based on accrual accounting and the economic resources measurement basis. Accrual: % filled x total of closure and post-closure costs

Which form is used to file an annual report for foreign issuers listed on U.S. stock exchanges?

Form 20-F

Users of Not-for-Profit Financial Statements

Governing boards, donors, grantors, creditors, members, and other stakeholders of the not-for-profit entity

Landfills—Fund Financial Statements

If the landfill is recorded in the general fund because the facility charges little or no user fee, the city reports only the actual change in current financial resources. Despite the huge eventual liability, the reduction in current financial resources is limited to the annual payment of $300,000. The remaining liability is too far into the future to necessitate reporting.

Governmental Funds

Includes all activities a government carries out to provide citizens with services that are financed primarily through taxes and other general revenue sources

Chapter 7 Bankruptcy

Liquidation

Fund financial statements follow which method of accounting?

Modified Accrual Accounting

Fiduciary Funds

Monitors monies held by the government in a trustee capacity

Information included in a Form 990:

Part VI - Governance, Management, and Disclosure Part VII - Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors Part VIII - Statement of Revenue Part IX - Statement of Functional Expenses Part X - Balance Sheet

Net assets can possess which types of restrictions?

Purpose Restricted ("This donated money must be used by the charity to buy a new truck") Time Restricted ("This donated money must be used evenly over the next four years")

Debt Service Funds

Record financial resources accumulated to pay long-term liabilities and interest as they come due

Responsibilities of a bankruptcy trustee:

Recover all property belonging to the insolvent company, preserve the estate from any deterioration, liquidate noncash assets, and make proper distributions to the various claimants

Treatment of Not-for-Profit Pledges and Contributions:

Reporting requirements have been established for contributions, which are unconditional transfers of cash or other resources to an entity in a voluntary nonreciprocal transaction. Conditional contributions are not reported. They have a barrier that must be overcome before the charity is entitled to the gift. In addition, the donor can demand return of the money or refuse to pay if not already conveyed. Recorded at fair value. Pledges to be collected more than one year into the future must be reported at present value and also reduced by any expected uncollectible amounts. Private not-for-profit entities recognize contributed services as support if they either create or enhance nonfinancial assets or require a specialized skill (for example, accounting, architecture, or nursing) that would be purchased if not provided by donation. Donations of works of art and historical treasures do not have to be reported if they meet three specific criteria. Not-for-profit entities sometimes receive donations that must be given to a different beneficiary. While the gift is held, the asset is normally recorded along with an accompanying liability. However, if the entity is given variance power to change the beneficiary, the not-for-profit records a contribution rather than a liability.

What drives the process of property conveyance if a person dies intestate (without a valid will)?

State Inheritance Laws

Who issues authoritative guidance for state and local governments?

The Governmental Accounting Standards Board (GASB)

Functional Currency

The currency of the foreign entity's primary economic operating environment

Form 8-K

The form used to disclose a unique or significant happening (filed within with 15 calendar days of the event)

Current financial resources

The monetary assets available for officials to spend to meet the government's needs during the present budget period. Assets that eventually will be spent, such as cash and receivables