Governmental Fund Accounting

Budgetary entries

• Budget: estimated revenues / appropriations.
• Purchase order: debit encumbrances; reverse on receipt; record actual expenditure.
• Year-end open encumbrances → restricted, committed, or assigned fund balance.

Revenue (modified accrual)

• Property taxes: levy year; available = collected within 60 days; rest → deferred inflow.
• Grants: when eligibility requirements met (reimbursement: when costs incurred).
• Sales and income taxes: when the underlying transaction occurs.

Expenditures

When incurred; debt principal and interest when due; supplies: purchases or consumption method.

Capital projects and debt service

Bond proceeds = other financing source; capital outlay = expenditure; transfers = other financing sources and uses.

Interfund

Loans → due to/from · services → revenue/expenditure · transfers → financing sources/uses · reimbursements → move the expenditure.

Governmental Accounting Standards Board (GASB) 87 and 96

Leases and subscription-based information technology arrangements (SBITAs): governmental funds record expenditure + other financing source at inception.

Proprietary cash flows

Direct method; four categories.

Exam traps

• Property taxes collected in advance for next year's levy are a deferred inflow, not revenue.
• Interest on long-term debt is recognized when due, so it usually isn't accrued at year end in the debt service fund.
• Long-term liabilities such as compensated absences are reported in governmental funds only when they have matured (are due and payable).