GOVERNMENTAL ACCOUNTING

GOVERNMENTAL ACCOUNTING MASBO New Clerk Academy October 1, 2019 – Missoula Denise Williams MASBO Executive Director 406-461-3659, dwilliams@masbo.com

FUND ACCOUNTING What is a fund? • self-balancing set of accounts • Cash and other financial resources • Liabilities • Residual equities or fund balances • segregated for the purpose of carrying on specific activities or attaining certain objectives • in accordance with special regulations, restrictions, or limitations (GAAP, state law, GASB)

TYPES OF FUNDS • Governmental Fiduciary • General - Trust • Special revenue - Custodial • Debt Service • Capital Projects • Permanent • Proprietary • Enterprise • Internal Service

FUND ACCOUNTING Assets – what is owned • Cash and investments • Taxes Receivable • Due From Other Governments Liabilities – what is owed • Accounts payable • Due to Other Governments Fund Balance – residual balances of revenues and expenditures

FUND ACCOUNTING Revenue – resources coming in during fiscal year • Examples: state funding, property taxes Expenditures – resources paid out during the fiscal year • Salaries and benefits • Supplies, utility bills, insurance, repairs Change in Fund Balance – difference between revenue and expenditures for the fiscal year

FUND ACCOUNTING Balance Sheet (ongoing balances as of a given date) • Assets • Liabilities • Fund Balance Revenues, Expenditures & Changes in Fund Balance (activity for a fiscal year) • Revenues • Expenditures Difference in revenues vs. expenditures is “closed out” to fund balance

FUND ACCOUNTING ACCOUNTING FORMULA Assets = Liabilities + Fund Balance Accounts with Debit Balances • Assets • Expenditures Accounts with Credit Balances • Liabilities • Fund Balance • Revenues

Recording Transactions Account: • an accounting record of increase and decreases in a specific asset, liability, revenue, expenditure or fund balance item • In its simplest form an account consists of 3 items: TITLE Debit side Credit side

Recording Transactions

Recording Transactions CASH Debit side Credit side REVENUE Debit side Credit side

Recording Transactions CASH Debit side (increase) Credit side (decrease) REVENUE Debit side (decrease) Credit side (increase)

Recording Transactions REVENUE Debit side Credit side EXPENDITURE Debit side Credit side

Recording Transactions EXPENDITURE Debit side (increase) Credit side (decrease) REVENUE Debit side (decrease) Credit side (increase)

Recording Revenue Transaction 1 Received Direct State Aid from OPI: $200,000 CASH Debit side (increase) $200,000 REVENUE Credit side (increase) $200,000

Recording Expenditures EXPENDITURE Debit side (increase) Credit side (decrease) ACCOUNTS PAYABLE Debit side (increase) Credit side (decrease)

Recording Expenditures Transaction 2 Paid utility bill $5,000 ACCOUNTS PAYABLE Credit side (increase) $5,000 EXPENDITURE Debit side (increase) $5,000

Recording Expenditures Transaction 2 Paid utility bill $5,000 CASH Credit side (decrease) $5,000 ACCOUNTS PAYABLE Debit side (decrease) $5,000

Recording Transactions Journalizing the transactions • Date of the transaction • Accounts and amounts to be debited and credited • Brief explanation of the transaction • Each transaction must balance debits to credits (double entry accounting)

Journalizing the Transactions Transaction 1: AccountDebitCredit Cash $200,000 Revenue $200,000 Received Direct State Aid from OPI

Journalizing the Transactions Transaction 2: AccountDebitCredit Expenditure$5,000 Accounts Payable $5,000 Recorded utility bill claim $5,000

Journalizing the Transactions Transaction 2: AccountDebitCredit Cash $5,000 Accounts Payable $5,000 Paid utility bill claim $5,000

Recording Transactions Transaction 1 Received Direct State Aid from OPI: $200,000 CASH $200,000 REVENUE $200,000

Recording Transactions Transaction 2 Recordedutility bill claim $5,000 ACCOUNTS PAYABLE $5,000 EXPENDITURE $5,000

Recording Transactions Transaction 2 Paid utility bill $5,000 CASH $5,000 ACCOUNTS PAYABLE $5,000

Recording Transactions Transaction 2 Recorded claim $5,000 Paid utility bill $5,000 ACCOUNTS PAYABLE $5,000 paid bill $5,000 recorded claim

FUND ACCOUNTING Balance Sheet (balances as of a certain date) • Assets • Liabilities • Fund Balance Revenues, Expenditures & Changes in Fund Balance (activity for a fiscal year) • Revenues • Expenditures Difference in revenues vs. expenditures is “closed out” to fund balance

Test Your Knowledge The Balance Sheet shows the balances of assets, liabilities and fund balance on a given date. • True • False

Test Your Knowledge The Statement of Revenues, Expenditures and Changes in Fund Balance show the balances of revenue and expenditure accounts for a period of time (fiscal year). • True • False

Test Your Knowledge The things a district owns, such as cash and receivables, are called: • Fund Balance • Revenues • Assets • Expenditures

Test Your Knowledge The things a district owes, such as accounts payable and deferred inflows, are called: • Liabilities • Revenues • Assets • Expenditures

Test Your Knowledge Which of the following are examples of governmental fund types: • General • Special Revenue • Capital Projects • All of the above are governmental type funds

Test Your Knowledge Which of the following are examples of special revenue funds used by Montana school districts: • Retirement Fund • Transportation Fund • Flexibility Fund • All of the above

Test Your Knowledge Which of the following are accounts that would be found on a Balance Sheet: • Cash • Liabilities • Fund Balance • All of the above

Test Your Knowledge Which of the following are accounts usually have a debit balance: • Cash • Liabilities • Revenue • Fund Balance

Test Your Knowledge Which of the following are accounts usually have a credit balance: • Cash • Liabilities • Revenue • b and c

Test Your Knowledge A transaction that increases Cash is recorded as a debit. • True • False

Test Your Knowledge A transaction that increases Revenue is recorded as a debit. • True • False

Test Your Knowledge A transaction that decreases Cash is recorded as a credit. • True • False

Test Your Knowledge A transaction that increases an Expenditure account is recorded as a debit. • True • False

GOVERNMENTAL ACCOUNTING