Question

in government budgetary accounting could you please explain how to close out operating statement and budgetary accounts

Answer 1

Government financial statements are annual financial statements or reports for the year. The financial statements, in contrast to budget, present the revenue collected and amounts spent. The government financial statements usually include a statement of activities (similar to an income statement in the private sector), a balance sheet and often some type of reconciliation. Cash flow statements are often included to show the sources of the revenue and the destination of the expenses.

GOVT ACCOUNTING BASICS:

1. Double entry accounting system

- Each transaction has a debit and a credit

a) Posted to individual general ledger accounts

b) Accounts closed at end of year to prepare financial statements

2. Goverment accounting equation :

Assets - Liabilities = Fund balance / Net Assets

GOVT OPEREATION ACCOUNTS:

Used to report what actually happens during the year. Used to show change in fund equity from beginning to end of the year

1) Revenues, Other Financing Sources Credit Accounts Taxes, charges for services, grants, transfers, etc

2) Expenditures, Other Financing Uses Debit Accounts Current operating, debt service, capital outlay, depreciation,

etc. Operating Accounts close at year end.

BUDGETARY ACCOUNTS:

Typical Budgetary Accounts

1.Estimated Revenues – what you expect to receive during FY as revenue

2.Appropriations – what you are authorized to spend in FY (controlled by Allotment Accounts at CCSF)

3.Encumbrances – commitments to spend

4.Estimated Other Financing Sources – resources you expect to receive that are not revenues such as transfers from other funds or bond proceeds

5.Estimated Other Financing Uses – transfers to other funds

BUDGETARY BASIC OF ACCOUNTING:

Standards are not set by GASB. Budgetary accounting is outside GASB’s scope

• Most common basis: – Cash, plus encumbrances for spending

– Cash for revenues

• Some governments use GAAP basis – Modified accural

CLOSING BUDGETARY ACCOUNTS:

When fiscal year ends

Accounting Event: Closing Appropriations and Estimated Revenues, Actual Revenues, Expenditures, and Encumbrances

Closing entries:

Appropriations Dr

Estimated revenue

fund balance