Which of the following should not be accrued as expenditures in a governmental fund at year end?
Accruals are adjustments for revenue that has been earned but is not yet posted to the general ledger accounts, and expenses that have been incurred but are not yet posted to the general ledger accounts. Year-end accruals are adjusting entries to make sure revenue and expenses are recorded in the correct fiscal year. Show
A revenue accrual does not need to be made if an accounts receivable entry has already been recorded. If cash is received on or after July 1 for revenue that was not recorded in the current fiscal year, please process a revenue accrual. An expense accrual should be made for goods or services provided where the expenditure has not been recorded. Remember an encumbrance is not an expense. Please reference the KFS Payment Processing E-docs page for specific instructions on the timing for PREQ, DV and PCDO. There are two year-end accrual object codes (OC). These object codes should only be used at year-end and reversed in July (of the following fiscal year).
Below is an example of revenue and expense year-end accruals. If using the Year End Distribution of Income and Expense (YEDI) e-doc, enter the entries in the To section and the From section for the reversing entry.
The advantage of using the AV is that it can be scheduled to auto reverse in the next fiscal year. If a YEDI is used, a second entry must be posted in the next fiscal year to reverse the accrual. The reversing entry should be posted in period one (P1) using a Distribution of Income and Expense (DI) e-doc. If a YEDI is used, it is strongly recommended that both entries, the accrual and the reversal, be created at the same time. Please reference the table below for a summary of which e-doc to use and when, and how to use them.
An accrual, or accrued expense, is a means of recording an expense that was incurred in one accounting period but
not paid until a future accounting period. Accruals differ from Accounts Payable transactions in that an invoice is usually not yet received and entered into the system before the year end. Recording an accrual ensures that the transaction is recognized in the accounting period when it was incurred, rather than paid. This is a requirement of GAAP-based accounting, and provides a more accurate and up-to-date view of the University’s financial position than the cash- basis accounting method, in
which expenses are recorded when paid. For an expense to be recorded in the current fiscal year, the expense should have been incurred by June 30, meaning that the goods should have been received or services should have been rendered by that date (end of day). When recording an accrual, the debit of the journal entry is posted to an expense account, and the credit is posted to an accrued expense liability account, which appears on the balance sheet.
When the University pays for the expense, an entry to reduce the accrued expense liability and to reduce cash is recorded by posting a debit to the accrued expense liability account and a credit to the cash account. There are generally four types of year end accruals recorded by the University: These
accruals are recorded automatically by Prime Financials based on receipts entered against purchase orders by the University departments. If goods are entered as received, but they have not been paid yet, the system will record the expense as an accrued expense. The expense associated with the invoice is booked when Accounts Payable enters the invoice, not when the invoice payment is sent to the supplier. Receipt accruals will only be recorded for expenses greater than $2,500. Goods and services
received by June 30 must be entered by 4:30 p.m. on June 30. These accruals are done by request by the department and in collaboration with their budget office analyst. Budget office accruals are usually necessary when a department needs to accrue or defer an
expense/revenue transaction that meets the above accrual criteria and that are not automatically recorded by the system (as in receipt accruals). These accruals are usually non-PO accruals for activities that have taken place prior to June 30. These accruals must be submitted and approved by the budget office by 12:00 p.m. on July 7. These
accruals are recorded by certain offices (such as Facilities, Dining and OIT) at year end during 1st and 2nd close. Examples of Central Office accruals are utility bill accruals that span more than one accounting period. These accruals must be submitted to for posting by 12:00 p.m. on July 13. Budget office must be notified of the accruals submitted. There are also other types of large accruals made during this process. Controller's Office accruals are recorded by the Controller’s office during the year-end financial statement process. These accruals are generally calculated by reviewing significant payments made after year end and determining if the related expenses occurred in the current fiscal year or the next fiscal year. For these accruals,
departments and projects are not charged; rather these are charged to a special Controller’s office department. These accruals are generally determined after the general ledger is deemed final for Information Warehouse reporting. In the next fiscal year, the accruals for the prior fiscal year need to be reversed from the balance sheet
so that expenses are not double counted when paid in the next fiscal year.. Accruals are automatically reversed on the first day of the new fiscal year. Reversals of accruals are done automatically by the Prime system when the option is selected to automatically reverse the entry in the next accounting period (doing so assigns the same journal class number to the reversing entry as the original entry). What are expenditures in governmental accounting?In governmental funds, expenditures are usually recognized in the accounting period in which the goods or services are received and the liability for payment is incurred. However, in instances when current financial resources are not reduced as a result of the incurrence of a liability, an expenditure is not recorded.
Which of the following fund types is not included in the government wide financial statements?The fiduciary funds (such as pension trusts and agency funds) are not included in the government-wide statements, because the resources they account for do not belong to the government. The governmental and business-type activities combine to represent the total primary government.
How does governmental fund expenditures should be recognized in the accounting period?In governmental funds, the recognition of expenditures occurs in accordance with the modified accrual basis of accounting. Expenses incurred in proprietary funds are recognized using the accrual basis of accounting.
What is included in governmental funds?According to the GAAFR (the Blue Book), governmental funds are “used to account for activities primarily supported by taxes, grants, and similar revenue sources.” Within the category of Governmental Funds, there are five types: General Fund, special revenue funds, debt service funds, capital projects funds, and ...
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