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 Proprietary General - Trust Special revenue - Custodial Debt Service Capital Projects Permanent Proprietary Enterprise Internal Service

BUDDGETED FUNDS FUND # FUND NAME FUND TYPE 01 General 02 Transportation Special Revenue 11 Bus Depreciation 13 Tuition 14 Retirement 17 Adult Education 19 Non-Operating 28 Technology 29 Flexibility 50 Debt Service 61 Building Reserve Capital Projects

NON-BUDDGETED FUNDS FUND # FUND NAME FUND TYPE 12 School Foods Special Revenue 15 Miscellaneous Programs 18 Traffic Education 20 Lease Rental Agreement 21 Compensated Absences 24 Metal Mines Tax Reserve 25 State Mining Impact 26 Impact Aid 27 Litigation Reserve 45 Permanent Endowment Permanent 60 Building Capital Projects 70-72 Enterprise Proprietary 73-79 Internal Service 82 Interlocal Cooperative Fiduciary or General 81-85 Other Trust Funds Fiduciary

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

Assets = Liabilities + 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 Account Type Normal Balance Effect of a Debit entry Effect of a Credit Entry ASSET Debit Increase Decrease LIABILITY Credit FUND BALANCE REVENUE EXPENDITURE

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

Recording Expenditures 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 Account Debit Credit Cash $200,000 Revenue $200,000 Received Direct State Aid from OPI

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

Journalizing the Transactions Account Debit Credit Cash $5,000 Accounts Payable $5,000 Paid utility bill claim $5,000

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

Recording Transactions Recorded utility bill claim $5,000 ACCOUNTS PAYABLE $5,000 EXPENDITURE $5,000

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

Recording Transactions 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