1. Define Governmental Operating Activities © Dale R. Geiger 20111

2. Terminal Learning Objective Task: Define governmental operating activities Condition: You are a cost advisor technician with access to all PCAM course handouts, readings, and spreadsheet tools, and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors. Standard: with at least 80% accuracy Describe timing differences between cash-based, budgetary and accrual accounting methods Identify key budgetary inputs and outputs from GFEBS Record operating transactions © Dale R. Geiger 20112

3. What’s the Difference? Consider the purchasing sequence: When does the Accounting System “count” the cost? Plan Order Consume Receive Pay © Dale R. Geiger 20113

4. Why a Different Method of Accounting? Different entities have different external reporting requirements Individuals report income on a cash basis Governmental entities report activities on a budgetary basis Businesses, revolving funds and the proprietary governmental accounts report activities on an accrual basis © Dale R. Geiger 20114

5. What’s the Difference? Plan Order Consume Receive Pay © Dale R. Geiger 20115

6. What’s the Difference? Plan Order Consume Receive Pay Commitment  Obligation  Expenditure © Dale R. Geiger 20116

7. What’s the Difference? Plan Order Consume Receive Pay Asset & Liability  Remove Liability  Expense © Dale R. Geiger 20117

8. Check on Learning Which method of accounting records the cost when cash is paid? Which method of accounting records the cost when goods are received? © Dale R. Geiger 20118

9. Review: Budgetary Terminology Appropriation Authorization to spend Obligation Order placed; Appropriation is no longer available to be spent Expenditure Goods or services received; Appropriation used up Unobligated Balance What is left in the envelope; Appropriation still available to be spent © Dale R. Geiger 20119

10. Fund Accounting Governmental entities account for activities using Funds A Fund is a separate Accounting Entity within the larger governmental entity Has its own self-balancing set of accounts Produces its own separate financial statements Ensures segregation of monies for specific purposes © Dale R. Geiger 201110

11. Budgetary Accounting The following equation: Can be restated as: Expenditures+ Open Obligations + Unobligated Balance Appropriations & Other = Appropriations- Open Obligations -Expenditures Unobligated Balance = Budgetary Resources=Status of Budgetary Resources © Dale R. Geiger 201111

12. Budgetary Accounting The following equation: Can be restated as: Expenditures+ Open Obligations + Unobligated Balance Appropriations & Other = Appropriations & Other - Open Obligations -Expenditures= Budgetary Resources=Status of Budgetary Resources Highlights Unobligated Balance to help managers avoid overspending © Dale R. Geiger 201112

13. Budgetary Accounting The following equation: Can be restated as: Expenditures+ Open Obligations + Unobligated Balance = Appropriations & Other - Open Obligations -Expenditures= Budgetary Resources=Status of Budgetary Resources Highlights budgetary resources to promote accountability to external users © Dale R. Geiger 201113

14. GFEBS Open Obligation Report © Dale R. Geiger 201114

15. Check on Learning What is the budgetary accounting equation? What is the smallest budgetary unit in GFEBS for which financial statements can be produced? © Dale R. Geiger 201115

16. Lacy’s Lemonade Stand Lacy Simmons receives a $200 appropriation from the family and starts a lemonade stand Record the appropriation in the table below: Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance © Dale R. Geiger 201116

17. Lacy’s Lemonade Stand Lacy Simmons receives a $200 appropriation from the family and starts a lemonade stand Record the appropriation in the table below: Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Appropriation+200 Balance200 © Dale R. Geiger 201117

18. Lacy’s Lemonade Stand Orders flyers from the print shop at an estimated cost of $10 Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance forward200 © Dale R. Geiger 201118

19. Lacy’s Lemonade Stand Orders flyers from the print shop at an estimated cost of $10 Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance forward200 Orders Flyers+10-10 Balance20010190 © Dale R. Geiger 201119

20. Lacy’s Lemonade Stand Buys a pitcher, a juicer and a table at a yard sale for $20 Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance forward20010190 © Dale R. Geiger 201120

21. Lacy’s Lemonade Stand Buys a pitcher, a juicer and a table at a yard sale for $20 Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward20010190 Buys Table & Utensils+20-20 Balance2001020170 © Dale R. Geiger 201121

22. Lacy’s Lemonade Stand Receives the flyers and pays the bill for $10 Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance forward2001020170 © Dale R. Geiger 201122

23. Lacy’s Lemonade Stand Receives the flyers and pays the bill for $10 Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward2001020170 Receives flyers-10+10 Balance020180 Pays Bill+10-10 Balance200030170 © Dale R. Geiger 201123

24. Lacy’s Lemonade Stand Pays Bert $5 to pass out flyers Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward200030170 © Dale R. Geiger 201124

25. Lacy’s Lemonade Stand Pays Bert $5 to pass out flyers Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward200030170 Pays Bert+5-5 Balance200035165 © Dale R. Geiger 201125

26. Lacy’s Lemonade Stand Purchases supplies: cups $15; napkins $5; lemons, $25; sugar, $10 and ice, $10 Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward200035165 © Dale R. Geiger 201126

27. Lacy’s Lemonade Stand Purchases supplies: cups $15; napkins $5; lemons, $25; sugar, $10 and ice, $10 Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward200035165 Purchases supplies+65-65 Balance2000100 © Dale R. Geiger 201127

28. Lacy’s Lemonade Stand First day’s sales: $15 in cash and $20 in IOUs Collections from customers increase Lacy’s spending authority Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward2000100 © Dale R. Geiger 201128

29. Lacy’s Lemonade Stand First day’s sales: $15 in cash and $20 in IOUs Collections from customers increase Lacy’s spending authority Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward2000100 Cash Collections+15 Balance2150100115 © Dale R. Geiger 201129

30. Lacy’s Lemonade Stand Receives $5 cash toward the IOUs Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward2150100115 © Dale R. Geiger 201130

31. Lacy’s Lemonade Stand Receives $5 cash toward the IOUs Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward2150100 Cash Collections+5 Balance2200100120 © Dale R. Geiger 201131

32. Lacy’s Lemonade Stand Purchases $40 in supplies on account at the grocery store Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward2200100120 © Dale R. Geiger 201132

33. Lacy’s Lemonade Stand Purchases $40 in supplies on account at the grocery store Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward2200100120 Purchased supplies+40-40 Balance220014080 © Dale R. Geiger 201133

34. Lacy’s Lemonade Stand Makes cash sales of $50 Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward220014080 © Dale R. Geiger 201134

35. Lacy’s Lemonade Stand Makes cash sales of $50 Description Approp & Other Obligations (-) Expenditures (-) Unobligated Balance Balance Forward220014080 Cash Sales+50 Balance270140130 © Dale R. Geiger 201135

36. Statement of Net Cost Expenditures: Supplies$105 Utensils 20 Advertising 15 Total Expenditures$140 Less Revenues: 70 Net Cost $70 © Dale R. Geiger 201136

37. What about Cash Basis? How does Lacy’s Lemonade Stand measure up on a cash basis? Cash collections:$70 Less Cash Payments: Supplies$65 Utensils 20 Advertising 15 Total payments: $100 Net Loss$30 © Dale R. Geiger 201137

38. Check on Learning When will an expenditure be recorded under budgetary accounting rules? How does the collection of cash affect the budgetary equation? © Dale R. Geiger 201138

39. Practical Exercise © Dale R. Geiger 201139

40. Budgetary Accounting Spreadsheet Enter Lacy’s transaction data to track her unobligated balance © Dale R. Geiger 201140

41. Budgetary Accounting Spreadsheet This spreadsheet permits tracking multiple sub-appropriations © Dale R. Geiger 201141

42. Practical Exercise © Dale R. Geiger 201142