The Accounting Cycle for Governmental Funds and Account Groups

Glossary for chapter V of Financial Reporting in Government
By Dr. John Sacco , George Mason University
Revised Saturday, April 12, 1997

account groups: Because governmental fund accounting makes a sharp distinction between current and long term items, governmental financial statements need a place to put long term activities (i.e., long term assets and liabilities). Account groups are used for this purpose. Since account groups are consider memoranda, they do not need to follow strict accounting rules. For example, long debt may be backed only by the full faith and credit (i.e., the taxing and borrowing power) not any current assets. The account groups would be placed with the balance sheet. The account group for long term debt is the general long term account group (GLTDAG).
accounting software packages: Computer applications designed to record and track transactions and events and summarize these into account balances and financial statements are referred to as accounting software packages.
accounts: All the specific asset, liabilities, and fund balances are stored in the accounts. For there can be a cash account, a notes payable account, and reserve for employee retirement account. The accounts allow the chronological entries to be summarized by specific element, eg, cash. In government, there will be a set of accounts for each fund.
accounting cycle: Since financial reports are given each period (usually a year in government) there are a set of steps (cycle) taken each period that result in the reports and preparation for the next period or cycle. The term cycle is used because every period there is a start and an end. In government the cycle usually starts with the budget, goes through the journal entries, adjusting entries, posting to the accounts, financial reports, and closings.
accounting equation: Like other equations it is an algebraic equality where the left side equals the right side. Further it can be manipulated to solve for unknows or rearranges. In accounting the equation describes the resources of an operating unit and the sources of these resources. The equation for governmental funds is: current assets = current liabilities + fund balance. The assets are the resources and the liabilities and fund balance the sources. The equation for a business or business like operation is: assets = liabilities + equity.
accounting record: All or most of the documents that go into producing financial reports would be considered accounting records. An accounting record could be an invoice, a purchase order, or the balance in the cash account.
accrual
accrual accounting: In developing a conceptual framework for accounting and financial reporting, accrual recognizes transactions and events when the activity occur regardless of when the cash changes hands. As long as something is estimatable and probable it is recognized. Estimating how much pension a person is due from working one year even though the person might not receive the pension for many years is an example of accrual.
accumulated depreciation: With a long term fixed asset the depreciation will be summed as the periods of benefit from the asset continue. If a fixed asset (eg, a piece of equipment) has a cost of one million dollars and a life of five years with no salvage value then by the end of the second year the accumulated depreciation will be $40,000, ie, $20,000 from the first year and $20,000 from the second. Businesses use accumulated depreciation and funds run like business (eg, proprietary funds) also use accumulated depreciation.
adjusting entry
adjusting entries: For a variety of reasons, some events are not recorded as they occur. In order to make sure the financial statements are up to date, adjusting entries are made to record events that have not been recorded. Often, the adjusting entry is a matter of convenience -- it is simply more convenient to record the event once at the end of the period rather to make many entries as the period unfolds. Recording salaries every day would be overburdening but if the period ends one day before the salaries are paid then an adjusting entry should be made to capture the costs of that period. Adjusting entries are critical to the matching concept in business and important to the modified accrual concept of governmental funds.
annual budget
annual budget: Annual is a period of one year. In government, much of the accounting and financial reporting is geared to things that will happen and involve cash during the fiscal year. This focus is driven by the approval and execution of the annual budget. The budget covers the governmental decisions on how to raise money and where to spend it. Traditionally, one of the most public decisions in government. A government may have several budgets for the different funds in government. The budget for the general fund is usually the largest. Financial reports, which should assess financial performance, including compliance with budget, are not nearly as widely debated or circulated.
assets: Assets have future economic benefit. They will help a government or company in the operation of their activities. Cash, machinery, and patents are assets as long as they will yield future benefits.
audit: Many types of audits can be done but financial audits attempt to determine whether management adhered to GAAP in publishing official financial statements. Government audits include not only adherence to GAAP but also government laws and regulations.
auditor: Auditors are trained professionals who examine financial records and systems of internal control to determine whether these adhere to principles established. Auditors can conduct other types of engagements, reviews, or projection, but examination of financial statements and internal control system are common endeavors.
balance sheets: The intend of this statement is to show the financial position, conditions, or health in terms of liquidity. That is, can the unit pay its bills with the assets on hand, or can the unit take advantage of emerging opportunities with the assets available. For governmental funds, the balance sheet is restricted to items of short term liquidity, that is, can the government meet liabilities or take opportunities in the next few months.
bonds: Officially called debt securities, bonds provide ways for governments to raise large sums of money by borrowing. Bonds usually have a principle amount and a contract interest rate. The principle can be paid at maturity while the interest is generally paid semi-annually as a percent of the principle. For example, a government could see 10,000,000 in bonds with a 5% interest rate. If the bonds matured in five years, then the 10,000,000 would have to be paid to the bondholder. During that period, 500,000 would have to be paid in interest each year or 250,000 semi-annually. These bonds would be called term bonds since they are due at point in time. Serial bonds come due at different points in time.
books: In accounting the term books is often used to characterize repository of the detail financial information. The use of the term books comes from the days before computers when accounting information was keep in books or what were also called ledger books. Even with the advent and widespread use of computers people still refer to the repository of accounting information as the books.
budget: The budget covers the governmental decisions on how to raise money and where to spend it. Traditionally, one of the most public decisions in government. A government may have several budgets for the different funds in government. The budget for the general fund is usually the largest. Financial reports, which should assess financial performance, including compliance with budget, are not nearly as widely debated or circulated.
CAFR: Stands for comprehensive financial report.
capital project: A large effort resulting in a major asset such as construction of a building or purchase of a building is a capital project. The resulting asset will have a life of longer than a year and entail a major expenditure.
capital project fund: This is a governmental fund that records the money coming in and going out for large projects, such as buildings, machinery, and large vehicles. It follows from the compliance orientation of governmental accounting. Legislature authorize a major project and might want it tracked in a capital project fund. Sometimes, however, government use capital project funds simply to borrow for items they cannot cover with general revenues.
cash account
cash basis: In developing a conceptual framework for accounting and financial reporting, cash accounting or a cash basis recognizes transactions and events only when cash changes hands. The cash basis is the opposite of the accrual.
closing entries
closings: At the end of an accounting period certain accounts need to be brought to a zero balance in order to start the new period and also to determine the fund balance for the past period. This process is frequently referred to as closing the books. All the accounts in the statement of revenues, expenditures, and changes in fund balance are closed. So too are all the budgetary accounts and any open encumbrances.
code numbers: To enhance precision, code numbers are often used to the various accounts in the chart of accounts. For example, cash in a particular bank might have the code number 1010. More generally code numbers can be used to enhance the precision of classifying and accessing any item. Codes could be used for customers, inventory, or fixed assets.
combined: A combined financial statement is the highest level of summarization or aggregation. For example, a government may have two or more capital project funds. In the combined statement, these would presented in one column as capital projects.
combining: A combining financial statement is at a second level of aggregation below the top or combined level. If each fund in a fund type is presented on one page this is a combining level. For example, if special revenue funds have three funds, parks, schools, and libraries, then the combining level would present the three on the same page.
command approach: In a computer application, actions can often be taken by giving an explicit set of instructions called commands. In DOS (disk operating system) the command DIR provides a list of files in the current directly. Commands can be very powerful, finding particular files, extracting information from those files, and placing that information into other files.
compliance: Compliance assesses whether actual money raising and spending adhere to budget mandates set by the legislative body. All the financial statements can help judge compliance, but one in particular call budget versus actual is used to assess compliance. Historically, annual compliance with the budget has been the main factor shaping governmental financial reports.; When interest is earned on past interest this is called compounding. For instance, if there is 5% on $100 for a year, then the next year the interest will be not only on the $100 but on the 5 dollars of interest earned. Compounding can be for time periods shorter than a year.
comprehensive annual financial report: Required by the Governmental Accounting Standards Board, it has several sections including an introduction, financial statements, and statistics.
computer applications: Computer applications are programs designed to do a variety of task from very simple to complex. Many computer applications are built to take daily financial transactions, keep track of these, and summarize them into financial statements and reports.
computer memory: The computer memory provides a place or places to store information. Some memory is volatile in that information in it disappears when the computer is turned off while other memory is permanent in that information stored there will remain there regardless of whether the computer is on or not. The memory capacity of computers have grown exponentially.
conditions: Financial conditions or position or health go mainly with the balance sheet. The idea behind the financial conditions is an assessment of whether the government has sufficient assets to cover its liabilities. Since governmental balance sheets are mainly for current or annual activities, conditions refer to whether current assets can cover current liabilities. However, long term liabilities can be introduced in a variety of ways to assess conditions. Long term debt can be compared to indicators of tax capacity to determine if a government is putting too much pressure on its capacity. Debt as a ratio of total real estate value is sometimes used to assess long term financial conditions.
contributions: To start or infuse an entity or business, owners or investors put in money, goods, or services. In business these are the owners, partners, or stockholders. In government one fund can contribute to another although it is not always the case for the contributing fund to expect a money return such as a dividend.
control accounts: In an accounting ledger system the control accounts have the total and the subsidiary ledger has the details. Nonetheless, the amounts in the subsidiary ledger must equal the total on the control accounts. For instance, the amount owed to each vendor in the accounts or vouchers payable subsidiary ledger must equal the total in the accounts or vouchers payable control ledger.
cost of goods sold: When an inventory item is sold its cost is recognized in the financial statements. Costs can be recognized on a perpetual basis, ie, as the items are sold or on a periodic basis, ie, at the end of the period by subtracting the ending inventory (those not sold) for those available for sale. Different method, such last in first out (LIFO) can also be used to calculate the cost of goods sold.
creditors: People to whom one owes money or even goods and services. A government may owe money to vendors or banks. Then the vendor or bank would be a creditor. A business may owe money and goods to pay off a creditor. For example, a business might borrow a certain amount of money and promise to make payment in cash and goods.
credits: In this case, credits comes from the accounting terminology of debits and credits. It is simply used to balance a debit for the purpose of double entry accounting. For example, if a government took in 1,000 in revenue fees in the form of cash, the cash would be debited since cash is an asset and increases in assets are debited; the fees would be credited since fees are equity and any increase in equity is credited. A credit could represent an increase or decrease.
current: Essentially, the same as annual. In government, much of the accounting and financial reporting is geared to things that will happen and involve cash during the fiscal year.
current assets: Asset have some future value and current assets are those that will yield their value in a year or less. Cash, supplies, inventory, taxes receivable, and short term investments can often be placed in the category of current assets.
current liabilities: Liabilities are amounts of money or goods or services owed. When payments is within a year or less then the liability is current.
database: Information is organized and stored in a database. For instance, all the names, codes for the names, and phone numbers of clients would constitute a database. The easier it is to rearrange, access, and combine database the better. In other words, database should not be fixed at one point in time without the ability to reorganize the database. Managers and user cannot foresee all the needs in advance; thus, easy manipulation and change of the database without sacrificing security is important.
data entry screen: In computer applications, data entry screen replace or supplement the manual forms or reports used. The screens provide boxes on places to enter information that is stored and later manipulated and reported. The screens should be pleasing to the eye, easy to understand, and assist with remembering complex information and assist with checking for accuracy.
debits: In this case, debits comes from the accounting terminology of debits and credits. It is simply used to balance a credit for the purpose of double entry accounting. For example, if a government took in 1,000 in revenue fees in the form of cash, the cash would be debited since cash is an asset and increases in assets are debited; the fees would be credited since fees are equity and any increase in equity is credited. A debit could represent an increase or decrease.
debt: When a unit incurs an obligation to pay in the future it has a debt. Bonds, pensions, legal settlement, and even vacation time can be part of the debt of a government.
debt service fund: This is the fund were money is placed and invested to pay the principle and interest on debt, usually bonds. Sometimes the lenders, the legislators, or the managers demand that a the debt service fund be established so it is clear that money is being put away and invested to pay future debits.
deferred revenue: If money is received but cannot be recognized as a revenue, it is often called a deferred revenue. When the conditions are met the deferred revenue is converted to revenue. Deferred revenue is common is business when a firm receives money in advance but has not yet delivered the service. Deferred revenue occurs in government when a fund receives money, a property tax, eg, but cannot spent it until a future period. The same sometimes holds for intergovernmental revenue. A government receives the money but can recognize it as revenue until the government meets certain conditions.
depreciation expense: The allocation of the original cost of a long term fixed asset (ie, with a life of more than year) to the periods that will benefit is the depreciation expense. A million piece of equipment with an expected life of five years and no savage value will have a depreciation expense of $20,000 per year for five years. This expense is one of the expenses subtracted from gross revenue to arrive at profit or loss. Businesses use accumulated depreciation and funds run like business (eg, proprietary funds) also use accumulated depreciation.
DOS
disk operating system: DOS is a particular type of operating system. It is associated with PCS or PC compatible computers and works mainly with detailed commands rather than a graphic interface. Ordinarily it is limited in the number of applications or tasks that can be run in parallel.
earmarked: When revenue are designed for a certain fund or activity the revenue is often called earmarked.
element: In accounting the elements refer to assets, liabilities, and equity or in the case of government, fund balance. Sometimes the phrase, elements of the accounting equation is used.
employer taxes: Just as employees must pay taxes, so too must employers. One tax the both pay is the FICA -- federal insurance contribution act tax.
encumbered
encumbrances: In governmental accounting, the estimated cost of a purchase is often subtracted from the appropriation even before the goods or services are delivered. That is, the estimated amount is subtracted when order. The purpose is to prevent overspending vis a vis the appropriation.
entities
entity: Unlike businesses, governments do not report for the entire unit, but rather for subunits called entities. Technically, the entity can be the primary government, organizations for which the primary government is financially responsible, or organizations which the primary government influences and ought not be excluded. The notion of entity or subunit can also be extended to funds. Funds are entities set up to show the source of money and how the money was spent. Subunits also include account groups. These are used to keep track of certain long term transactions and events until the transaction or event becomes a current item. One reason for the complex expanse of entities is the detail legal nature of government. Another reason is the pressure of interest groups to have governmental action protected or ear marked by giving those actions special status. Thus, a municipality can have recreation authority which it controls financially and have separate financial statements with funds and accounts for that recreation authority.
equity: In business accounting equity refers to ownership. More specifically, equity is the residual or what is left to the owners after assets have been used to pay off the liabilities. In equation for equity = assets - liabilities.
expenditures: Governmental accounting uses the term expenditures to differentiate government rules from business rules. In business, the term expense is the phrase of choice. Expenditures is used in government to show the modified cash or modified accrual basis. When some item is purchased with cash or an account soon to be paid it is an expenditure. In business an item is an asset until it is used to help generate revenue. In other words the matching principle guides recording of expenses. Promises are handled differently too. In government, they are not likely to get recorded as expenditures until the promise demands cash. In business, if a promise is earned in the process of generating revenue it is deemed an expense even though it may not demand cash until well into the future.
expense: In accrual accounting one goal is to match expenses against the revenue those expenses helped to earn. An expense is a use of an asset. Directly using supplies, paying people for work done, or allocating (depreciating) the cost of equipment to the period of benefit are examples of expenses. Governmental fund use the term expenditures, since expenditure is associated with using money not necessarily using or consuming an asset.
FASB
Financial Accounting Standards Board: FASB stands for Financial Accounting Standards Board. FASB was organized in 1974 as an independent rule making body for accounting and financial reporting in the private sector. It is overseen by the Financial Accounting Foundation and supported by private contributions. It is seen by the Securities and Exchange Commission (SEC) as the official rule making body for accounting and financial reporting in the business sector and in the nonprofit sector not controlled by government. It uses a due process procedure for making rules, that is, debate is public and interested parties have an opportunity to express their opinions about proposed rules.
financial reports: Financial reports encompass the many ways an entity can assess it financial conditions, results, and compliance. The financial statements, such as the balance, are among the common financial reports. Other financial reports would be the budget and the comprehensive Annual Financial Report (CAFR)
fica: FICA stands for federal insurance contribution act. This act and its amendments defines what amounts should be withhold to pay for social security obligations.
fiduciary funds: What cuts across these is that someone is holding money for someone or something else. The government is usually very restricted in what it can do with the money in these funds. Two fiduciary funds are the trust and agency.
financial performance: Performance is used as an all embracing term to include financial success, conditions, and compliance. It is historical in perspective, referring to performance during a period (perhaps a year) just past.
financial reporting: The financial reports are a large category that include many types of reports, one of which is a financial statement. These reports are designed to capture different aspects of past financial performance and future financial prospects.
financial statements: The financial statements summarize the operating success the conditions or financial health, and legal compliance. For governmental funds, each of these measures -- success, conditions, and health -- reflect short term or annual performance. In business or business like operations these measures of performance reflect both short and long term performance. Governments have a set of financial statements required by the Governmental Accounting Standards Board (GASB).
fixed assets: They are also called property, plant and equipment. These are assets used to help run or operate the government. Specifically, they many include vehicles, buildings, and machines. Under ordinary circumstances, they are not expected to be converted to cash to pay bills.
flow of current financial funds
flow of financial resources: The official phrase used in governmental accounting to characterize the focus of what is to be included in the governmental statements and what is not to be included. Money passing through is to be included regardless of whether its revenue, transfers among funds, or borrowing. Fixed assets or long term obligations that do not require immediate payment are excluded.
flow of economic resources: This is the focus used in business accounting. It includes both short and long term items compared to the flow of current financial funds which includes only short term items such as cash. The flow of current financial funds is presently used in government as the focus of what to include in the governmental funds.
full faith and credit: People who are creditors of government are often protected from loss by the full faith and credit of the government. This means that the government will either use future taxes or borrowing to pay off loans or bills. financial performance: Performance is used as an all embracing term to include financial success, conditions, and compliance. It is historical in perspective, referring to performance during a period (perhaps a year) just past.
function keys: In computer applications functions keys, often designed from F1 to F10, F12 or F14, provide uses with simple means to retrieve information or take some action. For example, F1 might be the help key and F2 might be the key to list the account groups in the chart of accounts. The function keys are memory aides or ways of short cutting procedures.
fund balance: When liabilities are subtracted from assets, there is a fund balance. A positive fund balance means there are more assets than liabilities; a negative fund balance means just the opposite. Fund balance can be complicated by the fact that part of the fund balance is reserved and part unreserved. The difference between reserved and unreserved is that the unreserved can potentially be authorized for future expenditures while the reserved cannot. Additionally, the fund balance is a residual and not necessarily a cash amount.
funds: One of the fundamental principles of governmental accounting is the fund. Funds are usually established by legislation and provide an accounting mechanism for keeping track of money raised and spent for a specific activity or set of activities. Governments have three broad type of funds and specific funds within those broad type of funds.
GAAP: GAAP means Generally Accepted Accounting Principles. These are the principles that practitioners use to produce financial statements. They can become accepted via due process or via long term practice or both. It is the GAAP that help make financial statements compatible from year to year and jurisdiction to jurisdictions.
GASB: GASB stands for Governmental Accounting Standards Board. It was organized in 1984. Like FASB it falls under the umbrella of the Financial Accounting Foundation. It makes rules for state and local government and nonprofits controlled by government. GASB is recognized by the Securities and Exchange Commission (SEC) as the rule making body for state and local government. It follows due process in that interested parities can comment before rules are accepted. GASB is independent in that its costs are covered by contributions.
general fund: This is the governmental fund used for most of the routine and traditional activities of government, such as police, fire, tax collection, and general administration. The general fund is the most common of all funds. It keeps track of current activities.
general ledger: If an accounting system keeps all or most of its records in a single set of accounts, this single system is sometimes referred to as the general ledger. The ledger could also be the control accounts, with detailed data in the subsidiary ledgers.
general long term debt account group ">: If an accounting system keeps all or most of its records in a single set of accounts, this single system is sometimes referred to as the general ledger. The ledger could also be the control accounts, with detailed data in the subsidiary ledgers.
general purpose financial statements (GPFS)
governmental accounting: In general accounting is designed to capture financial transactions and report on financial performance. State and local governments have their own set of rules apart from business. While there are many differences one major one is that governments focus heavily on judging legal compliance and business focuses on profit and loss.
governmental funds: In general accounting is designed to capture financial transactions and report on financial performance. State and local governments have their own set of rules apart from business. While there are many differences one major one is that governments focus heavily on judging legal compliance and business focuses on profit and loss.
health: Used interchangeably with financial conditions or the ability to pay debt and take opportunities when they arise.
hierarchy of menus": In computer applications, menus are often arranged with a main menu first then other menus extending from the main menu. The main menu might have 4 options. These options then give rise to the next tier of menus. Options in the second tier may give rise to other menus. The result looks something like an organizational chart.
icons: As used in computer terminology, icons are images or graphics used to represent actions or computer processes. A trash can might be an icon for deleting a file, a picture of a house might indicate moving back or to the main or home page, and a pen might indicate a wordprocessing package.
income statement: One of the financial statements used in business is the income statement. It is commonly referred to a bottom line type of statement. It shows whether the business earned a profit or incurred a loss for a given period. Some government programs are carried out like business operations and in those cases a statement similar to the income statement is produced.
inflows and outflows: In governmental funds, one measure of success is whether the inflow of money equals or exceeds the outflow. Inflow can include revenue, borrowing, or transfers. Outflows can include expenditures or transfers. Thus, inflows and outflows are broader than revenues and expenditures.
interest: Interest is the cost for using money. In the case of bonds sold by government, there will likely be a contract interest rate. For instance, if the contract interest rate is 5% and the amount of bonds sold is 1,000,000 then the annual interest is $50,000.
interest revenue: Money earned from an investment can be interest revenue.
interperiod equity
intergenerational equity: This goal has been adopted by GABS in its objectives of financial reporting. The idea is that governments should raise enough revenue to cover all services for a given period, generally a year. Services should not be provided that will put a burden on future taxpayers or generations.
intergovernmental revenue: Revenue coming to a local government from a state or federal government is an example of intergovernmental revenue. More generally money earned or legally due from another government is often an intergovernmental revenue. Usually the money is legally designated rather than earned in a business sense. Intergovernmental revenues can come with many conditions attached such as the receiving government cannot recognize the money as revenue until the appropriate expenditures are made. Intergovernmental revenues often require audits to determine if the receiving government spent the money appropriately and has a management system (often referred to an internal control structure) capable of tracking revenue from other governments.
: A broad term used to connoted savings or capital improvements instead of immediate consumption. The investment can in securities such as stocks and bonds or in fixed assets such vehicles and machinery. In business, purchase of inventory can also be considered an investment in the business that will pay off in terms of returns that are larger than the investment. Typically, investments refers to investment in securities. level of aggregation within funds: Since a single fund type can have many funds within it, the financial statements aggregate at different levels. The highest is combined and there only the fund type is shown (eg, special revenue or capital projects). The next level is combining. Here each fund within a type is show but they are show in column format. Thus, if the capital projects fund has five separate funds these would be shown in column format as under the title, combining. If each fund were shown separately for each statement, the title would be individual.
journal entries
journal entry
journalizing: In keeping the detailed records of financial activities, these activities are placed in journals in chronological order. The entry can be to computer or to a manual system. From the journal the entries are posted to the accounts. In government all this is done by fund. Also referred to as journalizing.
key word search: If an application has the ability to find any and all instances of certain words, this may be called a key word search. Powerful search routines should be able to find any word or combination of words.
liabilities
liability: Future obligations or sacrifices constitute liabilities. An account payable or note payable can be a liability. So too can a pension or legal claim.
line item: In budget terminology, a line item is a detail in the budget. It refers to the things to be acquired not the results to be achieved. The line items can be as detailed a pencils.
liquidity: Liquidity refers to how quick an asset can be converted to cash. A three-month treasury note is probably more liquid than a backhoe, but probably less liquid than money in a checking account.
local area network (LAN): LANs allow many computers and computer associated devices (eg, printers) to be shared and access by a group of people. Often the LAN will have one main computer (sometimes called the server) with many smaller computers accessing applications and data from the main computer.
long term: Long term refers to a period lasting more than a year. Bonds, pensions, and even vacation benefits are often long term items.
long term debt: Usually refers to amounts owed from borrowing where the amount is due in a year or more. If the principal on a bond is not due until a year or more than a year, the principal would be a long tern debt.
long term obligation: Olbigations connote a debt or something owed such as an amount of money. Long term means a year or longer. A bond payable two years from now would constitute a long term obligation. Pensions payable years from are long term obligations.
match
matching: In accrual accounting, one of the goals is to equate or match all the costs against all the revenue those costs help to earn. The matching will show the profit or loss for the period.
model
models: A model is an attempt to capture the important elements and relationship among the elements for a given issue or task. It is a simplification of reality.
modified accrual: Historically the committees and organizations that set the principles for governmental accounting have used the phrase modified accrual to characterize the rules for recognizing when to enter a transaction or event. Officially, modified accrual is used since accrual is used sometimes and cash sometimes. For example, a sales tax might be recognized on a cash basis, that is, when the tax is collected. Property tax might be accrued, that is, recognized when the legislature set the rates and the first day of the fiscal year began rather than when the tax money came in from the property levy.
OLE
object linking and embedding: With some operating systems and computer applications it is possible to make a change in an object or item in one application and the that object change in other applications. For instance, if a wordprocessing file has a table with fund revenues and a change in made in fund revenues in a spreadsheet then that change carries to wordprocessing file.
operating system: The operating system of a computer is the software that coordinates the various applications and allows communication among the different subsystems of the computer. For example, the operating system lets the use switch which application or applications are to be active and passes information from an application to a printer. A comparison is sometimes drawn between a conductor of an orchestra and an operating system. Current operating system are heavily based on graphic interfaces and allow users to work with more than one application at a time. Earlier operating systems were not a sophisticated.
other financing sources: Inflows that increase equity or fund balance, but are not revenues. For example, the proceeds from a bond fall in the category of other financing sources. In other words they are not earned or legally demanded like a tax but during the annual budget period they can be used to off set expenditures in the statement of revenues, expenditures, and changes in fund balance. No similar category exists in business accounting.
other financing uses: These transactions decrease fund balance in a fashion similar to expenditures but are given a special category to show they are different from the expenditures of the fund. Transfer to another fund are other financing uses.
post
posting
posted: Posting is the process of summarizing the individual journal entries to the appropriate accounts and calculating a balance for that account. For example, all the entries containing cash as posted or placed in the cash account to determine the cash balance. The same holds for other accounts such as safety expenditures, property tax revenue, and revenue from fines.
principal (principal) amount: When bonds or other debt securities are sold, there is usually a principle amount, or the amount to be paid at maturity. If a government borrows $5,000,000 then the principle amount is $5,000,000.
primary government: A primary government is usually a state or general purpose government. It can also be a special purpose body that has an elected body. It is distinguished by having elected officials responsible and accountable to the people.
proprietary fund: The propriety funds are different in purpose from the government funds and designed to be like business financial reporting. In other words, matching and accrual accounting provides a guide for proprietary funds. Two types of proprietary funds are the internal service fund and the enterprise fund.
purchase order: The point at which a good or service is formally ordered from a vendor is captured in a purchase order. In governmental funds, purchase orders are encumbered or subtracted from amounts appropriated even though the liability has not yet been incurred. The purpose of encumbering the amount in the purchase order is avoid overspending or spending for inappropriate items.
relational database: Databases that can be easily connected to each other to form new databases provide the foundation for relational databases. Ordinarily, if two files or database have the same item or key, then the database can be combined so that the information in each is now accessible in one place.
report generating
report generator: When both simple and complex reports can be produced just by identifying what items and the appearance then the software capable of this task is often called a report generator. A report generator for an accounting software package should be able to produce an operating statement for a given fund just by identifying the fund name and the year for the report.
reserve for supplies: In the fund balance of governmental funds some of the fund balance is unrestricted and can be appropriated. Some is restricted or reserved. Reserve for supplies means that this amount is the amount of supplies on hand and thus not money that can be expended.
retained earnings: Retained earnings is a phrase that is more commonly used in business financial reporting. However, it is used in government when government has operations that are to be accounted for in a fashion similar to business financial reporting. These operations are referred to a proprietary funds. Technically, retained earnings equal any contributions made to the proprietary funds, plus any profits, minus any losses, and minus any distributions.
return: In this case, return is the amount or percentage earned on an investment. If $200 is earned on an investment of $1,000 over a period of a year, that is a 20% return for the year.
scroll bars: Scroll bars allow a computer user to browser through a list to items and select the desired items.
statement of cash flows: Cash flow statements are part of the statements produced when government operates on business accounting rules. The cash flows show where the cash originated and where it was paid, showing also how the change occurred between the beginning and ending cash amounts.
statement of revenues expenditures and changes in fund balance: This is statement is designed to measure the operating success or results of the period. In government, operating success is achieved is enough money is brought in to cover the money going out. Money in can include borrowing and money out can include transfers. In business, operating success is based on revenues in excess of expenses.
statement of revenues expenditures and changes in fund balance budget and actual: This statement is designed to determine whether the administration complied with the authorized legislative budget but comparing the actual with the budget.
success: Financial success goes with the operating statement or operating results. It is measured by whether the government was able to raise enough money during a given period to cover its outlays. In government success is affected by annual and cash nature of the accounting rules. Inflows of money can include borrowing; outflow include only those due and payable, not those promised but not payable this period.
subsidary ledger: The name ledger is used to indicate the keeping of accounting data and records. Subsidiary ledgers are used to keep records that are more detailed than the controlling ledger. For example, the controlling ledger might have totals on accounts payable, but the subsidiary ledger could have which vendors are owed money. While the subsidiary ledger has the details its amounts must equal the total in the controlling ledger.
title bar: In a graphical user interface, the title bar will show the title of the application and sometimes the name of the file or document being created or changed. Below the title bar, one might find words or icon for the major procedure the application can perform. In some case both words and icons are used to describe the main functions available under the application. These functions might include opening and saving files, formatting the data, and exiting the program.
transactions and events: These are the activities that the government captures or records in order to produce financial reports. Transactions are usually activities or exchanges between the government and outsiders or exchanges among funds. Events are things that occur but are not immediately recorded. A employee earns salary or wages every minute on the job, but this event is only recorded at set times.
trial balance: From time to time, all the accounts in a fund or in an accounting entity may be compared to see if the debits equal the credits. The process of checking all the accounts to see if debits equal credits is a trial balance. The trial balance is often done before the financial statements are prepared. The trial balance can help catch certain type of recording errors such as a debit to cash of $100 and a credit to revenue of $10. With computers, these type of journal entry error are usually caught (or trapped) before they can be entered into the system. Thus, the trial balance can be used to see a summary of all accounts instead of just checking for errors in balance.
transfers: Since governmental financial statements are based on funds, there is often a transfer among the funds. For example, the general fund may transfer money to the debt service fund so that fund can pay interest due on bonds. Because funds are the main accounting entity in government no effort is made to eliminate any double counting among funds and produce a consolidated statement for the entire government.
unearned revenue: When money comes in that will eventually be revenue but for the moment cannot be recognized as revenue it is called unearned or deferred revenue. Unearned is generally used in business and deferred in governmental funds. Rents collected in advance are an example of unearned revenue in business. The money has come in but the service has not been provided and thus not earned. The unearned revenue is a liability since the firm has the money and must still provide the goods or service in the future.
variance: The variance often compares some standard with the actual. In government, the standard can be the budget. Thus, the effort in government is often to stay within the budget and to avoid unfavorable variances, that is, where the actual is out of line with the budget.
voucher payable: A voucher connotes that a bill has been checked carefully to determine that at least the authorization, amount, and quantity are correct and should be paid. Thus, a voucher payable is liability.
windows: Windows have become an operating system for PCS and PC compatible computers. It is a graphic user interface (GUI) with the capability to run more than one application at a time. Each new versions adds more features.
withdrawal: Windows have become an operating system for PCS and PC compatible computers. It is a graphic user interface (GUI) with the capability to run more than one application at a time. Each new versions adds more features.

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